Diversified Restaurant Holdings, Inc. Completes Acquisition of Eighteen Buffalo Wild Wings Restaurants



Diversified Restaurant Holdings, Inc. Completes Acquisition of Eighteen Buffalo Wild Wings RestaurantsUpdates Fiscal Year 2015 Outlook to Reflect Accretive Acquisition

Diversified Restaurant Holdings, Inc. Completes Acquisition of Eighteen Buffalo Wild Wings RestaurantsDiversified Restaurant Holdings, Inc. (Nasdaq:BAGR), the creator, developer and operator of the unique, full-service, ultra-casual restaurant and bar Bagger Dave’s Burger Tavern and one of the largest franchisees for Buffalo Wild Wings, announced today that it has closed on its acquisition of eighteen Buffalo Wild Wings restaurants in the St. Louis area for $54 million. DRH now owns the entire St. Louis market for BWW. The Company also believes that there are additional opportunities to open new BWW stores in the St. Louis area over time.

As reported on June 29, 2015, the Company’s senior lender, Citizens Bank, led a bank syndicate which financed 100% of the transaction with a senior-secured debt facility and refinanced existing debt. The financing includes a $120 million Term Loan, an unfunded $30 million Development Line of Credit to support continued store growth and an unfunded $5 million Revolver to support working capital needs. The Term Loan is for a term of five years and payments principal are based upon a 12-year straight-line amortization. These terms have resulted in leverage and coverage ratios that are comfortably within DRH’s covenant limits.

Michael Ansley, President and CEO of DRH, commented, “We are pleased to have closed on this transaction of 18 highly-successful and very profitable BWW restaurants in the St. Louis area. As our updated annual guidance suggests, these restaurants are immediately accretive to earnings, and together with our existing portfolio and scheduled new restaurant openings, should enable us to generate between $19.5 million to $21.0 million in adjusted EBITDA this year. This represents a 29.1% to 39.1% increase compared to fiscal year 2014 adjusted EBITDA of $15.1 million. Our task at hand is now to leverage our ‘best practices’ expertise, G&A infrastructure and systems to drive higher unit volumes and stronger profitability at these acquired restaurants. We are highly confident in our executional abilities to achieve this objective, which should go a long way in enhancing shareholder value over time.”

Updated Fiscal Year 2015 Outlook

DRH has updated its previous outlook for fiscal year 2015 to reflect the closing of this transaction. The Company also reiterated that it is likely to be at the low-end of its previous range for capital expenditures.

  • Revenue of $168.0 million to $174.0 million (compared to $148.0 million to $153.0 million pre-acquisition).
  • Eight to nine new restaurant openings, consisting of five to six Bagger Dave’s and three Buffalo Wild Wings. Inclusive of this eighteen restaurant acquisition, DRH should end the year with between 93 and 94 restaurants, consisting of 30 to 31 Bagger Dave’s and 63 Buffalo Wild Wings.
  • Capital expenditures of $35.0 million to $40.0 million.
  • Adjusted EBITDA of $19.5 million to $21.0 million (compared to $16.0 million to $17.0 million pre-acquisition).
  • Restaurant-level EBITDA of $30.3 million to $33.3 million (compared to $26.0 million to $28.5 million pre-acquisition).

Diversified Restaurant Holdings, Inc. owns and operates Bagger Dave’s Burger Tavern, a full-service, family-friendly restaurant and full bar with a casual, comfortable atmosphere specializing in custom-built, proprietary, fresh prime rib recipe burgers, all-natural turkey burgers, hand-cut fries, locally crafted beers on draft, hand-dipped milk shakes, salads, black bean turkey chili, and much more.  There are currently 26 company-owned Bagger Dave’s restaurants in Michigan and Indiana.  For more information, visit www.baggerdaves.com.  The Company also operates 60 Buffalo Wild Wings Grill & Bar franchised restaurants in Indiana, Illinois, Michigan, Missouri and Florida.