Two Dynamo Operators Win First Duo Deal of the Year

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. “One column for each of the brands, and then a total,” recalled the founder of Muy Cos., who sold all 755 of his Taco Bell, Pizza Hut and Wendy’s restaurants in a $1 billion-plus grand exit last October.

Bodenstedt kept it simple. “What 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?” 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: “Taco Bell, 9. Wendy’s, 7. Pizza Hut, 6,” take it or leave it, he declared, then described the typical auction process with disdain. “Fifty books. 10 bids. Five highest offers. Three best of offers. And a buyer.” What a waste of time.

“I don’t go fishing, I go catching,” said the almost life-long Texan who sold all his property in San Antonio and is relocating to Europe. “I don’t go to try to sell my business. I go to sell my business.”

For Bodenstedt’s longtime investment banker, selling 85 Taco Bell, 352 Pizza Hut and 318 Wendy’s restaurants in six months seemed a “nearly impossible” task, said Chris Kelleher of Auspex  Capital. Not to mention 25 fee properties, the corporate office and the corporate  aircraft for an aggregate price “well in  excess of $1 billion. It was the second  largest QSR industry M&A transaction  ever,” 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; he’s  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  Muy’s Taco Bells and about half of the  318 Wendy’s. He wanted to buy all the  Wendy’s but corporate has an “unwritten  his great leadership  and trust, was essential to the success  of the deals,” the nomination form said,  but during an interview the conversation  about meeting the deadline turned  playful. “Were you cracking the whip?”  I asked Bodenstedt. “Two whips in each  hand,” Bodenstedt joked. “Several of  them. Several of them,” said Shriram  Chokshi of Auspex Capital.

Bodenstedt praised the team at Auspex  Capital. “I made a mistake early on,”  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. “I  don’t draw my own blood. Experts do  what they do and that’s what Auspex  does for us,” he said. “Deals come up  spontaneously, so you have to be able to  respond spontaneously,” 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, “when we rounded out our  team,” 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. “Our CIO,  CFO, chief people officer, directors of  ops, second in commands, chief pilot.  Seventeen people, and they all became  millionaires at the end.” When other  operators came calling with job offers,  “our team had a higher net worth than  the people trying to hire them,” he said.

Bodenstedt, age 55, is one of former  President Trump’s largest campaign  contributors, giving more than $400,000  to his reelection campaign for 2020. He  at first thought he’d sell his restaurants a  few years from now. Why? “Because this  business has a certain pattern. People are  growth-minded” at first. “Many people  become less risk-tolerant and stop  growing and then the organization starts  to lose value.”

Then when President Biden took  office—Bodenstedt is not a fan—and  Congress talked about raising capital  gains taxes, he called the executive team  together and presented the case for selling  the business now. “My recommendation  was, if you’re ready to go, I’m ready to go.  Everybody raised their hand,” Bodenstedt  said. “I’m proud that everyone made the  decision together and we executed.”

Asked how it feels to exit his life’s  work, he said, “I always approached the  business as, we never really owned the  business. We just borrowed it. I feel really  good about our stewardship. I’m not an  entrepreneur. I’m anti-entrepreneurial.  I’m lazy, if you would. I just put together  the team,” he said.

Asked about the low point at his  company, and he answers immediately.  “Friday, March 13, 2020. The day  America closed down,” he recalled. “My  Northeast restaurants were the canary  in the coal mine.” On or about March  11, they had a call. “We would draw  down all of our lines of credit because  when you need money you can’t access  It was a really good decision. I was in  contact with David Gibbs,” the CEO of  Yum Brands, each of his brand presidents,  “the governor of the state of Texas and  the White House. By the morning of the  16th we put in a plan to conserve cash,”  he said.

That day “has been the worst day of  business ever. I was concerned I would  not have a business, out of my control.”  At a Harvard Business School course, “I  heard this: Companies never fail they  just run out of money, and I thought that  could happen to me.”

How does he feel after his mic drop?  “I started at McDonald’s at minimum  wage,” at age 18, and now his restaurants  sold for more than $1 billion. “It’s not  the minimum wage business. It’s the  maximum opportunity business,” he said.  “I certainly love what I did. I’ll miss  the people I interacted with. Life goes  on,” he said. As if on cue, up drives his  former chief people officer in a brand  new Porsche 911 Turbo.

So Muy’s newly minted millionaires  aren’t saving their money? “They’re  doing all they can do to help with that  inflation,” he said with a laugh, then  added one last jab at President Biden.  “Let’s go Brandon.”