Whataburger's founding family sells controlling stake in iconic Texas chain (2024)

Whataburger, the beloved burger chain with a 69-year family legacy in Texas, has sold a controlling interest in the company to Chicago-based investment banking firm BDT Capital.

The Dobson family who founded the iconic company will remain minority stakeholders and the headquarters will stay in San Antonio.

"Together, BDT and the Whataburger team will begin exploring expansion plans — while staying true to the brand it has been over the past 69 years," the company said in a statementFriday.

Terms of the deal weren't disclosed. It's expected to close later this summer.

The motive is Whataburger's desire to expand its brand and introduce its restaurants to new customers, the company said. BDT will provide the funding needed to grow Whataburger's operations.

The chain will likely expand its presence in the Southwest and expand its perimeter, said Darren Tristano, founder of Foodservice Results, a food industry consulting firm. It has morethan 800 locations in 10 states, the majority in Texas.

"There will be some growth toward the north, but I wouldn't expect them to show up in New York City or Chicago," Tristano said.

BDT is a merchant bank that invests infamily-owned companies selling everything from branded fishing rods to tequila. In addition to Whataburger, it's also invested in Krispy Kreme Doughnuts and Panera Bread.

Byron Trott, a former Goldman Sachs global investment banking executive,founded BDT in 2009 after spending decades advising some of America's leading capitalists, including Warren Buffett and heirs of Walmart founder Sam Walton. His firmalso served as financial adviser to Keurig in its January 2018 takeover of Plano's Dr Pepper.

Whataburger's revenue totaled $2.2 billion in 2016, the most recent year for which data on the privately-owned company is available, according to Technomic'stop-500 chain restaurant report.

"The Whataburger we all love is now poised for many more years of growth, while maintaining its culture, the family legacy and the high quality of its food and service," said Patrick Tobin, a partner at law firm Jackson Walker's San Antonio office. Jackson Walker served as Whataburger's legal adviser.

The first Whataburger opened in 1950 in Corpus Christi. Co-founder Harmon Dobson’s goal was to make a burger so delicious that consumers said “What a burger!” after taking a bite. In 2001, the Texas Legislature declared the company an official Texas Treasure.

In May, Whataburger confirmed it had hired Morgan Stanley to explore a possible sale.

It's the second Texas-born company to be sold this week. On Thursday, the family that built Schlitterbahn into a national brand sold two of its three Texas water parks to an Ohio theme park operator for $261 million.

Whataburger also announced several leadership changes at the company that refers toits 40,000 employees as "family members."

President and CEO PrestonAtkinson and board chairman Tom Dobson are stepping down to work with Las Aguilas, an investment company focused on philanthropy and real estate.Las Aguilaswas established by the Dobson family in 2011. Dobson and Atkinson will remain on the company's board of directors.

Ed Nelson will replace Atkinson as president. Nelson was previously chief financial officer and controller. The company will not name a new CEO, instead creating a chief operating officer position forLeonard Mazzoco, the formervice president of business operations.

The retentionof senior leaders is good news for customers who don't want to say goodbye to Whataburger's signature Fancy Ketchup or any of its other fan favorites.

"It says they think the company is well-run," said Amy Curtis, a mergers and acquisitions-focused partner at Dallas law firmThompson & Knight. "It's a sign you're not going to see wholesale changes."

The Whataburger brand enjoys a cult following in Texas.

It's thego-to spot for high school athletes after a Friday night football game. High school football teams in Frisco even fight fordomain over their local Whataburger, #1020 onEl Dorado Parkway and North Dallas Parkway.

Staying true to the Whataburger brand is key to its future, said Tristano, the food industry consultant.

"Brands that have done well in these scenarios are ones that don't make a lot of changes," Tristano said. "They don't update the stores right away or change the menu. If they stick with the tradition, with what got them there, they'll be on a good path."

CORRECTION, 4:30 p.m, June 14: A previous version of this article said BDT Capital Partners owned a majority stake in Dunkin'. It does not.

CORRECTION, 3:30 p.m, June 20: A previous version of this article said Hugh and Lynne Dobson will remain on Whataburger's board of directors. They will not.