Wendy's Sells Arby's to Private Equity Group

The marriage of square burgers and roast beef sandwiches is about to end.

Wendy's/Arby's Group said Monday that it will sell a majority stake in its struggling Arby's brand to a group led by Roark Capital Group, the Atlanta private equity firm. The move marks the end of a short-lived union between the two fast-food chains, and represents a role reversal. Arby's started as the suitor in the relationship, and ended up on the chopping block.

The announcement comes less than five months after Wendy's/Arby's Group, which is also based in Atlanta, said it was putting Arby's up for sale. Last month, CEO Roland Smith told analysts that he had seen "several quality bidders" for Arby's, and that they had all done "significant due diligence."

Roark will pay $130 million in cash for an 81.5 percent stake in Arby's, and will also assume $190 million worth of Arby's debt. Roark already owns Moe's Southwest Grill, Cinnabon, and other restaurants.

Wendy's/Arby's Group will keep an 18.5 percent stake in Arby's, and will change its name after the deal goes through. Spokesman Bob Bertini said the company is considering different options, and the new name will include the word "Wendy's."

Wendy's/Arby's Group values the minority stake it gets in Arby's at $30 million will also get a tax benefit worth $80 million, which Bertini described as an "offset to taxable income."

Wendy's/Arby's Group shares rose 31 cents, or 6.9 percent, to $4.83 in pre-market trading.

Wendy's and Arby's first came together when billionaire investor Nelson Peltz and his Triarc hedge fund, which already owned Arby's, agreed to scoop up Wendy's as well. Peltz remains involved as the company's chairman.

Wendy's/Arby's Group has struggled since its formation in late 2008, the depths of the recession, losing money for seven of its 10 quarters. CEO Smith has said that selling Arby's will allow the company to focus on Wendy's, which he hopes to expand by launching breakfast in more locations and by opening more restaurants overseas.

Wendy's has about twice as many restaurants - 6,500 to Arby's 3,600 - and represents about 70 percent of the company's revenue. However, in the first quarter, Arby's seemed like the stronger player by some measures. Its revenue rose by 5 percent, while Wendy's revenue fell less than 1 percent, though some of Arby's performance was likely due to sale prices.

The sale is expected to close in the third quarter, which starts in July. Roark managing partner Neal Aronson said in a statement that Roark looks forward to helping Arby's "great brand achieve its full potential."

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jharris549

I used to like Arby's but that cheese sauce is horrible. Also, our Arby's never has the specials they advertise.

June 13 2011 at 6:52 PM Report abuse rate up rate down Reply
john

I used to haul out of Columbus Ohio back in the late 60's, there used to be a rost beef stand on the northeast corner of W. Fifth Ave and Grandview. I wonder if thats the original Arby's?? Wendeys has taken a dump since Dave Thomas died and since Wendeys has bought out Hortons out of Canada

June 13 2011 at 5:51 PM Report abuse +1 rate up rate down Reply
Trent

I noticed ZOMBURGERS also......! its driving me crazy...

June 13 2011 at 3:59 PM Report abuse rate up rate down Reply
claymorh1

We have 2 Arby's nearby that I know of. One is very old, physically; the other is newer but the staff makes your visit seem like a bother -- or an intrusion on their time. I don't just go someplace for the food: If I can't like the people, the quality of the food doesn't matter. So--if there's a bad attitude from the Top, well...
Sounds a little like Wal*Mart....when Sam died, the skid started. And I miss Dave in the commercials, too. HE made Wendy's special.

June 13 2011 at 3:45 PM Report abuse +4 rate up rate down Reply
Chris Williams

Why does the Wendy's logo say "ZOMBURGERS" ? Zombie burgers? Huh?

June 13 2011 at 3:41 PM Report abuse rate up rate down Reply
1 reply to Chris Williams's comment
floridarocks2010

Q: Why does the Wendy's logo say "ZOMBURGERS" ? Zombie burgers? Huh?
A: The reason why, is to make the readers of the article chuckle a little bit.

June 13 2011 at 3:55 PM Report abuse rate up rate down Reply
ljconner

Wendy's is off our fast food list.....food is bland, never hot and tasteless......and too pricey for
the product received. Arby's is at least better on their roast beef sandwiches for a change.
McDonalds....you had better like ketchup.

June 13 2011 at 3:32 PM Report abuse +2 rate up rate down Reply
ilm9p

And the reason quality has gone down-hill is due to Nelson Peltz. That piece of human filth would sell his Mother for a profit, not only that he'd send her COD. But if you really want to pay top-dollar for a pile of garbage go to Five Guys.

June 13 2011 at 3:17 PM Report abuse +1 rate up rate down Reply
Frank

Wendy's in our area just raised the double stack 99 cent burger to $1.49....50%......I could understand rasing it to $1.09 or $1.19...but 50%...no thanks.

June 13 2011 at 3:13 PM Report abuse rate up rate down Reply
Pat

Dare we hope the food will return to pre-merger quality? Both chains have gone seriously downhill in recent years. Wendy's more than Arby's. I used to drive pretty far out of my way for Wendy's salads, but the new replacement ones just SUCK!

June 13 2011 at 2:47 PM Report abuse +4 rate up rate down Reply
tippy301

In Texas, most Wendy's are staffed by non-English speakers to whom HOT FOOD is a foreign concept. Arby's tend to be located near pet shop's & dog pounds. Send it back. Have it hot & don't ask about the "special sauce".

June 13 2011 at 2:43 PM Report abuse +3 rate up rate down Reply
1 reply to tippy301's comment
valgaavmiko

Thank you! They put a lady at the window that didn't speak English and it took 15 minutes to get a fork. She had to go get someone else. Seriously, if you hire immigrants (legal ones anyway) that don't have firm grasp on the dominant language in the area, put them in a non-customer service position until they learn! I'm from an immigrant family and they worked jobs where they didn't have to converse until they learned!

June 13 2011 at 3:41 PM Report abuse +2 rate up rate down Reply