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McLane and Popeyes End Restaurant Distribution Deal

(BRK.A), (BRK.B)

Berkshire Hathaway’s McLane Company, Inc., a leading supply chain services company providing grocery and foodservice supply chain solutions, has announced that its McLane Foodservice and Popeyes Louisiana Kitchen have mutually agreed to end their restaurant distribution relationship, effective July 2019.

McLane has been supplying the southern California, Arizona and southern Nevada geographies for Popeyes Louisiana Kitchen restaurants. While both entities appreciate their long-term relationship, each company believes this move will best serve its financial and operational needs in these geographic markets.

Despite this aspect of their relationship coming to an end, McLane will continue to play a part in Popeyes’s supply chain. KINEXO, a subsidiary of McLane that provides innovative supply chain solutions to respected brands in the foodservice industry, will continue to serve as Popeyes’s exclusive redistribution partner nationwide for numerous items from multiple suppliers used or sold in their restaurant outlets.

Additionally, McLane will continue to serve as a primary distributor to Burger King, which along with Popeyes, is owned by Restaurant Brands International.

One of Warren Buffett’s best deals in recent years was his 2014 financing of Burger King’s acquisition of Canadian restaurant chain Tim Hortons, which was renamed Restaurant Brands International.

The deal was financed by Berkshire Hathaway, and Berkshire’s role gave the conglomerate ownership and control over 4.18% of the outstanding Common Shares and 14.37% of the total number of votes attached to all outstanding voting shares of the newly created company.

Popeyes Louisiana Kitchen became a part of Restaurant Brands in 2017, when it was acquired for $1.8 billion.

© 2019 David Mazor

Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.