A proposed $105 million sale that would transfer dozens of former Salad and Go drive-thru sites to Dutch Bros is drawing fire from rival coffee chain 7 Brew, which told a U.S. bankruptcy court it had put forward a higher-value bid that never reached an open auction.
The asset purchase agreement, dated Aug. 4 and filed in the U.S. Bankruptcy Court for the Southern District of Texas, would see Dutch Bros parent Boersma Bros. LLC acquire leases and operating assets tied to 65 shuttered Salad and Go locations across Arizona, Nevada, Texas and Oklahoma, according to an APA summary on Bondoro. The filing shows $105 million in cash earmarked for 51 Arizona and Nevada drive-thru leases, plus a token $50 total for 14 closed Texas and Oklahoma leases, backed by a $10 million escrow deposit and $95 million due at closing.
The transaction is structured as a private deal “not subject to higher and better offers,” and includes a fiduciary out with a $3.8 million termination fee, expense reimbursement and a $10 million minimum initial overbid, Bondoro’s summary states. In a separate court filing reported by Tucson.com, the debtors said Dutch Bros was chosen for “deal certainty, speed of closing, limited conditionality, and overall value to the estates.”
That process has become the focal point of a fight over who gets to control this rare cluster of ready-made drive-thru sites. At an Aug. 7 hearing, 7 Brew’s counsel, restructuring partner Ross Fiedler of Kirkland & Ellis, told the court his client submitted a letter of intent a week earlier and had “multiple bids that provided more dollar value and provided certainty of closing greater than that which was provided by the Dutch LOI,” according to Restaurant Dive.
Fiedler added that 7 Brew was willing to act as a stalking horse bidder and participate in a wider auction, arguing that “there have been burdens placed on this marketing process that are not really consistent with obtaining the highest and best price,” Restaurant Dive reported. The amount of 7 Brew’s offer was not disclosed in the reviewed coverage.
For Dutch Bros, the properties represent a sizable expansion opportunity rather than a brand acquisition. The deal includes leases, equipment, point-of-sale systems and other operating assets but explicitly excludes the Salad and Go name, recipes and other intellectual property, Real Estate Daily News reported. Dutch Bros plans to use the sites for its drive-thru coffee operations, according to USA Today.
On an Aug. 5 earnings call, Dutch Bros chief financial officer Joshua Guenser described the portfolio as “a great opportunity for us to get a hold of some fantastic real estate in markets where we see a lot of potential to continue growing,” in remarks reported by Tucson.com. Dutch Bros had 1,177 drive-thru-only shops across more than 25 U.S. states as of March 31, with average unit volumes above $2 million, and annual revenue exceeding $1 billion, according to the Bondoro summary of debtor filings.
In Tucson specifically, Dutch Bros currently runs 16 shops, and acquiring seven former Salad and Go leases there could lift its local footprint to as many as 23 locations if all are converted, an increase of nearly 44%, Real Estate Daily News reported. The same outlet noted that drive-thru development sites have become increasingly difficult to secure, a backdrop that helps explain why multiple beverage chains are contesting this portfolio in court rather than waiting for new builds.
Salad and Go, founded in Gilbert, Arizona, in 2013 as a health-focused drive-thru concept, expanded to 146 locations at its peak and held an estimated valuation of $1.1 billion in 2022, according to a Chapter 11 declaration from CFO Francis Gallagher cited by Daily Coffee News. But aggressive expansion, dead rent on closed Texas and Oklahoma sites and overhead left the business unsustainable, Restaurant Dive and Bondoro reported, prompting the Aug. 4 Chapter 11 filing and closure of remaining restaurants on Aug. 5.
While the Dutch Bros transaction heads toward a court approval decision, the rest of Salad and Go’s real estate remains in play. Omar Alaniz of Reed Smith, counsel to the debtor, told the court there were “many interested parties, some that want certain blocks, some that are one-off,” and said roughly 100 remaining leases would be marketed through a competitive process, according to Restaurant Dive.
The Dutch Bros sale itself had not closed and the proposed order approving it had not been signed by a judge as of Aug. 6, both Daily Coffee News and Real Estate Daily News reported, leaving 7 Brew’s objection and claims about a sidelined higher bid as live issues in the bankruptcy case.
