TravelCenters of America LLC (NYSE: TA) has agreed to acquire Quaker Steak & Lube® casual dining restaurants and certain related assets, including existing restaurant operations, restaurant franchise program and bottled sauces for retail sale business, for $25 million.
Founded in 1974, Quaker Steak & Lube®, known for its “Best Wings USA”, iconic décor and original sauces, has over 50 locations, a majority of which are franchised, in 16 states, with a concentration in Pennsylvania and Ohio. TravelCenters intends to convert some of its existing full service restaurants to the Quaker Steak & Lube® brand while simultaneously expanding the franchise program and the number of stand alone company operated restaurants over time.
TravelCenters believes its expertise operating full service restaurants on a national scale which are consistently rated by customers as the #1 and #2 preferred truck stop restaurant brands provides TA with the ability to build Quaker Steak & Lube® into a nationally recognized brand and increase the profitability of its existing operations. The expected benefits from this transaction include:
Expanding TravelCenters’ customer base to include additional traffic from four wheel motorists and local markets;
Growing the profits at certain existing travel center restaurants; and
Expanding the Quaker Steak & Lube® restaurant business into new markets.
“Quaker Steak & Lube®’s unique brand and award winning menu is a great fit for TA’s primary customers – professional truck drivers and highway motorists,” said TA’s chief executive officer Tom O’Brien. “We are confident that our existing food services operations will provide TA the tools it needs to make Quaker Steak & Lube® a nationally recognized restaurant brand. By converting some of our existing full service restaurants to the Quaker Steak & Lube® brand we will enhance the variety of food and hospitality options that our travel centers already provide to professional drivers at the same time that we expand the public awareness of the Quaker Steak & Lube® brand. We also expect to expand the Quaker Steak & Lube®’ existing franchise program as well as its business of operating company owned restaurants separate from our travel centers.”
Earlier today Quaker Steak & Lube® began proceedings for reorganization under Chapter 11 of the U.S. Bankruptcy Code and simultaneously filed in court the asset purchase and $2 million debtor in possession financing agreements with TA. Pursuant to the purchase agreement, TA has made a deposit toward the purchase price and has agreed to offer employment following the purchase to substantially all of Quaker Steak & Lube®’s current employees. The agreements are subject to bankruptcy court approval processes, which are expected to be completed in early 2016, and other conditions including, but not limited to, an auction process supervised by the bankruptcy court. The auction process is expected to be subject to certain rules regarding topping bids including, but not limited to, TA’s right, if TA’s purchase is not approved, to receive a refund of its deposit, a topping fee, expense reimbursements and repayment of the debtor in possession financing plus interest, and TA’s rights to assume or reject company leases at certain Quaker Steak & Lube® locations.
