" Chris and the METIS team did an awesome job selling my restaurants. These guys know the hospitality business inside and out. I met with them a full year in advance, and they outlined the process, provided what turned out to be accurate valuation guidance, and helped me get everything in order before we even went to market. There were a lot of moving parts in selling three restaurants with three concepts, two buildings, and a lease – they had a solution for the many issues that camp up. They were excellent negotiators to get a great deal done for all parties involved. I totally recommend METIS to any restaurant owner thinking about selling.”   

 

-Juston Watson, Owner Kegs and Grub Hospitality

CLIENT

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Kegs and Grub, LLC is a collection of three highly profitable and unique restaurants located in the heart of one of America’s fastest growing and most beloved wine destinations, Walla Walla, Washington. Often described as the place where wine country unwinds, Kegs and Grub Hospitality features three distinct brands and concepts: Stone Hut Bar and Grill, Red Monkey Downtown, and Hop Thief Taphouse and Kitchen. In 2001, Juston Watson acquired the Stone Hut Bar and Grill, a staple in the Walla Walla community since the 1940s and set to reimagine the bar and bring his “favorite neighborhood bar” concept to life. Originally from Montana, Juston was enthusiastic about Walla Walla’s burgeoning wine community and saw the need to create a bar that met the needs of both locals and tourists through upscaled casual food, cocktails, a wide selection of craft beers in a relaxed, friendly setting. In 2009, Juston opened Red Monkey Downtown, a family centric bar and grill experience, where parents enjoy hand crafted cocktails and kids enjoy custom made milkshakes, while catching their favorite sports team on the variety of big screen TVs. Hop Thief Taphouse and Kitchen introduced the concept of self-serve taps to Eastern Washington as only the second self-serve tap concept in Washington state when it opened in 2019. Guests “choose their own adventure” and grab a frosted glass of their choice out of a refrigerated cabinet and self-pour beer, wine, specialty cold-brew coffees, hard cider, kombucha, and root beers which are priced by the ounce.  Hop thief also offers craft cocktails and a generously portioned menu of upscale, creative comfort food.

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CHALLENGE

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Juston Watson and his wife Lori had grown their hospitality company from a single outlet to three thriving establishments and were ready to explore a sale to pursue new professional endeavors. The company now encompassed a solid corporate team including an executive chef, an operations manager, and a human resources manager, all of whom provide oversight and support for the three restaurants, including the coordination of staffing for both front of house and back of house operations. Juston’s intention was to find a new owner that could steward these thriving restaurants and support the incredible staff Juston had worked hard to hire and train.

 

The acquisition was also unique for a hospitality company, as it included the opportunity to acquire the land and buildings at both Hop Thief and Stone Hut, while Red Monkey was on a long-term lease. A new owner needed to have both the capital to acquire such assets, but also the operational know-how of running a multi-million-dollar, multi-outlet hospitality company.

 

Perhaps most important though was the need to run a process in the most discrete manner possible to preserve the economic health of these businesses, each with strong followings of “regulars”. As some of the most popular food and drink establishments in SE Washington, complete confidentiality was imperative to retain management, staffing, and customer loyalty.

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PROCESS

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The METIS team began meeting with Juston Watson a year in advance of the sale. METIS relied on its experience running and advising hospitality businesses to provide new performance benchmarking, KPI tracking, and financial modeling that helped illuminate the restaurants’ strong performance and helped Juston identify ways to maximize exit value. METIS’ financial modeling forecasted future options and profitability for the company under various operational structures. Once Juston was ready to explore a sale, these models helped buyers understand how operational adjustments could unlock even greater financials returns.

 

METIS knew the buyer would likely come from one of two sets of buyer pools: a real estate investor with an established hospitality company as a partner/contractor or an established owner/operator looking to grow businesses where they can own the real estate. METIS created separate bespoke marketing materials for these buyer types. The first set of materials forecasted the financial performance of the company for an owner/operator, and how maintaining a separate, but related land company that leases the restaurants to an operating company presents an efficient operating model for a new owner. The second set of marketing materials cast the financials with a third-party management company operating the business for a capital partner that would own the assets and improvements. METIS’ marketing materials also included in-depth analysis on the SE Washington and Walla Walla markets demonstrating the unique investment proposition of the region. METIS approached a broad variety of prospective buyers throughout the nation simultaneously and discretely, producing multiple interested parties from a variety of investor types. 

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OUTCOME

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After navigating several interested Buyers, the owners/operators of Amendment XXI (an upscale restaurant and bar in nearby Richland, Washington) quickly rose to the top of the buyer pool for Juston. Led by Rob Jacobs and several investors with ties to Walla Walla, it was clear that this team had the operational know-how, access to the required capital, and understanding of the role these restaurants played in the Walla Walla community. METIS helped the Buyer develop their financial pro-forma and worked closing with lending institutions to establish the financing package to pull off the deal. METIS was involved in every aspect of the diligence process including property reviews, financing, alcohol and gambling licensing, accounting, staffing, and obtaining the required lease assignment from the Red Monkey landlord.  The new ownership group is thrilled with the acquisition and Juston is excited to see his restaurants thrive under their stewardship.