In New York City last summer, James Bodenstedt presented a single sheet of paper with four columns of type to two hand-picked prospective buyers. âOne column for each of the brands, and then a total,â recalled the founder of Muy Cos., who sold all 755 of his Taco Bell, Pizza Hut and Wendyâs restaurants in a $1 billion-plus grand exit last October.
Bodenstedt kept it simple. âWhat is the price? How did I get to it? What is the equity I have to put in? Am I going to make money and how?â His goal was to present a deal he knew could get done in six months, before Congress changed the capital gains rate (as people feared but never happened) and employees worried too much about their future. Multiples of cash flow were likewise non-negotiable: âTaco Bell, 9. Wendyâs, 7. Pizza Hut, 6,â take it or leave it, he declared, then described the typical auction process with disdain. âFifty books. 10 bids. Five highest offers. Three best of offers. And a buyer.â What a waste of time.
âI donât go fishing, I go catching,â said the almost life-long Texan who sold all his property in San Antonio and is relocating to Europe. âI donât go to try to sell my business. I go to sell my business.â
For Bodenstedtâs longtime investment banker, selling 85 Taco Bell, 352 Pizza Hut and 318 Wendyâs restaurants in six months seemed a ânearly impossibleâ task, said Chris Kelleher of Auspex Capital. Not to mention 25 fee properties, the corporate office and the corporate aircraft for an aggregate price âwell in excess of $1 billion. It was the second largest QSR industry M&A transaction ever,â the nomination form said.
As a result of the acquisitions, Shoukat Dhanani and his newly formed company Ayvaz Pizza became the second-largest franchisee in the Pizza Hut system; heâs also a giant Popeyes and Burger King franchisee. Sentinel Capital Partners is the financial backer.
His brother Ali Dhanani, of HAZA Bells and HAZA Foods, bought all of Muyâs Taco Bells and about half of the 318 Wendyâs. He wanted to buy all the Wendyâs but corporate has an âunwritten his great leadership and trust, was essential to the success of the deals,â the nomination form said, but during an interview the conversation about meeting the deadline turned playful. âWere you cracking the whip?â I asked Bodenstedt. âTwo whips in each hand,â Bodenstedt joked. âSeveral of them. Several of them,â said Shriram Chokshi of Auspex Capital.
Bodenstedt praised the team at Auspex Capital. âI made a mistake early on,â buying a group of restaurants without the proper diligence, and he learne from that experience not to diagnose his own illness or prescribe his own meds. âI donât draw my own blood. Experts do what they do and thatâs what Auspex does for us,â he said. âDeals come up spontaneously, so you have to be able to respond spontaneously,â and the client and investment banker executed 84 total transactions, including about 40 restaurant acquisitions, over his career.
The turning point for Muy Cos. came in 2010/11, âwhen we rounded out our team,â with a chief legal officer, a chief information officer and other executives. Bodenstedt believes in giving equity to people far deeper in the ranks than just the top three or four officers. âOur CIO, CFO, chief people officer, directors of ops, second in commands, chief pilot. Seventeen people, and they all became millionaires at the end.â When other operators came calling with job offers, âour team had a higher net worth than the people trying to hire them,â he said.
Bodenstedt, age 55, is one of former President Trumpâs largest campaign contributors, giving more than $400,000 to his reelection campaign for 2020. He at first thought heâd sell his restaurants a few years from now. Why? âBecause this business has a certain pattern. People are  growth-mindedâ at first. âMany people become less risk-tolerant and stop growing and then the organization starts to lose value.â
Then when President Biden took officeâBodenstedt is not a fanâand Congress talked about raising capital gains taxes, he called the executive team together and presented the case for selling the business now. âMy recommendation was, if youâre ready to go, Iâm ready to go. Everybody raised their hand,â Bodenstedt said. âIâm proud that everyone made the decision together and we executed.â
Asked how it feels to exit his lifeâs work, he said, âI always approached the business as, we never really owned the business. We just borrowed it. I feel really good about our stewardship. Iâm not an entrepreneur. Iâm anti-entrepreneurial. Iâm lazy, if you would. I just put together the team,â he said.
Asked about the low point at his company, and he answers immediately. âFriday, March 13, 2020. The day America closed down,â he recalled. âMy Northeast restaurants were the canary in the coal mine.â On or about March 11, they had a call. âWe would draw down all of our lines of credit because when you need money you canât access  It was a really good decision. I was in contact with David Gibbs,â the CEO of Yum Brands, each of his brand presidents,  âthe governor of the state of Texas and the White House. By the morning of the 16th we put in a plan to conserve cash,â he said.
That day âhas been the worst day of business ever. I was concerned I would not have a business, out of my control.â At a Harvard Business School course, âI heard this: Companies never fail they just run out of money, and I thought that could happen to me.â
How does he feel after his mic drop? âI started at McDonaldâs at minimum wage,â at age 18, and now his restaurants sold for more than $1 billion. âItâs not the minimum wage business. Itâs the maximum opportunity business,â he said. âI certainly love what I did. Iâll miss the people I interacted with. Life goes on,â he said. As if on cue, up drives his former chief people officer in a brand new Porsche 911 Turbo.
So Muyâs newly minted millionaires arenât saving their money? âTheyâre doing all they can do to help with that inflation,â he said with a laugh, then added one last jab at President Biden. âLetâs go Brandon.â