Triarc, now Wendy's/Arby's, closed on a $2 billion deal for Wendy's Sept. 29, with a new recipe for success, according to a Wall Street Journal interview with Wendy's new CEO Roland Smith. Various changes include: targeting the 'older' 24-49 year-old crowd, revisions to its value menu, better fries, focusing on breakfast and remodeling stores.

Meanwhile, the first half of the year saw activist investing, private equity activity and other dealmaking continue across all breeds of fast food.

Rounding out May, hedge fund East Peak Partners LP boosted its stake in Ann Arbor, Mich.-based Domino's Pizza Inc. by about 1% to 6.24%, according to a May 27 regulatory filing and said it held discussions with management and could make suggestions about its financial strategy and financing options.

Burger King Holdings Inc. said May 6 its private equity backers -- TPG Capital, Bain Capital LLC and Goldman Sachs Capital Partners -- would sell nearly $415 million worth of shares in a secondary stock offering. It's not the first time they've done so. See more on that below.

Meanwhile, The Deal's Demitri Diakantonis took a look at the self-fulfilling deal dynamic among restaurant chains launched in, of all places, Columbus, Ohio. The city, he wrote:

has seen the birth of a number of restaurant chains, beginning with the mother of all fast-food chains, White Castle System Inc., in 1921, through Bob Evans Farms Inc. (1953) and Wendy's International Inc. (1969) and, more recently, Max and Erma's Restaurants Inc., or Damon's Grill.

Why Columbus? Adam Birnbaum, a managing partner of New York's Grandwood Capital LLC, says the city has been a "hotbed" for retail and storefront companies since the 19th century (the city was founded in 1812). Industry analysts agree that the high concentration of restaurant chains sets up a self-fulfilling dynamic. "A restaurant company that began and flourished in the Columbus market had a better likelihood of succeeding in other markets where competition might not be as severe," Birnbaum adds.

But back to Wendy's. The Triarc deal valued Wendy's shares at premium of more than 5.7% to its close the day before and came a week after the No. 3 burger chain in the U.S. rejected two offers from Peltz's companies and nearly a year after the company unveiled a strategic review.

Under terms of the deal, Wendy's shareholders would receive 4.25 Class A shares in Triarc, then the parent of smaller chain Arby's, of which Peltz was chairman, for each Wendy's share they owned.

The news came nearly a week after Peter May, the president of Trian on April 18 revealed plans to demand a special meeting of Wendy's shareholders after learning the Dublin, Ohio burger chain had rejected two separate offers for Wendy's -- one that involved combining Wendy's and Arby's and another that involved an offer for Wendy's worth $900 million in cash and an unspecified amount of stock.

Peltz, whose funds held a 9.8% stake in Wendy's had been steadily pressuring the burger chain for months. The activist in a filing Feb. 11 upped his campaign, unveiling plans to nominate six directors to Wendy's board and expand it to 15 from 13. He was lobbying for the election of: Jerry Levin, Jeffrey Bloomberg, Ulysses Bridgeman, Kenneth Gilbert, Richard Mandell and Gregory Sachs.

The news came weeks after Wendy's special committee said Jan. 28 it was in the final stages of its strategic review process and three months after Triarc offered to buy the company at an undisclosed price, but one that was below the $37 to $41 per share range it had offered four months earlier that had valued the company at $3.2 billion to $3.6 billion. (See more below.)

Meanwhile, El Pollo Loco Holdings Inc. was at the end of December 2007 the latest fast food chain to make deal headlines. The Costa Mesa, Calif.-based company, which specializes in Mexican-style grilled chicken, said it had taken a $45 million injection from Los Angeles-based private equity firm Freeman Spogli & Co. to fuel expansion. The news came nearly 14 months after the company, a holding of a Trimaran Capital Partners affiliate, scrapped plans to go public, as The Deal's Paul Bonanos noted.

Also in December, Burger King was looking East -- to China and the rest of Asia -- to more directly go up against burger chain front-runner McDonald's Corp. According to a Reuters interview with chief executive John Chidsey, the company expects half of its revenues will come from beyond the U.S. within five years and that it expects to have 250 to 300 outposts in China by then. BK is returning to Japan, from which it retreated several years amid fierce competition from other fast-food chains like McDonald's, which has outposts outnumbering its own by 80:1, and KFC, the Dec. 20 report said.

News of Burger King's Eastern expansion came as Wendy's was entertaining offers, including one from Peltz (who separately Dec. 19 was reported to be taking a stake in casual dining chain Cheesecake Factory Inc.). Peltz's Triarc Cos. offered on Nov. 12 to buy Wendy's, but at a lower price than it had projected less than four months earlier. Just how much lower, it didn't say.

Meanwhile, a year and a half after taking Burger King public in an offering that quadrupled the value of their stake, the burger chain's private equity backers unveiled plans Nov. 5 to take home some of the bacon on their investment, selling slightly less than a third of their combined stake in a secondary stock offering, 23 million shares. As The Deal's David Carey points out:

To date, the buyout group has raked in $1.13 billion in cash through stock sales in 2006 and 2007, a debt redemption and a special dividend. At $26.48 a share, the 79 million shares the group now owns have a market value of $2.1 billion.

AUCTION HEAT

In a regulatory filing Nov. 13, Triarc said only that the offer, which would be primarily cash and a portion paid in Triarc equity, was "below the valuation range" that it said it was prepared to offer in a letter sent in late July. The letter indicated Peltz's firm was prepared to offer $37 to $41 a share for the Dublin, Ohio-based hamburger chain, a bid that valued the company at $3.2 billion to $3.6 billion. Wendy's opened its books to Triarc in August.

The news came as media reports indicated the auction might run into problems and see lower bids due to weak credit markets and unfavorable terms imposed by J.P. Morgan Chase & Co. and Lehman Brothers Inc. A Wall Street Journal report Nov. 14 indicated that, according to a source, Triarc's offer didn't include the staple financing the lenders have offered.

Despite market conditions, the company drew several prospective suitors, and the Journal said Sept. 18, more than 12 parties signed confidentiality agreements. However, citing a source familiar with the matter after the bids came due Nov. 12, the Journal said a consortium led by Fidelity National Financial Inc. chairman William Foley decided against bidding because of the poor terms of the staple financing and uncertainty that management really wanted to sell the company. Foley, a one-time chairman of Carl's Jr. and Hardee's parent company CKE Restaurants Inc., teamed up with Thomas H. Lee Partners LP, Oaktree Capital Management LP and Ares Management LLC on a bid. According to the Journal, it wasn't clear whether an offer was submitted by a group that included David Karam, president of Cedar Enterprises Inc., which owns 134 Wendy's restaurants; Kelso & Co.; and Oak Hill Capital Partners.

Meanwhile, a conflict between franchisees and the company was brewed. A group of Wendy's franchise owners, including Peltz board nominee Ulysses Bridgeman, representing more than 1,100 restaurants, or 25% of U.S. franchise owners, sent a letter to the board dated Sept. 8, alleging it had been left out of the strategic review process and a lack of concern or oversight on the part of the board. Further, the franchisees requested the board instate guidelines aimed at quality control. The company's chairman countered with his own letter refuting the charges against board oversight and asking for a candid conversation.

As the sale process went on, Wendy's gave Sandell Asset Management Corp., part of an investment group that has Peltz at its helm, access to its books earlier in September.

Peltz -- who earlier in 2007 saw to the addition of three hand-picked nominees to Wendy's board -- indicated July 30 that Triarc would be willing to pay up to $4.1 billion for the burger chain, but only if the two could come to terms on the confidentiality agreement by the end of the day on Aug. 1.

Earlier in July, Peltz took issue with terms imposing a standstill agreement on his company, thereby limiting its flexibility integrating Arby's -- the sole asset of Peltz-controlled Triarc since it unveiled plans April 30 to sell its controlling stake in money manager Deerfield & Co. LLC for nearly $300 million -- and Wendy's. In his letter July 30, Peltz complained of terms requiring the deal be funded through staple financing, or Wendy's financial adviser lending the buyer the money to finance the deal, which he complained would hinder flexibility. Peltz indicated he would send a new agreement and asked that it be signed by 5 p.m. on Aug. 1.

Wendy's first unveiled a strategic review April 25 and officially put itself up for sale June 19.

Bowing to investor pressure, the company took its Canadian coffee and doughnut chain, Tim Hortons Inc., public in March 2006, pricing 29 million shares at about $23.16 a share and seeing them rise to $33 the same day. Wendy's hung on to 82.75% of Tim Hortons' shares until Sept. 29, 2006. A bit harder to swallow was Wendy's sale of its own Mexican quick-serve chain Baja Fresh to West Coast-based investor David Kim for $31 million -- 88% less than it paid for the chain in 2002.

It seems, however, that cutting quick-serve Mexican, coffee and doughnuts from its diet was not enough to placate shareholders hungering for higher returns.

TRIMMING THE FAT

Meanwhile, McDonald's Corp. said Aug. 6, 2007 it would sell its Boston Market Corp. chain to Sun Capital Partners Inc. for undisclosed terms, seven months after putting the ailing chain on the block. The deal closed Aug. 28. All the while, the leading fast-food company continued to trim its diet to focus on hamburgers in high-growth areas.

A Brazilian press report in March 2007 said Oakbrook, Ill.-based Mickey D's was near a deal to sell its burger joints in Latin American. Brazilian business daily Valor Economico said citing sources that financial bidder Pactual was the likely buyer and that the deal price was near $600 million -- far short of what McDonald's was expecting, according to a Reuters report. McDonald's denied the report, though acknowledged it has been eying Latin America as one region where it would like to set up "developmental licensee ownership," or a structure in which local investors put their capital and resources into expanding the brand regionally and McDonald's collects royalties.

McDonald's went on a fast-casual restaurant binge eight years earlier, when it bought Donatos Pizzeria Corp. in 1999 for undisclosed terms. A year later, it bought Boston Chicken Inc.'s Boston Market restaurants out of bankruptcy with $173.5 million and picked up the rest of Chipotle Mexican Grill Inc. it didn't already own from the chain's Denver-based founders. The restaurants were cobbled together under the Partner Brands umbrella, which would become a largely unprofitable unit and reshuffled a few years later.

In 2003, McDonald's cut Italian from its diet with the sale of Donatos back to its founder and pulled its money out of Fazoli's Restaurants, taking a charge valued then at between $289 million and $355 million. McDonald's originally had aggressive expansion plans for Donatos, but the decision to sell was part of a broader move to recast most of its unprofitable Partner Brands businesses. Concurrently, McDonald's stopped adding Boston Market Corp. restaurants outside the U.S. and closed its Pret A Manger restaurants in Japan.

Three years later, McDonald's took its quick serve Mexican outfit Chipotle Mexican Grill public in a stellar debut -- Chipotle shares doubled in their first day of trading to $44 apiece. They rose to a 52-week high of $67.77 in May 2006 and according to a regulatory filing, as of Sept. 30, 2006, Mickey D's still owned more than 83% of Chipotle shares.

THEIR WAY

A few months after McDonald's unleashed Chipotle to the hungry public markets, Burger King sizzled in its own debut, pricing its shares at the $17 top of its range and raising $425 million. The performance enabled the company's PE backers who sponsored the burger chain's $1.5 billion leveraged buyout in 2002, to quadruple their equity investment before lunchtime on May 18, 2006. The Deal's Christine Idzelis and Peter Moreira wrote:

Around noon it was trading a bit lower at $17.65 a share. At that level, and assuming the greenshoe is fully exercised, the sponsors' remaining 74% stake would be worth about $1.8 billion. And including the unrealized portion, the value of their original money would have increased fourfold.

The private equity backers revealed months later they would book another gain on their investment and sell down their stake in the company, unloading at least 20 million shares for at least $400 million.