NPC International Inc. has agreed to acquire 39 Wendy’s restaurants, bringing the franchisee’s burger holdings to 183 units, the company said Wednesday.
Overland Park, Kan.-based NPC International said it has agreed to pay $29.2 million, plus working capital, for 35 restaurants from a subsidiary of The Wendy’s Co., plus four other recently constructed units for $7.4 million.
The restaurants to be acquired are in the Raleigh-Durham, N.C., area, NPC International said, and the 35 units generated about $59 million in sales during the 52 weeks ended Jan. 3. NPC International expects to close the deal in late July.
“This highly coveted market will leverage our existing Wendy’s infrastructure, and is contiguous with our current Winston-Salem and Greensboro Wendy’s operations,” said Jim Schwartz, NPC International chairman, president and CEO, in a statement.
The deal marked NPC International’s fifth acquisition of Wendy’s restaurants since 2013.
With the additional 39 restaurants, Schwartz said the total 183 Wendy’s units will produce revenue exceeding $260 million, which will account for about 22 percent of NPC International’s revenue.
The acquired restaurants will be owned and operated by NPC International's wholly owned subsidiary NPC Quality Burgers Inc.
Wendy’s has set a goal of reducing company ownership to about 5 percent of its total system.
Todd Penegor, Wendy’s president and CEO, said in a first-quarter earnings call in May that the burger operator expected to sell 315 restaurants to franchisees in 2016, including 55 units that were sold in the first quarter. The company sold 826 restaurants from 2013 through 2015.
As part of the most recent acquisition, NPC International plans to remodel some of the restaurants in Wendy’s Image Activation format. Penegor said the Image Activation redesign included 110 new restaurants this year in North America and 430 reimaged restaurants.
“More than 24 percent of the Wendy's system is currently on the new image, and we expect that number will rise to approximately 30 percent by the end of this year,” he told analysts.
For the first quarter ended March 29, NPC International reported that net income rose 54 percent, to $7.6 million, from $5 million the previous year. Sales grew 3.3 percent, to $319.5 million, from $309.2 million the previous year.
NPC International said first-quarter same-store sales at its Pizza Hut restaurants increased 4.1 percent, and rose 2.4 percent at its Wendy’s units.
NPC International is the largest Pizza Hut franchisee, operating 1,233 of the chain’s units in 28 states. The franchisee currently has 144 Wendy’s units in five states.