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PAR acquires Punchh: Why Ron Shaich believes in the $500M deal

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PAR Technology trades higher after the company bought loyalty program provider Punchh for $500 million in cash and stock. Ron Shaich, Founder of Panera Bread and CEO of Act III Holdings, joins Yahoo Finance Live to discuss why he's investing in PAR and break down the outlook for restaurants post-pandemic.

Video Transcript

BRIAN SOZZI: Somewhat under the radar, there was a rather large deal in the restaurant industry this week. Restaurant tech company Par Technology, which tells point-of-sale systems and software to more than 100,000 restaurants, acquired loyalty program provider Punchh for $500 million. About $160 million in equity funding for the deal came from Panera Bread founder Ron Shaich's Act III Holdings and T. Rowe Price. The one and only Ron Shaich joins us now. Ron, good to speak with you, as always. $160 million-- pardon the pun-- that's a lot of bread. Why did you make this deal?

RON SHAICH: Brian, good to see you again. It's great. Look it, this is a powerful company that is on the edge of putting together the first unified commerce platform for the restaurant industry for enterprise level [INAUDIBLE]. This company right now has in its hands the ability to offer what is the heart of every restaurant in its digital apparatus, which is essentially that commerce platform. With the addition of Punchh, they have the front end of it. They have loyalty, they have customer, they already have POS. They're building out the other pieces of it.

The problem, I can tell you, as somebody who built tech systems in the restaurant industry-- and Panera was clearly one of the leaders-- the problem is when you try to combine disparate systems, when you try to bring them together, you end up in a situation where those-- where the processing is often cumbersome. It doesn't speak to each other-- the pieces don't speak to each other. It's difficult for management. It, frankly, reduces the agility of innovation. What these guys are offering and we'll be in the position to offer is going to be powerful when they combine [INAUDIBLE] with Punchh.

Now, having said that, Brian, I'll share with you something. This stock has been up four-fold in the last year and a half since Savneet Singh took over as CEO. This company, it's been a [INAUDIBLE]. Those are investors that are saying they get the vision. The reality is with this acquisition, we, as people who are players in the industry-- I'm not just an investor-- we're also customers. We and T. Rowe Price are saying we believe in that vision.

But it's not just us. The founders of Punchh who are essentially taking equity in this transaction, they're saying they believe in the vision. And I think all of us are coming together to say we have the opportunity to build something that is extraordinarily powerful that's going to dominate potentially this-- the technology to the restaurant industry for, shall we say, enterprise class clients. This is something big.

BRIAN SOZZI: Ron, this is a lot of money. This is a significant investment by you. Are you starting to see a turn in the restaurant chains that you, in fact, operate? Is the business starting to turn the corner? Because I imagine you not necessarily want to make this business, this investment per se if business was still under pressure in the restaurant industry.

RON SHAICH: I think that first off, the technology suppliers to the restaurant industry did extraordinarily well during COVID. There was tremendous demand because digital became an [INAUDIBLE]. And the reality is, everybody wants technology. Everybody wants digital. The problem is, it's really hard to do. And what Par is going to be able to offer is an integrated approach that allows people to do it much more easily.

Having said that, the restaurant industry where we have half a dozen investments, the restaurant industry itself has been through a very difficult year. Having said that, it's coming out of that. We're seeing every day stronger and stronger sales. I believe there is powerful latent demand out there for what restaurants offer. People want to get back. They want to connect with each other. They want to be out of the house. They want to enjoy food in an environment other than their home or their car.

I think you're going to see a flourishing like flowers blossoming in this country, as we move from the summer into the fall. And I think that-- I'm very optimistic. I think as everybody knows, the pandemic of '18 and '19 was followed by the roaring 20s. Now it was also followed by the Great Depression after the roaring 20s. But nonetheless, I think we're in for an environment in which restaurants are going to be the beneficiaries.

BRIAN SOZZI: Ron, you look and sound great. What is-- you know, it's been a while since we've talked to you--

RON SHAICH: [INAUDIBLE] how long you and I have been talking to each other.

BRIAN SOZZI: Yeah, you look good. You sound good, in high spirits. How have your businesses been doing through the pandemic? And what have you learned?

RON SHAICH: Well, you know, we made an investment similar to this in a company called BJ's, where we and T. Rowe came together put in $75 or $80 million. It was really an investment that their numbers in '22 would be in 90% of where they were in '99. The reality is, we're ahead of that in every way. And the reality is that stock is up 3 and 1/2 times since we made the investment. The reality is the rest-- people want restaurants.

The restaurant industry is the second oldest profession and the reality is that people want what restaurants offer. They want that environment. And I think that we basically perceive the restaurant-- the COVID period as a tax. And so the question is, when are we going to get back to the way restaurants were? I think we believe you're going to really start to feel that this summer into the fall. And I think we believe very firmly that we paid the tax to get here. And this is going to be a very good period.

I will say that's validated by our success with [INAUDIBLE]. [INAUDIBLE] done extraordinarily well. Their comps are relatively strong. They're building out rapidly across the country. We're in another company called [INAUDIBLE], which is-- it just opened a second market. It's stronger than its-- it's been in its home market. We opened in DC on top of our presence in Boston, where we play. We have a wellness concept of Life Alive, doing some very, very strong volumes.

And then we're in a couple of other things-- Farmers Business Network, which is another one of these companies that we're helping evolve as a mature, large company backed by Kleiner Perkins, DBL, [INAUDIBLE], T. Rowe Price, Fido. And we're in there on the masthead because we're able to help them in some small ways. I'm on the board there. Another company, Level 99, which is entertainment. I think we're really feeling very good. And I think anybody who's been able to survive through the virus actually has a strong business model. This is going to be a very good year.