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Restaurant deal activity begins to sizzle

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Illustration: Tiffany Herring/Axios

Restaurant deal activity is slowly heating up as deal announcements roll in and auctions launch.

Why it matters: After two frosty years the sector is due for a rebound.

Zoom in: Bob Evans Restaurants has retained investment bank Kroll, while Tropical Smoothie Cafe is working with investment bank Robert W. Baird & Co. — both for sale processes.

Thai Union Group is attempting to sell its stake in Red Lobster, though the retailer is distressed and could end up restructuring either in or out of court.

Driving the news: Several PE firms have holdings they have held off on bringing to market, but are now under pressure to sell, a source says.

  • Conditions aren't perfect, but they're good enough to transact in if necessary, a second source says.

Catch up quick: Several deals have either been announced, have closed, or are expected to close including Pinstripes, which went public via a SPAC merger, and The One Group's acquisition of Benihana's parent company Safflower Holdings Corp.

  • Burger King parent Restuarant Brands International said in January it would acquire Carrols Restaurant Group for about $1 billion.
  • Roark Capital's $9.6 billion purchase of sandwich chain Subway is also expected to close this year, though is under review by the FTC.

Caveat: As in other sectors, valuation expectations are preventing deals from getting done.

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