Bob Evans Farms, Inc. owns and operates full-service restaurants under the Bob Evans Restaurants brand name. Bob Evans Restaurants owned and operated 522 family restaurants in 18 states, mainly in the Midwest, mid-Atlantic and Southeast regions of the U.S. as of the end of the second fiscal quarter – October 28, 2016. On January 24, 2017, Bob Evans Farms, Inc. announced definitive agreements for the sale of Bob Evans Restaurants and the purchase of Pineland Farms Potato Company.
The Company is transforming its operations. Bob Evans Farms will now concentrate solely on realizing the full potential of its BEF Foods business. The Company’s BEF Foods is the national market share leader in refrigerated dinner side dishes. In addition, BEF Foods is the market share leader in sausage products in its main Midwest markets.
Bob Evans Farms, Inc. entered into a definitive agreement for the sale of Bob Evans Restaurants to an affiliate of Golden Gate Capital (a San Francisco, California-based private equity investment firm) for $565 million plus assumption of certain net working capital liabilities at the time of closing, estimated to be $40 to $50 million. Bob Evans Farms estimates that cash proceeds, net of taxes and transaction-related costs, will be $475 to $485 million.
The Company’s BEF Foods acquired Pineland Farms Potato Company for $115 million. Following the closing of the Bob Evans Restaurants transaction, Mr. Mike Townsley, President of BEF Foods, will assume the role of President and Chief Executive Officer (CEO) of Bob Evans Farms, Inc. Pineland Farms Potato Company’s main products include a broad assortment of cut and mashed potato products serving retail and foodservice customers.
By way of its BEF Foods division, Bob Evans Farms is also a foremost producer and distributor of refrigerated side dishes, pork sausage, and an array of refrigerated and frozen convenience food items. These are under the Bob Evans and Owens brand names. BEF Foods products are sold at more than 30,000 retail locations in 50 States as well as the District of Columbia.
BEF Foods’ sales mix shift is toward side-dish products of a higher margin. BEF’s normalized operating margin is in the approximately 15-18 percent range. The Company is undertaking plant efficiency initiatives regarding its BEF Foods division. It is also making ongoing brand investments as pertains to BEF Foods.
The business strategy going forward for BEF Foods is to grow Bob Evans from a strong regional food brand to a national food brand. The Company is working to take advantage of its market-leading refrigerated side-dish position. This is while protecting the number one breakfast sausage position in its main markets.
Bob Evans is the number 1 dinner side-dish brand. For the Company’s Q2 2017, it had a 49 percent share of the dinner sides category. Mashed potatoes are the number 1 dinner side and macaroni and cheese is the number 2 dinner side. The Company’s plan is to aggressively grow its refrigerated side dishes business.
Bob Evans Farms, Inc.’s present quarterly dividend rate is $0.34 per share or $1.36 annually.