Arby's parent company is acquiring Sonic. Here's how the CEO says he picks which brands to buy.

Kate Taylor

Sep 25, 2018, 20:17 IST

Arby's parent company is acquiring Sonic. Here's how the CEO says he picks which brands to buy.

Inspire Brands CEO Paul Brown.

Arby's parent company, Inspire Brands, is acquiring Buffalo Wild Wings in a $2.3 billion deal.
Inspire Brands CEO Paul Brown told Business Insider in an interview earlier this year that the company was looking to acquire brands in need of "repositioning."
Brown also said that a major focus is adding "distinct" brands with the potential to grow.

Inspire Brands, parent company of Arby's and Buffalo Wild Wings, is acquiring Sonic for $2.3 billion including debt.

Inspire Brands announced the deal on Tuesday. However, Sonic fits many of the qualifications that Inspire Brands CEO Paul Brown told Business Insider he was looking for when considering acquisitions.

Brown, formerly the CEO of Arby's, was appointed head of Inspire Brands when the company was formed in February following the acquisition of Buffalo Wild Wings. At the time, Business Insider sat down with Brown and discussed his plans for the future, including what he was looking for as he expanded Inspire Brands' portfolio.

According to Brown, Inspire is targeting brands in need of "repositioning."

"We like brands that are great brands, that have gone through a period of great success, and may be in a temporary period with a little bit of a challenge, where there's an opportunity to come in and get it back on a path," Brown said in February. "I wouldn't call it fundamentally 'turning around.'"

While Sonic is an iconic brand, especially in Oklahoma, Texas, and parts of the Midwest and South, it has recently struggled to grow same-store sales. System same-stores sales have dropped at the chain every quarter for the last two years.

Brown also said that a major focus is adding "distinct" brands to the portfolio:

"There's no other brand like Arby's or Buffalo Wild Wings on an international scale. That obviously is the ideal scenario.

And also brands that are scaled, but also have growth opportunity in front of them. Buying really small brands and trying to really grow them is not part of the stated strategy. We like [Rusty] Taco, which came along with Buffalo Wild Wings, and that has some opportunity to do some fun and interesting things with it. We like to incubate a brand or two along the way, but that's not our stated strategy.

Up and down the spectrum, even in QSR, we would want the brands to be as complementary as possible. You don't want brands that are right on top of each other. It's harder from an internal standpoint. You want to keep lines between the brands. If they get too close together, it gets harder to manage."