TORONTO — Cara Operations Ltd. is growing its restaurant empire yet again with a $200-million deal to buy Keg Restaurants Ltd., which operates a chain of 160 steakhouses.
Cara and its franchisees already operate 1,259 restaurants under brands that include Swiss Chalet and St-Hubert chicken restaurants, the Harvey’s, Burger’s Priest and New York Fries quick service chains, Milestones, Montana’s, Kelsey’s, and East Side Mario’s casual dining restaurants, as well as Prime Pubs, Elephant & Castle and Bier Markt.
The Vaughan, Ont.-based restaurant company’s deal with Keg Restaurants Ltd. will see Cara nab about 160 Keg locations across Canada and the U.S., further consolidating Canada’s restaurant industry.
In exchange for KRL, Cara has agreed to pay KRL’s shareholders — Fairfax Financial Holdings Ltd. and Keg chief executive David Aisenstat — $105 million in cash and 3.8 million Cara subordinate voting shares.
In addition, Cara may have to fork over another $30 million in cash if certain financial milestones are attained within the first three fiscal years after the deal closes.
Cara says it intends to change its corporate name “to reflect the new business composition” once the deal closes.
The companies say the acquisition is not expected to change the Keg’s relationship with the Keg Royalties Income Fund, a publicly traded entity that receives royalties from Keg restaurants operated by KRL.
Under the deal, Aisenstat will assume oversight of Cara’s higher-end casual brands, including the Bier Markt, the Landing Group and Milestones restaurants. He will also join the Cara board as vice-chairman.
Aisenstat previously worked for Nabisco Brands, before turning to his father’s company Hy’s Steakhouse chain in Toronto, where he rose through the ranks to become president.
He was involved in the sale of KRL in 1987 to Whitbread PLC, a British brewing and hospitality company, before buying KRL back from Whitbread 10 years later.
KRL was founded as the Keg and Cleaver in 1971 by British Columbian entrepreneur George Tidball, who was also involved with the Spaghetti Factory, A&W, and Apex ski resort.
Meanwhile, Cara was founded in 1883 as the Canada Railway News Company, specializing in the sale of newspapers, magazines and sweet treats at rail hubs. It later transitioned towards catering and eventually, turned its attention to restaurants.