As the U.S. restaurant industry continues to surge, FAT brands announced its $30 million acquisition of Smokey Bones Barbecue. The all-cash stock purchase will be funded by FAT’s existing securitization facilities.
“As we have spent the year focusing on digesting past acquisitions, we’ve also been amplifying the explosive growth in our polished dining vertical,” stated Andy Wiederhorn, FAT Brands Founder and Chairman, in the company’s press release. “Having a strong player in the barbecue space provides another arrow in our quiver for the polished dining segment and opens the door for additional growth strategies for our sister brands.”
Barbecue has its roots in the dawn of humanity. Homo erectus, which walked the earth even prior to homo sapiens, began cooking meat over fire 1.8 million years ago. Some of the earliest recipes barbecue recipes are associated with the ancient Egyptian and Sumerians, who smoked meats at high temperatures around 7000 BC with a rice bran oil rather than the animal fats used today.
According to the Smithsonian, the indigenous tribes living in the Caribbean in the late 15th century taught Christopher Columbus and the Spanish conquistadors their method of using green wood to cook meat slowly with a smoky smolder rather than direct flame. The Spanish called this “barbacoa,” likely derived from the Taino tribe’s term for the practice, and spread the practice north into what became the United States. The cuisine remains most popular in the south, even to this day.
Different regions developed various branches of the technique, with Southerners focusing on pork barbecue due to the ease of raising pigs in the region by letting them loose to feed in forests, while Texans had the land to raise cattle and developed beef-based barbecue, and Kentuckians preferred mutton. Each region’s barbecue further diverged along with the spices and tastes brought to the cuisine by their respective immigrant groups. Why barbecue began to be shortened by many to “BBQ” in the 1970s is unknown, but is likely due to advertisers seeking to save space in newspaper ads and roadside signs.
Smokey Bones Barbecue is a significant player in the space, but nevertheless dwarfed by Dickey’s Barbecue Pit, which dominates the category with over 550 barbecue restaurants. Like the broader restaurant industry, barbecue chains faced a disastrous 2020 as many restaurants were forced to shut during pandemic lockdowns.
Even as consumers returned to restaurants, the chains were forced to respond to pressures from multiple directions:
- Restaurants reacted to consumers’ increasing desire to eat at home by ramping up their delivery services
- Consumers’ shifting tastes toward healthier options led many eateries to revamp their menus or augment their traditional fare with new options
- Restaurants have responded to labor market shortages and increasing wage costs by automating processes, offering self-serve, and simplifying their menus to operate with fewer employees.
Despite these headwinds, the restaurant industry is projected to reach $898 billion in sales this year and add 400,000 jobs. FAT Brands seeks to capitalize on such growth.
According to Matterhorn’s comprehensive M&A database, which harnesses AI to track current and historical deals, FAT (Fresh. Authentic. Tasty.) Brands Inc. is represented by law firm Greenberg Traurig, LLP and Smokey Bones Bar & Fire Grill restaurant chain is advised by Kirkland & Ellis LLP.
