Red Robin Gourmet Burgers Inc. recently announced the acquisition of an existing Red Robin franchised unit in Clifton, New Jersey from UBA Enterprises and included it in the company-owned operations. The transition to company-owned model affirms management’s confidence in its core business model. The purchase consideration of the deal is around $3.2 million.

The recent spurt in growth in the franchised entity has made it a lucrative acquisition target. According to Red Robin management, the acquired eatery will likely have annual sales of about $3.9 million. Hence, we view the deal as strategically positive in an industry that depends largely on franchising.

The acquired unit is the fourth company owned Red Robin site in New Jersey. This Seattle-based company has been catering to the New Jersey market since 2004 and envisions further expansion prospect. Red Robin will shortly come up with another company-owned unit in Woodbridge, New Jersey. Post-acquisition, Red Robin has only one franchised unit in New Jersey serving the market at Hamilton.