Yum Brands acquires fast-casual chain Habit Burger for a casual $375M
Snacks / Tuesday, January 07, 2020
More than late night drunchies... Yum! Brands announced Monday that it's buying California-based Habit Restaurants, causing the burger chain's shares to surge 33%. You know Yum as the owner of fast food go-tos KFC, Pizza Hut, and Taco Bell (AKA, Ken-taco-hut) — this is its 1st acquistion of a stand-alone fast-casual chain since going public in '97. We fried up the history:
- 1969: The Habit Burger Grill opens in Santa Barbara — the fancy burger chain boasts some healthy-ish options too (fried green beans FTW).
- 1977: PepsiCo starts a fast food division by acquiring Pizza Hut (then Taco Bell in '78, then KFC in '86).
- 1997: Pepsi decides its done with restaurants. So it wraps up the tacos, chicken, and pizza into a separate company, and sticks on the "Yum Brands" name (and separate YUM stock).
- 2020: Yum is now the world's largest restaurant company with 49K stores in 145 countries. Next, it's throwing Habit's 265 locations on the menu, planning to add over 2K more.
The burning question on everyone's lips... Why Burgers? Why Now? The answer: Because fast-food needs fast-casual. When you think fast-casual, you picture harvest grain bowls that you pay for at the counter (after loading up on free toppings). But burgers are part of the fast-growing segment too:
- Five Guys and Shake Shack are also fast-casual (more expensive and higher quality than Mickey D's, but still pretty accessible).
- From 2005 to 2017, the number of burger outlets quadrupled — Americans are willing to pay for more expensive premium burgers.
- Yum wants a piece of the growing fast-casual pie without straying too far outside its comfort zone. Burgers hit the spot.
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