SOUTHFIELD Mich. Buffalo Wild Wings franchisee Diversified Restaurant Holdings plans to more than double its annual sales next year by acquiring the nine units of the chain that it currently manages but does not own.
The Southfield-based company said Friday it had entered a letter of intent to exercise an option that is part of its management agreement to buy six restaurants in Michigan and three in Florida that had combined sales of $24 million in 2008.
The final price for the sale is still being negotiated, according to president and chief executive T. Michael Ansley, but it will be set with a predetermined formula outlined in the management agreement.
The funding for the acquisition will come from a combination of cash, potentially raised in a convertible preferred stock offering, and financing from the seller, Ansley said.
Diversified Restaurant Holdings, which trades on the Over the Counter Bulletin Board under the ticker DFRH, reported sales of $11.6 million in 2008 from the seven BWW units it currently owns and its two fast-casual Bagger Dave’s Legendary Burgers and Fries restaurants. Diversified Restaurant Holdings opened the first Bagger Dave’s in January 2008 in Berkley, Mich., and the second in Ann Arbor, Mich., last August.
Ansley said the acquisition is scheduled for Aug. 1, 2010, and projected that Diversified Restaurants’ total sales that year would be $34 million. He noted that the company also has an agreement with BWW to open 10 more restaurants in Florida and 12 more in Michigan.
Minneapolis-based Buffalo Wild Wings operates or franchises more than 600 sports-oriented casual-dining restaurants.
Contact Bret Thorn at [email protected]