Sydran Announces Deal in Excess of $35 Million to Acquire Chili's Properties in Nine States; Sydran Continues Fast-Track Expansion with Strategic Move into Casual Dining Segment; Becomes a Major Chili's Franchisee

Business Wire, Dec 26, 1996

SAN RAMON, Calif.--(BUSINESS WIRE)--Dec. 26, 1996--In a key strategic business diversification move that also keeps The Sydran Group on track as one of the restaurant industry's fastest growing companies, the Northern California-based company has signed an agreement to acquire a nine-state block of 17 Chili's restaurant franchises and some related real estate from a Dallas-based restaurant franchise company, Sydran owner and chief executive officer Matthew Schoenberg announced today.

Total purchase price is in excess of $35 million.

Schoenberg also announced that Sydran has negotiated a separate development deal with Chili's franchisor, Brinker International Inc., that gives it the right to develop more than 30 additional franchises in a 14-state area over the next seven years.

Sydran now owns and operates more than 160 restaurant properties, including more than 140 Burger King restaurants, which makes The Sydran Group one of the three largest Burger King franchisees. With this acquisition, Sydran is also one of the largest Chili's franchisees.

"This is a major step for Sydran because it means diversification both into a new dining concept and into new geographic areas," said Schoenberg. "We have long thought Chili's to be the leading casual dining chain, and its franchisor, Brinker International, is recognized as a leader in casual theme dining concepts. We see great growth potential for Chili's and we look forward to having a great relationship with Brinker just as we have with Burger King."

According to the terms of the acquisitions agreement, Sydran is acquiring from Dallas-based Snowstate Restaurant Corp. 17 existing Chili's restaurants, along with seven pieces of related real estate, located in a nine-state area. The agreement with Brinker International gives Sydran development rights in another five states as well. The franchise territory comprises the states of Idaho, Iowa, Nebraska, Montana, North Dakota, South Dakota, Utah and Wyoming, along with parts of Arkansas, Colorado, New Mexico and Texas.

This acquisition continues the rapid expansion that Sydran began in 1994, which has made it one of the nation's fastest growing restaurant companies. According to the 1995 Technomic Top 100 report, produced by Technomic Inc., a foodservice market research firm that annually ranks restaurant companies, Sydran topped the list of fastest growing restaurant companies in the nation both in terms of percentage increase in sales and in number of units. The fast growth was due to the company's two late-1994 acquisitions of 99 Burger Kings in Louisiana plus continued development of new Burger King properties in Northern California.

According to Schoenberg, "We've been searching for the right move into casual dining, and Chili's is the ideal opportunity for Sydran. Our goal is to own and operate a diversified portfolio of restaurant franchise operations. We will continue to aggressively seek out other acquisitions across the United States."

Sydran projects 1996 revenues of $166.7 million and 1997 revenues of approximately $228 million. The Sydran Group expects to reach $500 million in sales by 1999 through diversified holdings.

With this acquisition, Sydran ranks squarely among the top 10 restaurant franchisee companies in the U.S. In 1995 Sydran reached tenth place, with $150 million in sales, in its first year on Restaurant Finance Monitor's list of the top 100 franchisees.

Schoenberg has an agreement with the Burger King Corp. to develop 50 restaurants in the San Francisco Bay Area and another 50 in the New Orleans area over the next 10 years.

Chili's, which offers Southwestern Grill cuisine, had 497 restaurants in 44 states and eight countries internationally as of its June 1996 fiscal year-end. In addition to Chili's, Brinker International owns and operates a portfolio of restaurant concepts including On The Border, Spageddies Italian Kitchen, Grady's American Grill, Romano's Macaroni Grill, Cozymel's, and Maggiano's Little Italy.

The Sydran Group, which is comprised of an affiliated group of restaurant operations and real estate holding companies, will employ approximately 7,000 people following the acquisition.

CONTACT: Torme & Kenney

Steven Freemire/Bob Kenney, 415/956-1791