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Cheesecake Factory acquires Fox Restaurant Concepts, North Italia remaining stake

Purchase reinforces the brands as an experiental business

The Cheesecake Factory agreed to the acquisition of Fox Restaurant Concepts and the purchase the remainder of North Italia that it does not already own. Upon closing, the transaction offers the sellers $308M before additional cash payments of $45 million made over the next four years. Fox Restaurant Concepts owns and operates 45 restaurants in seven states and Washington, D.C.

Today, North Italia operates 20 upscale, casual-dining restaurants in nine states, in addition to the District of Columbia. It received an investment from the Cheesecake Factory in 2016. At the time, The Cheesecake Factory also invested $44M in Flower Child. In the fast-casual restaurant segment, the restaurant chain operates a better-for you dining concept. Flower Child makes it easy for health-conscious consumers to follow regimented diets, including Paleo and Keto, while eating out.

“…we have decided to bring together North Italia and Fox Restaurant Concepts, including Flower Child, with The Cheesecake Factory to reinforce our leadership position in experiential dining,” said David Overton, The Cheesecake Factory chairman and chief executive. “With the power of The Cheesecake Factory brand, infrastructure and growth potential, complemented by an additional growth vehicle in the North Italia concept and an incubation engine to develop concepts of the future…offer growth opportunities for our respective teams”

As part of the transaction, Cheesecake Factory is purchasing the balance of North Italia for $130M in cash. And also, the Calabasas, Calif.-based casual-dining chain will grow the modern, Italian concept at an annual unit-rate growth of 20 percent. On average, restaurants have annual unit volumes of $7M per year.

Overton suggested the The Cheesecake Factory’s leadership position in experiential dining is reinforced through the acquisitions

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Fox Restaurant Concepts acquisition to provide legroom for growth

In addition, Fox Restaurant Concepts will benefit from the additional capital infusion and The Cheesecake Factory’s growth strategy. The Cheesecake Factory is paying $178M for Fox Restaurant Concepts, and an additional $45M over the next four years. “David Overton and I quickly realized the magic occurring between our organizations while we worked through North Italia’s integration,” said Sam Fox, founder and chief executive of Fox Restaurant Concepts.

Furthermore, North Italia’s support center will move to the headquarters of The Cheesecake Factory. An “integration plan” is underway for the transition. After the Fox Restaurant Concepts acquisition, it will continue to be operated out of Phoenix, Ariz. Additionally, Fox will remain the CEO of the company as it continues to operate as The Cheesecake Factory’s wholly-owned subsidiary.

Photo credit: North Italia

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