7 Brew pays $143M for 73 Salad and Go sites
Coffee chain 7 Brew will pay over $143 million for 73 closed Salad and Go locations in four states, outbidding rival Dutch Bros in a bankruptcy auction.
Drive-thru coffee chain 7 Brew will pay more than $143 million for 73 closed Salad and Go locations. The deal, detailed in court documents filed on Tuesday, covers sites in Arizona, Texas, Oklahoma, and Nevada. 7 Brew won the bidding for the large group of sites after rival Dutch Bros opted not to increase its previous, $105 million offer for the locations.
This acquisition follows a bidding contest. Dutch Bros had initially been declared the buyer of up to 65 locations, including 51 in Arizona and Nevada and up to 14 in Texas and Oklahoma. 7 Brew stepped in with a larger bid, forcing Salad and Go to declare an auction. In a Friday afternoon press release, Dutch Bros said it opted not to increase its offer, thereby avoiding a potential bidding war with 7 Brew that could have driven the price up further.
The $143 million breakdown
The purchase price, which must still be approved by the bankruptcy court, is broken into two groups of sites.
| Group | Number of Sites | Purchase Price | State Breakdown (Sites) |
|---|---|---|---|
| Group A | 49 | $124.8 million | Arizona (35), Texas (10), Nevada (3), Oklahoma (1) |
| Group B | 24 | $18.4 million | Arizona (7), Texas (9), Oklahoma (6), Nevada (2) |
The price is hefty, amounting to just under $2 million per location, on average, which is costly for a leased location that must still be remodeled to fit 7 Brew's image. Yet 7 Brew felt the price was worth it, not just to feed the brand's insatiable need for growth, but to keep those sites out of the hands of Dutch Bros.
A strategic move in a growth race
Both brands are in something of an arms race for superiority in the drive-thru beverage market. 7 Brew has been one of the fastest-growing restaurant chains in the U.S. in recent years. The brand had no locations in 2016 and is already the country's fourth-largest coffee brand. It had just 40 locations at the end of 2022. Today it has more than 800.
Dutch Bros has more than 1,200 and is pushing to more than double in size by 2029. The Salad and Go sites were considered key to that effort. In a statement, Dutch Bros CEO Christine Barone explained the decision not to raise their bid. "New shop growth is one of the most important drivers of our long-term strategy, and we remain highly confident in our path to 2,029 shops in 2029," Barone said. "We've always been disciplined in how we allocate capital."
The seller's collapse
The locations became available after Salad and Go filed for bankruptcy last month after a poor expansion into Texas drained cash and ultimately doomed the chain. The company quickly identified Dutch Bros and 7 Brew as potential buyers of its sites given the similarity of the concepts' location requirements.
With this purchase, the largely franchised 7 Brew chain secures the locations it really wanted. Dutch Bros will have to find new sites to fulfill its 2,029-shop goal.
