BBQ Holdings Inc., the parent company of the Famous Dave’s barbecue chain, is buying the Granite City Food and Brewery chain, which tumbled into bankruptcy recently after years of helping drive the craft-beer craze in Minnesota.
Terms weren’t disclosed, and the deal will require approval from the judge overseeing Granite City’s bankruptcy restructuring. A hearing is set for Feb. 21.
It’s the first major acquisition by Minnetonka-based BBQ Holdings since it formed a holding company structure last year after many years under the Famous Dave’s identity, focused on a single chain.
“We’ve been looking for a bolt-on acquisition for a long time, something that easily fits into our processes and our philosophy,” Jeff Crivello, chief executive of BBQ, said in an interview Thursday after the deal was announced.
The two chains’ operations are similar, he said, with both Granite City and Famous Dave’s cooking food from scratch when it is ordered. Granite City makes its own beer, with a range of types that start at a brewery in Iowa and are finished at microbreweries inside each of its 32 locations.
“They’re also in our backyard, which is very helpful. It’s very easy to fold their office into ours,” Crivello said. “We’re very excited for the opportunity to work together.”
The Granite City restaurants should contribute to BBQ Holdings’ profitability right away, Crivello said. Its restaurant offerings won’t immediately be affected by the ownership change. Crivello said pre-existing plans by Granite City’s executives and chefs to change its menu this year will proceed.
“They’ve done a lot of work on their menu. They have a lot of new items. They’re in a similar position that we’re in, analyzing what’s working and what’s not,” Crivello said. “We’ll let them continue with their 2020 plan and we’ll be there as a partner as needed.”
Granite City started in 1999 with a single location in St. Cloud and grew to operate two restaurant concepts, Granite City and Cadillac Ranch. Both provided a full range of classic American foods, from burgers to meatloaf and pastas, with Cadillac Ranch selling meals at a slightly higher price.
Granite City, which now has its main office in Bloomington, began experiencing trouble in late 2016 when it defaulted on a bank loan and shuttered some poorly performing locations. It continued missing loan payments during the next three years and filed for bankruptcy two months ago.
In its last financial report to shareholders, the company last summer said it lost about $4 million on $65 million in revenue during the first half of 2019. When it filed for the Chapter 11 bankruptcy restructuring, Granite City said it would halt financial disclosures and warned shareholders their shares might be canceled.
It then announced an auction to let other firms buy its assets free of its liabilities. Landry’s, the Houston-based holding company with more than 50 restaurant concepts including one called Cadillac Bar, then stepped forward to bid on its four-location Cadillac Ranch business.
In addition to the 126 Famous Dave’s locations, BBQ Holdings also owns two other concepts, Clark Crew BBQ in Oklahoma City and Real Famous BBQ in Utah, both of which are single-location restaurants.