In New York last summer, James Bodenstedt presented a single sheet of paper with four columns of characters to two hand-picked potential buyers. “One column for each of the brands, then a total,” recalled the founder of Muy Cos., which sold its 755 Taco Bell, Pizza Hut and Wendy’s restaurants in a big exit of more than a billion dollars in last October.
Bodenstedt kept it simple. “What’s the price? How did I get there? How much net worth do I need to invest? Will I make money and how? His goal was to present a deal he knew could be done in six months, before Congress changed the rate of appreciation (as people feared but never happened) and employees worried too much about their future.
Cash multiples were also non-negotiable: “Taco Bell, 9. Wendy’s, 7. Pizza Hut, 6,” take it or leave it, he said, then described the typical auction process with disdain. “Fifty pounds. 10 offers. Five highest bids. Three best offers. And a buyer. What a waste of time.
“I’m not going to fish, I’m going to catch,” said the nearly lifelong Texan who has sold all of his San Antonio properties and moved to Europe. “I’m not going to try to sell my business. I am going to sell my business.
For the longtime Bodenstedt investment banker, selling 85 Taco Bell restaurants, 352 Pizza Huts and 318 Wendy’s restaurants in six months seemed like an “almost impossible” task, said Chris Kelleher of Auspex Capital. Not to mention the 25 paying properties, the headquarters and the business jet for an overall price “well over $1 billion. This was the second largest M&A transaction ever in the QSR industry,” the nomination form reads.
Following the acquisitions, Shoukat Dhanani and his new company Ayvaz Pizza became the second franchisee of the Pizza Hut system; he is also a giant franchisee of Popeyes and Burger King. Sentinel Capital Partners is the backer.
His brother Ali Dhanani of HAZA Bells and HAZA Foods bought all of Muy’s Taco Bells and about half of 318 Wendy’s. He wanted to buy all of Wendy’s, but the company has an “unwritten rule” that prohibits any franchisee from having more than 400 locations, Kelleher said. Four other franchisees purchased the remaining Wendy’s.
Kelleher said Auspex’s “substantial relationships” with decision makers at Taco Bell, Pizza Hut and Wendy’s helped close the 17 separate deals before Bodenstedt’s October 2021 deadline.
“Finally, James’ extensive experience as a negotiator, as well as his leadership and confidence, have been essential to the success of the agreements,” said the nomination form, but during an interview, the conversation about respecting the delay has become playful. “You were cracking the whip?” I asked Bodenstedt. “Two whips in each hand,” joked Bodenstedt. ” Many of them. Several of them,” said Shriram Chokshi of Auspex Capital.
Bodenstedt congratulated the Auspex Capital team. “I made a mistake early on,” buying a group of restaurants without proper diligence, and he learned from that experience not to diagnose his own disease or prescribe his own medication. “I don’t draw my own blood. The experts do what they do and that’s what Auspex does for us,” he said. “Deals happen spontaneously, so you need to be able to respond spontaneously,” and the client and investment banker has executed 84 total deals, including about 40 restaurant acquisitions, over his career.
The turning point for Muy Cos. came in 2010/11, “when we completed our team”, with a legal director, a chief information officer and other executives. Bodenstedt believes in giving fairness to people far deeper in the ranks than just the top three or four officers. “Our CIO, CFO, director of human resources, directors of operations, second in command, chief pilot. Seventeen people, and they all became millionaires in the end. When other operators came calling with job offers, “our team had a higher net worth than the people trying to hire them,” he said.
Bodenstedt, 55, is one of former President Trump’s biggest campaign contributors, donating more than $400,000 to his 2020 re-election campaign. He initially thought he would sell his restaurants in a few years. Why? “Because this company has a certain pattern. People are “growth oriented” at first. “A lot of people become less risk tolerant and stop growing, and then the organization starts losing value.”
Then when President Biden took office – Bodenstedt is no fan – and Congress talked about raising capital gains taxes, he called the leadership team together and made the case in favor of selling the business now. “My recommendation was, if you’re ready to go, I’m ready to go. Everyone raised their hands,” Bodenstedt said. “I’m proud that everyone made the decision together and we executed.”
When asked what it was like to leave his life’s work, he said: “I always approached the company because we never really owned the company. We just borrowed it. I feel really good about our stewardship. I am not an entrepreneur. I am anti-entrepreneur. I’m lazy, if you will. I just put the team together,” he said.
Asked about the low point of his business, he responds immediately. “Friday, March 13, 2020. The day America shut down,” he recalled. “My Northeast restaurants were the canary in the coal mine.” On or about March 11, they received a call. “We would use all of our lines of credit because when you need money, you can’t access it. It was a very good decision. I was in contact with David Gibbs,” the CEO of Yum Brands, each of its brand presidents, “the Governor of the State of Texas and the White House. On the morning of the 16th, we put a plan in place to save money,” he said.
That day “was the worst day at work ever. I feared that I had no business, out of my control. In a Harvard Business School class, “I heard this: Businesses never fail, they just run out of money, and I thought this might happen to me.”
How does he feel after his microphone drops? “I started at McDonald’s on minimum wage” at 18, and now its restaurants have sold for over $1 billion. “It’s not about the minimum wage. It is the company that offers the maximum opportunity,” he said.
“I certainly love what I have done. I will miss the people I have interacted with. Life goes on, ”he said. As at the right time, mounts his former personnel director in a whole new Porsche 911 Turbo.
So Muy’s new millionaires aren’t saving their money? “They’re doing everything they can to fight this inflation,” he said with a laugh, then added a final jab at President Biden. “Let’s go Brandon.”