Lafayette-based public company American Restaurant Concepts buys ownership in franchisor of Wing Nutz restaurants, while businessman Seenu Kasturi's private equity firm acquires 50 percent interest in a related Wing Nutz entity.
American Restaurant Concepts Inc., operator and franchisor of Dick's Wings & Grill restaurants, announced in late January that it has acquired a 50 percent interest in Wing Nutz for $400,000 in cash and $400,000 worth of stock.
Based in Salt Lake City, Utah, Wing Nutz is a franchisor of sports-themed restaurants offering baked chicken wings, baked sandwiches and other baked foods. It also offers its own line of craft beers under the name "Nut Job Beers." Wing Nutz has 10 restaurants in Utah and one restaurant in Idaho, with an additional restaurant set to open in Utah and one in Las Vegas. There are another six restaurants in the pipeline in other western states.
Under the terms of the deal, the company acquired a 50 percent ownership interest in Paradise on Wings Franchise Group LLC, the franchisor of the Wing Nutz restaurants and owner of the Wing Nutz intellectual property.
In a separate but related transaction, Lafayette-based Blue Victory Holdings, a private equity firm, acquired a 50 percent ownership interest in Wing Nutz Development LLC, which holds the operating assets and liabilities associated with running the Wing Nutz franchises.
Seenu Kasturi
"It took forever to close this deal because of the complexity of separating the operating stores and the franchisor," Blue Victory CEO Seenu Kasturi tells ABiz. "The 50 percent interest of the operating stores was acquired by Blue Victory Holdings, and the 50 percent interest in Paradise on Wings, the franchisor, was acquired by our publicly traded entity American Restaurant Concepts [ARC's stock trades over the counter]. Our goal is to keep the public entity as straightforward as possible by having it only be the franchisor and not have exposure to liability via operations, employees, lease guaranty or debt. This structure also enables us to keep our [capital expenditures] low and have a predictable stream of revenue."
"We are pleased to have acquired a significant ownership stake in Wing Nutz as part of our strategy to drive growth and shareholder value by expanding into other brands," Richard Akam, CEO of American Restaurant Concepts, said in the announcement. "The Wing Nutz brand of premium baked chicken wings and other quality baked products complements our current Dick's Wings offering and expands our reach into the western half of the United States. This transaction increases the number of restaurants in which we have a financial interest by almost 70 percent, from 16 to 27, and will contribute greatly to our bottom line."
Last year ARC relocated from Jacksonville, Fla. to Lafayette. Kasturi, who owns about 7 percent of the publicly traded entitiy, notes that Blue Victory Holdings has a consulting and lender relationship with ARC.
A YOBE frozen yogurt is set to open on Ambassador Caffery at Kaliste Saloom next to McCallister's Deli, and negotiations are under way for a kiosk spot in Acadiana Mall.
In 2013 Blue Victory also closed on its acquisition of the YOBE frozen yogurt chain.
"We just finalized a lease for the first location in Lafayette at Kaliste Saloom and Ambassador Caffery next to McCallister's Deli and are in the final stages of negotiation for a kiosk location next to Auntie Anne's in the center court of the Acadiana Mall," Kasturi says.
Blue Victory ranks No. 43 on ABiz's list of the regions Top 50 Privately Held Companies with $29 million in 2012 revenues. Among its other holdings, Kasturi's company has ownership in locations of co-branded KFC, Taco Bell and Long John Silver's restaurants. It also has the rights to develop Hardee's stores in every parish that touches Lafayette. Lafayette's first Hardee's location opened on Kaliste Saloom Road, and the old KFC near Dulles Drive was converted into the city's second Hardee's.
Read more about Blue Victory Holdings here.