OAK BROOK, Ill. -- McDonald's Corp. here said last week it will buy most of the assets of Boston Market, a subsidiary of Boston Chicken, Golden, Colo.
Boston Market restaurants, which currently operate in 33 states, are widely credited with inspiring supermarkets to launch home-replacement programs.
McDonald's said its subsidiary, Golden Restaurant Operations, has signed a definite purchase agreement with Boston Chicken to purchase assets including 751 restaurants, franchise rights for an additional 108 restaurants, rights to the Boston Market brand name and to take over certain liabilities.
Because Boston Chicken filed for Chapter 11 protection from the U.S. Bankruptcy Court in the district of Arizona last year, the deal is subject to the approval of Boston Chicken's senior secured creditors and the Bankruptcy Court. McDonald's said the senior secured creditors, subject to government and bankruptcy court approval, have accepted its offer of $173.5 million in cash and the assumption of certain liabilities.
Boston Chicken's ownership interest in Einstein/Noah Bagel Corp. is not affected by the McDonald's purchase.
Boston Chicken said it expects to file its plan of reorganization later this month. Both companies said they expect McDonald's acquisition of Boston Market to be completed in mid-2000.
"The [Boston Market] brand is well-established, with excellent employees, quality products, loyal customers and future growth potential," said Jack M. Greenberg, McDonald's chairman and chief executive officer.
Industry observers gave SN widely divergent interpretations as to why America's largest fast-food company would want to take over the concept of a restaurant company that is $900 million in debt.
Some believe McDonald's was more interested in Boston Market's real estate than its menu.
Neil Stern, partner at McMillan/Doolittle, Chicago, told SN, "Buying these units gives them the ability to expand their Chipolte Mexican Grill and Donatos Pizza concepts. This was very opportunistic for them. They were able to buy a lot of real estate at a little price."
McDonald's may continue to operate some Boston Market concept restaurants, Stern added, but he does not think the company is into meal solutions for the long haul. "I don't picture Boston Market as a robust growth area for McDonald's," he said.
Other observers, however, said they believe McDonald's does want to build the brand. "The grocer had better beware, because now you have the most successful, efficient and powerful food marketing machine in the world embracing meal solutions," Ira Blumenthal, president, Co-Opportunities, an Atlanta consulting and marketing firm, told SN.
"I've been saying all year that this thing called home meal replacement or meal solutions is not dead," he added. "I also said quite clearly, 'Don't count Boston Market out. They'll be back, bigger and better than ever."'