Merger Mania Continues

In a melding of restaurants you would never want to eat at, Church's purchases Shoney's for an undisclosed sum. Shoney Bear to learn the Funky Chicken:

The Associated Press

NASHVILLE — An Atlanta-based company that operates Church's Chicken restaurants is acquiring Shoney's Restaurants for an undisclosed amount.

Royal Hospitality Corp., an affiliate of Royal Capital Corp., said it will take over all 282 Shoney's restaurants from Shoney's LLC, which is owned by an affiliate of Dallas-based Lone Star Funds.

Best known for its breakfast bar, Shoney's has 282 locations in 18 states, 230 of which are owned by franchisees. Royal expects to complete the acquisition of the 52 company-owned Shoney's restaurants by the end of the month. The restaurants will continue to be called Shoney's, and the chain's headquarters will remain in Nashville.

There are 13 Shoney's locations in Mississippi, including four in the Jackson metro area.

Royal is the largest franchisee of Church's Chicken with 112 restaurants located in Arizona, California and Texas.

"We all believe that Shoney's can be an even greater brand and can and will return to its glory days as an exciting food destination for millions of satisfied customers across the United States," said David Davoudpour, founder and CEO of Royal Capital.

Shoney's, begun in 1947 with a restaurant in West Virginia, merged with Danner Foods of Nashville in 1971 to become Shoney's Big Boy Enterprises. It became Shoney's Inc. five years later.

Shoney's posted solid sales and growth for decades before faltering in the 1980s as customers complained of poor food and service. The company sold off noncore operations such as its Pargo's and Fifth Quarter chains and closed some of its Shoney's locations.

The Lone Star Funds affiliate took Shoney's private in 2002 after nearly 30 years of public trading. At the time, the chain owned or franchised close to 1,000 Shoney's restaurants in 28 states, and it operated or franchised more than 560 Captain D's seafood restaurants. Lone Star sold the Captain D's chain in 2005.

Centrum Equities, a private equity firm, tried to buy Shoney's last year but then sued to get out of the deal.