Flynn Restaurant Group LLC has acquired Gateway Bells LLC, a Yum! Brands Inc. franchisee, significantly growing its holdings of Taco Bell restaurants in the Midwest, the company said Tuesday.
With completion of the Gateway Bells acquisition on Aug. 21, Flynn Restaurant Group has added another 62 mostly Taco Bell restaurants in Missouri and Illinois, primarily in the St. Louis market, for a total of 138 units, of which 133 are Taco Bells. The deal also included a handful of KFC and co-branded Taco Bell/Pizza Hut locations.
Terms of the deal were not disclosed, but with the shift in ownership, Flynn Restaurant Group has become Taco Bell’s third largest franchise operator.
Greg Flynn, founder, chair and chief executive of Flynn Restaurant Group, said the acquisition will bring the company about $80 million in additional revenue. The company said it generates $1.3 billion in annual revenue between the two divisions.
Gateway Bells was controlled by Don Ghareeb, a long-time franchisee who is also founder and chair emeritus of Tacala LLC, the nation’s second-largest Taco Bell franchise group, with 164 units.
In late 2012, Tacala was acquired by private-equity firm Altamont Capital Partners, but that deal did not include the 62 restaurants in the St. Louis market that Ghareeb also owned.
Flynn said he was excited to add the St. Louis market to Bell American Group’s holdings, noting the brand’s strong position there. However the restaurants are in need of “some TLC,” he said. Flynn plans to aggressively remodel and address deferred maintenance needs.
“We’d like to do it all within the first 12 months,” he said.
Flynn said Bell American will continue to operate as an autonomous business unit, with Charlie Brown as president and Sarat Koneru as director of operations.
San Francisco-based Flynn Restaurant Group LLC, whose Apple American Group division is the nation’s largest Applebee’s franchisee, late last year added Taco Bell to its portfolio for the first time with the acquisition of Southern Bells Inc., a franchise group that operated 76 restaurants in Indiana, Illinois and Kentucky.
In 2011, Flynn Restaurant Group, then known as Apple American, received a strategic growth investment from Goldman Sachs Capital Partners, which joined investment partner Weston Presidio and members of the management team.
The franchise group will continue to look for growth opportunities, Flynn said. “We are always interested in growth, but only under two conditions: We must be running well what we already own, and the opportunity must be accretive to the brand,” he added.
Flynn Restaurant Group operates 579 restaurants in 26 states, including 441 locations of the casual-dining Applebee’s Neighborhood Grill & Bar chain.