Taco Bell Parent Yum Brands To Acquire Habit Restaurants

Yum Brands, the parent company of fast-food chains Taco Bell and Kentucky Fried Chicken, plans to purchase fast-casual chain Habit Restaurants, which is the parent company of Habit Burger Grill, according to a report by The Wall Street Journal.

The deal is reportedly for Yum Brands to buy Habit for $14 a share, which comes out to about $375 million. Shares in Habit closed at $10.51 on Friday (Jan. 3), which puts it at a valuation of around $275 million. The deal should be completed by early summer of this year.

Habit’s shares moved positively on Monday (Jan. 6) to $14, which is a 33 percent increase. Yum’s shares stayed about even, at $102 a share.

Yum Brands, which is also the parent company of Pizza Hut, is eyeing Habit’s fast-casual model as one that will be poised to expand internationally.

There are currently about 280 Habit Burger restaurants throughout China and the U.S.; the chain first opened in 1969.

This is Yum Brands’ first acquisition since the company went public in the late 90s. The company was formed as a spinoff of PepsiCo, and has upwards of 49,000 restaurants in 145 countries.

Fast-casual burger chains have become increasingly popular, as more and more restaurant brands aim to expand in that direction.

The private-equity company Inspire Brands purchased sandwich eatery Jimmy John’s last year, adding to its already healthy portfolio that includes Sonic, Arby’s and Buffalo Wild Wings.

“We thought it was a sweet spot within fast-casual,” said Yum Chief Executive David Gibbs. Gibbs took over the Louisville, Kentucky company this month from former CEO Greg Creed.

Habit aims to expand to upwards of 2,000 locations with the Yum partnership. “There is plenty of runway left,” said Habit CEO Russell Bendel.

Yum said it expects to see profits from the deal starting in 2021.