Restaurant company spinning off burger-and-beer chain
A restaurant company is spinning off a burger-and-beer chain with multiple locations in West Michigan to help drive the chain's growth.
Southfield-based Diversified Restaurant Holdings (Nasdaq: SAUC) said yesterday that it is planning to split into two separate, publicly traded companies: one operating as a franchisee of Buffalo Wild Wings and one operating the Bagger Dave’s restaurant chain it created.
The company is the largest franchisee of Buffalo Wild Wings, with 64 locations, and the operator of 19 Bagger Dave’s restaurants.
It originally announced it was evaluating "strategic alternatives" for its Bagger Dave’s brand in May.
The two companies would be split through a “tax-free spinoff” of the Bagger’s Dave’s business to Diversified Restaurant Holdings stockholders.
The stand-alone Bagger Dave’s business would be traded in the over-the-counter, or OTCBB, market, while Diversified Restaurant Holdings would continue to operate its Buffalo Wild Wing locations and trade on the Nasdaq exchange.
A comprehensive plan for the spinoff is in the planning stages and must be approved by the company's board and meet "customary regulatory requirements."
A fourth-quarter execution is expected.
"Very different businesses"
"Following a comprehensive analysis of various strategic alternatives for Bagger Dave’s, the board and management team concluded that the separation of our BWW and Bagger Dave’s businesses is the best alternative for the company and our shareholders,” said Michael Ansley, president and CEO, Diversified Restaurant Holdings. “Separating the two very different businesses will enable each to better pursue their strategies and growth plans independently.”
Bagger Dave’s also has a more complex menu and food preparation process and requires a more diverse set of management and employees.
The Bagger Dave’s business had $10.7 million in revenue in the first two quarters of 2016.
“Over the last year, we invested considerable resources and time to improve the Bagger Dave’s concept, which included rationalizing underperforming locations, making changes in management and improvements in operations, while enhancing our customer touch points,” Ansley said.
“The greater focus on our BWW business and its significantly larger size, limits the attention and resources we can apply to Bagger Dave’s, which ultimately restricts our ability to build on the recent success of its re-defined concept. As an independent company, we believe Bagger Dave’s will be in a much better position to leverage its re-defined concept to drive growth.”