More than a decade ago, Perkins bought Marie Callender’s in a combination of two family-dining chains.
After 13 years, a massive recession and two bankruptcy filings, that combination is beingbroken apart. This time, Perkins will be part of Huddle House, which won an auction to buy the chain for $51.5 million.
The bakery that supplies the brands with pies and muffins and other items is being sold to Fairfield Gourmet Food Corp.,a New Jersey bakery company, for $18.7 million.
Marie Callender’s, however, is being sold for just $1.75 million to a company known simply as Marie Callender’s Inc. Details on the identity of the buyer were unavailable as of Friday.
Perkins and Marie Callender’smerged in 2006. The two brands boasted long histories. Perkins, with close to 500 locations, had been around since 1958. Marie Callender’s, which had 138 company and franchised units, was among the oldest full-service dining chains in the U.S., having opened in 1948.
Both brands had enjoyed same-store sales growth in the years leading up to the merger. But the company also had a lot of debt, and the bottom fell out of the economy just 18 months later.Sales plunged, and by 2011 the company had filed for bankruptcy, closing numerous locations in both brands.
As is frequently the case in many bankruptcy cases, Perkins & Marie Callender’s made some compromises. And in 2011 it made a big one: It sold the Marie Callender’s trademark to Conagra Foods for $57.5 million.
Conagra had been selling Marie Callender’s branded products in grocery stores and other retail outlets for more than a decade at the time. The decision to sell Conagra the full trademark diminished Marie Callender’s value.
In the years since, Marie Callender’s has steadily shrunk in size, and the latest bankruptcy filing only shrunk it further: The chain is down to 28 locations, half the size it was in 2017, based on data from Restaurant Business sister company Technomic.
A shrinking restaurant chain that doesn’t own its own trademark is not exactly a hot commodity. And California-based legacy family-dining chains haven’t exactly found a flourishing market of late, as illustratedby last year’s extremely quiet sale of Coco’s and Carrows to Shari’s Pies.
California’s operating environment certainly isn’t much help. Nor is growing competition from chains such asBlack Bear Diner.While the bakery and Perkins both had interest from multiple potential buyers, Marie Callender's did not, according to bankruptcy court documents.
By comparison, Memphis-based Perkins is in far better shape, though it is about 50 locations smaller than it was five years ago and 150 locations smaller than it was back in 2006. Its same-store sales, like Marie Callender’s, havestabilized this year.
And the chain will now be part of Huddle House, which appears to be turning up the heat on its own business. The company last year was sold to Elysium Management, a family office investment firm. Huddle House, which operates 351 locations, generated 2.9% U.S. system sales growth last year, according to Technomic data, while unit volumes rose 4.9%.
Huddle House will be able to take on Perkins without the burden of the smaller and weaker Marie Callender’s.
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Restaurant Business Editor-in-Chief Jonathan Maze is a longtime industry journalist who writes about restaurant finance, mergers and acquisitions and the economy, with a particular focus on quick-service restaurants.
