Not so fast Dutch Bros. Another chain wins bid for Salad and Go

The battle between two coffee chains to take over dozens of former Salad and Go drive-thrus now has a new victor. Arkansas-based 7 Brew outbid Dutch Bros in an auction to buy the majority of Salad and Go’s locations in Arizona, Nevada, Texas and Oklahoma.

7 Brew will pay more than $143 million for 73 drive-thrus of the now-bankrupt salad chain that got its start in Gilbert in 2013. A bankruptcy judge must still approve this new deal with 7 Brew at a hearing set for Sept. 21.

Salad and Go filed for bankruptcy on Aug. 4, and closed its final locations across Arizona and Nevada the next day. It marked the end of the chain, which expanded rapidly into Texas and Oklahoma after it was acquired by a private equity firm in 2021.

Court documents revealed Salad and Go had already found a suitor for its tiny restaurants. Boersma Bros., the company behind the Oregon-born, Tempe-based coffee chain Dutch Bros, offered $105 million for 65 locations spanning four states — with more than 40 in the Valley — and made a $10 million deposit.

In its bankruptcy filing, Salad and Go estimated it has about 130 locations in its portfolio. The remaining locations not part of this deal may be sold in smaller groups or individually. 

Salad and Go’s board considered 16 potential buyers and found Dutch Bros to be the best fit, per court filings. In a matter of days, it became clear this was far from a done deal. During an Aug. 7 court hearing, attorneys for the fast-growing chain 7 Brew implored the judge to allow for an auction, which Salad and Go and the court agreed to last month.

What drive-thrus will 7 Brew take over?

At the auction held on Monday, Dutch Bros chose not to increase its offer. Dutch Bros remains a backup bidder on locations it identified, per court documents. Should the deal with 7 Brew go through, Dutch Bros will receive a $3.8 million termination fee and other expenses. 

Though the coffee chain is unlikely to take over these stores, it still plans to nearly double the number of its drive-thru coffee bars by 2029.

“We’ve always been disciplined in how we allocate capital,” Dutch Bros CEO and President Christine Barone said in a press release. “While we have chosen not to increase our original offer, we remain engaged in the process and will continue to evaluate opportunities where the total investment provides the appropriate return.”

Since launching in 2017, 7 Brew has become known for its customizable coffee menu and the speedy services of its “Brew Crew.” The drive-thru chain expanded to Arizona last year and currently has one stand in Queen Creek and two in Tucson. 

Of the 73 locations 7 Brew aims to purchase, 35 are located in the Valley and six are in Tucson. 

Some landlords of these now-vacant Salad and Go sites objected to the initial proposed sale because their shopping centers already host coffee shops. They’ll now have until Sept. 17 to object to 7 Brew taking over these leases.