MUY Companies, MUY SalesÂ
Not that long ago, James Bodenstedt was content with 18 restaurants. âThat was enough for me. We never looked to grow, but we positioned ourselves ready to grow if the opportunity arose,â he said. Bodenstedt is president of MUY! Companies, one of the largest YUM! Brands and Wendyâs franchisees.
And arise it did. Monday, October 4, marked the closing of the last of the sales of MUYâs restaurantsâall 755 of them in 11 statesâfor an undisclosed amount. Franchisee Shoukat Dhanani and a newly formed company, Ayvaz Pizza, LLC, purchased approximately 360 Pizza Hut locations. Dhanani, currently the largest Burger King franchisee in the system, is entering the Pizza Hut system with this transaction.
Taco Bell franchisee, HAZA Bells and Wendyâs franchisee, HAZA Foods, both owned by Ali Dhanani, recently purchased MUYâs 85 Taco Bells and about half of the 318 Wendyâs. Roland Spongberg, founder and CEO of WKS Restaurant Group; John Hughes of Wendyâs of Bowling Green; Sanjay Mehra, CEO of Spark United Restaurant Holdings, and Santiago Chico, CEO of 916 Foods purchased the remaining locations.
âI think I can say that this was one of the largest franchisee transactions ever,â said Chris Kelleher, managing director with Auspex Capital, the investment banking firm that managed and advised on the deal. Itâs complicatedÂ
âThere were actually 17 separate transactions, including 755 restaurants, about 25 fee properties, the corporate office and the corporate aircraft,â Kelleher said of the sale. It was all-hands on deck for the Auspex team, as the process started in mid-March with the closing of all the deals six months laterâno mean feat. âJames was at his home in Italy during long stretches of the sales process so there were weeks where I started with strategy calls with James at 2 a.m. and would quit at midnight the following day, after hours-long APA drafting calls with the lawyers,â said Kelleher.
They had originally structured the Wendyâs deal to sell all of them to Ali Dhanani, but it had to be redone when Dhanani reached the franchisorâs cap on the number of units one company can own.
âThat process was a challenge,â he said, âbecause we broke
October 15, 2021
it up into pieces. And we spent a lot of time with the new Wendyâs franchisees, helping them transition smoothly into the system. Thatâs hours and hours, especially with due diligence from the franchisor and the buyersâ lenders.â
And at the same time, Auspex handled the debt raise for three of the buyers, too. âThere was a seven-bank deal and two five-bank deals,â Kelleher said.
âJames is a very experienced dealmaker,â he said. âHe understands the process and how to navigate with the franchisors, which is a key part of all of this. He gave us a lot of latitude, as well. He provided great leadership, which is key to the trust built up between everyone who worked on the transactions.â
The Auspex team saw that first hand. They have handled 84 transactions for MUY since first meeting Bodenstedt in 2001. âThis is bittersweet for us,â said Kelleher of the long relationship he and his colleagues have had with the MUY team. âWe just built great professional and personal relationships with them.â
âIâve spent 20 years working with Auspex,â said
Bodenstedt. âI wouldnât have grown like I had without them.â Sharing the pieÂ
Coming in at No. 5 on the 2021 Monitor 200 rankingâ the top restaurant franchisees in the nation ranked by salesâMUY was less than half that size 10 years ago, when the company was featured on the cover of Franchise Times, the Monitorâs sister publication, in April 2011: They had 250 restaurants.
Auspex had been advising Bodenstedt and his team since the beginning. âWe were with him in his first deal in 2003 when he had zero stores,â said Kelleher. âThe magic with James is that he has a great gift for spotting the deal and buying right. And he ran them right, too.â
Part of running them ârightâ was a keen eye for bringing on talented people, and giving them a stake in the business once they proved themselves. âI donât always know what the right thing to do is,â said Bodenstedt, âbut I can see what has been done incorrectly in the past and what has caused problems.â
And for any restaurant business, that problem is chiefly turnover, at all levels.
âI wanted to make sure the team was focused on the long term,â he told the Monitor. âWhen you have turnover, it creates a ripple effect throughout the organization.â Each
© 2021 Restaurant Finance MonitorÂ
member of his executive management team was given a stake of ownership in the company.
âWhen you get the right people, allowing them to have ownership helps with consistency,â Bodenstedt said. âMost companies have a bonus program that changes every year. Ours didnât change in 20 years.â When people know the goals needed to achieve, and can count on that, they are more likely to meet them.
He said their management turnover was 2%, a small number for the restaurant business, âand our area coach turnover was less than that,â he said. âAt some higher levels, our turnover was almost zero.â
Seven direct reports have been with him for years, and Bodenstedt also extended ownership to individuals two more layers down from that, leaving him with a 75% stake in the company.
âThere were 17 millionaires created through this (sale),â he reported.
The Non-Acquirer AcquirerÂ
And while Bodenstedt never set out to have a lot of restaurants, he said that throughout the years he acquired about 1,000 locations, some of which were sold years ago.
âMost people thought I was this big acquirer,â he said. âbut I turned down a lot of opportunities, too.â For a variety of reasons along the wayâmaybe the wrong price, wrong geographic fitâhe said he probably acted on 10% of the deals set before him.
He had it in his mind to sell in about 2024, âbut what I believed was going to happen with the new tax law accelerated that,â he said. âTurns out I was right, it just wasnât as significant as I thought it would be. Nonetheless, it was just enough that any future value we created would be eaten up by taxes.â
Kelleher sat down with him in late February to explore where the company was financially. âJames put together a presentation to his management team and said this is where we are, and this is what we could get,â he said. âIt was a unanimous vote to sell it.â
What Bodenstedt will do in retirement is still bit of a mystery, as he said heâll âbe doing what retired people doâtravel, you know, the normal retired stuff…Probably volunteer.â But we think he wonât be walking into the sunset longânot for the guy who likes to build things, and bring other people with him.