The ever-mysterious holding company Biglari Holdings (BH) (BH.A) is at it again, adding to its already substantial exposure to the restaurant space. Biglair owns the Steak n Shake and Western Sizzlin' restaurant chains outright, but also has stakes in other publicly traded chains.
Biglari owns just over 9% of Cracker Barrel Old Country Store (CBRL) (valued at $188 million) and its history with that company is somewhat legendary. After running several failed proxy contests, Biglari finally got a seat on the Cracker Barrel board of directors last fall. Interestingly, two weeks ago, Cracker Barrel announced that CEO Sandy Cochran was stepping down. Biglari also has a 5.2% stake in Jack In The Box Inc. (JACK) (valued at $105 million).
Late last week, via a form 13G filing, Biglari's latest restaurant stake was revealed. That happens to be a 9.1% stake (valued at $35 million) in quick service El Pollo Loco Holdings (LOCO) . El Pollo Loco, formerly known as Chicken Acquisition Corp., had 490 restaurants as of its latest year-end (188 company-owned locations, 302 franchised) in California (389 locations), Nevada (31), Arizona (27), Utah (9), Louisiana (2) and Colorado (1).
El Pollo Loco is up around 5% year to date and currently trades at about 15x and 13x 2023 and 2024 consensus earnings estimates, respectively. First-quarter results, announced in May, exceeded consensus estimates on both the top and bottom lines (earnings per share of 14 cents vs. an 11-cent consensus). Also in May, the company signed three development agreements for Northern Colorado, New Mexico, and El Paso, Texas.
In early 2023, Trimaran Capital Partners, which first invested in LOCO in 2005 and took it public in 2014, began liquidating its stake in the company. In March, Dean Kehler, managing partner at Trimaran, resigned as a LOCO director.
As Trimaran steps away, Biglair steps in, and it will be interesting to see what the future will hold in the Biglari-El Pollo Loco relationship.
