Bob Evans Farms Inc. has been feeling the pressure from shareholders. So much so that it prompted the company to sell its restaurant chain to Golden Gate Capital. While it sold the restaurant portion of its business, Bob Evans says it will be focusing on its packaged foods.
Golden Gate Capital receives 523 dining chains for $565 million. Bob Evans restaurants have been struggling and this shows in the 1.8 percent decline in October.
Bob Evans packaged food business, known as BEF Foods, made a purchase of its own. BEF Foods obtained Pineland Farms Potato Company for around $115 million.
The CEO of Bob Evans, Saed Mohseni, remains in his position despite the restaurant chain being purchased by Golden Gate. BEF Foods presidents, Mike Townsley, however, will step up as CEO of Bob Evens Farms after the restaurants have been sold. Mohseni spoke of the deal in a statement saying, “This partnership will provide Bob Evans Restaurants with the resources, knowledge, and flexibility needed to drive our growth while remaining true to the values of our founder, Bob Evans.”
Recently, the company turned its focus on improving restaurant experience for its customers. This included a new menu change, which removed at least twenty items in an attempt to achieve easier navigation. On the upside, its efforts were not in vain. Bob Evens saw not only an increase in store sales but in customer satisfaction.
When it comes to restaurants, however, Golden Gate is no novice. The company has bought and sold many restaurants in the past. This includes its acquisition of Red Lobster for $2.1 billion. The deal with Bob Evans entitles that Golden Gate pays $565 million as well as take over working capital liabilities which range from $40 million to $50 million.
For the longest time, shareholders have been nudging Bob Evans to make a change. Their idea was a spin-off of BEF Foods, but the recent sale of the Bob Evans restaurants will likely appease them. Especially Sandell Asset Management which is one of Bob Evans largest shareholders.
According to Mohseni, “We believe this focus will result in higher returns for our shareholders and, as a more focused private business, Bob Evans Restaurants will be better able to deliver on its brand promise of providing quality food and hospitality to every guest, every meal.”