It’s the biggest deal in company history.
For Mike Hamra, CEO of Springfield-based Hamra Enterprises, the purchase of 30 Wendy’s restaurants in the Boston area is a game changer that should result in a 30 percent increase in the company’s revenue next year.
The operator of franchise food stores amassed 26 stores between 1975 and the early 2000s.
“We did what it took 25 or 26 years to do in one acquisition,” said Hamra, whose father Sam founded the company when Mike was 7 years old.
Hamra Enterprises now owns 136 restaurants in six states through Panera Bread franchises in the Chicago and Boston areas, Noodles & Co. franchises operating in St. Louis, Columbia and New England, and Wendy’s stores in Missouri, Kansas and now on the East Coast. The 40-year-old company also owns SJH Hotels LLC, which runs a Holiday Inn Express Hotel & Suites in Lewisville, Texas.
The acquisition caps a period of aggressive growth. According to Springfield Business Journal archives, Hamra Enterprises operated 77 restaurants and hotels across four states that generated revenue of $160 million in 2012. Revenues, expected to land at around $250 million in 2015, were $33 million in 2005.
The move also takes Hamra Enterprises’ staff count past the milestone of 5,000 employees, Mike Hamra said, and it boosts the company’s footprint around Boston where managers were already in place. Hamra, who works out of Boston and Chicago, declined to disclose deal terms.
“We’ve been a Panera franchisee since the late ’90s, and we have 16, soon to be 17, Panera Bread locations there in Boston. I became a Noodles franchisee a few year back, and we have eight Noodles & Co. restaurants in Massachusetts and New Hampshire. So, we have 25 restaurants already in the Boston area,” he said. “This made a lot of sense to our group with regard to adding locations in a market where we already had a presence and a fairly large infrastructure.”
His out-of-store management team in the Boston area comprises five district managers and a market manager.
“They’re all staying. And we’ve got some great store-level general managers and assistant managers,” Hamra said, noting he’s met with some managers and administrators with over 20 years of experience with Wendy’s.
The acquired restaurants stretch from downtown Boston to Portsmouth, N.H.
The deal was on the table through Dublin, Ohio-based fast-food chain Wendy’s Co.’s (Nasdaq: WEN) efforts to sell over 1,000 stores to reduce its corporate holdings to roughly 5 percent of the 6,500-restaurant system. According to its most recent quarterly report, Wendy’s expected to unload about 225 restaurants this year and sell another 315 in 2016. The moves follow the sale of roughly 600 restaurants starting in 2013.
“Interest in the domestic restaurants that we intend to sell is high from existing and prospective franchisees, and we are confident that we will strengthen the Wendy’s brand as a result of these transactions by improving the efficiency and effectiveness of our total system,” Wendy’s Chief Financial Officer Todd Penegor said in a news release.
The chain, which operates in 29 countries and U.S. territories, expects pretax cash proceeds of $400 million-$475 million from the sales.
For Hamra Enterprises, a key objective is leveraging the strength of the staff and elevating the sales performance.
Hamra said the Boston-area stores parallel the company’s average for revenue. Wendy’s restaurants under Hamra Enterprises generate above average revenue, he said. According to Wendy’s annual report, company-owned stores in North America averaged $1.59 million in sales last year.
In the third quarter, Wendy’s same-store sales were up roughly 3 percent at both its North American corporate stores and franchise restaurants. Systemwide revenues were down in the quarter by 6.5 percent to $464.6 million, primarily because the company operated 153 fewer restaurants at the end of the quarter.
“The brand is very strong right now, generally speaking, in the U.S., and in that market, in particular, I think there is an opportunity to continue grow stores – one, maybe two a year over the next four years,” Hamra said.
In Springfield, one of the company’s next moves could be opening a couple of Noodles & Co. restaurants.
Hamra Enterprises bought the franchise rights to southwest Missouri in mid-2014, and Hamra said it likely would be another two or three years before they would arrive. He said the company wasn’t obligated to develop in Springfield with a given timeframe.
“There are good locations in Springfield right now. I think it’s a question of timing on our end. Are we ready to go into Springfield and have our existing team manage it? We don’t want to introduce a brand into the Springfield market unless we know we would be effective at operating it,” Hamra said.
“We just bought the St. Louis market last year. That would be the team that would oversee the group in Springfield, and we want them to have a little more time under their belt before we pursue new areas.”
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