The abrupt collapse of a popular healthy fast-food chain has sparked an unexpected competition between two rapidly expanding coffee companies. What happens to dozens of its former drive-thru locations could soon be decided by a bankruptcy-court auction.
Dutch Bros and 7 Brew are competing for the sites
Dutch Bros initially appeared poised to take over a large portion of Salad and Go’s former locations after agreeing to a $105 million deal for leasehold interests and site-related assets tied to 51 locations in Arizona and Nevada, along with additional leases in Texas and Oklahoma. The original transaction covered about 65 locations.
However, 7 Brew subsequently submitted a competing proposal, arguing that it could provide greater value. The company had previously raised concerns in bankruptcy court about the process surrounding Dutch Bros’ agreement and pushed for an auction.
That challenge has now turned into a formal bidding battle. A bankruptcy judge approved a targeted auction between Dutch Bros and 7 Brew for available Salad and Go leases, potentially involving roughly 130 locations, which will take place in October.
Salad and Go locations could become coffee shops
The competition comes after Salad and Go filed for Chapter 11 bankruptcy and closed its remaining locations. The Arizona-based drive-thru chain had expanded rapidly into multiple states before financial problems and other challenges forced it to shut down.
Dutch Bros’ proposed acquisition would turn many of the former salad drive-thrus into coffee locations. The sites are particularly attractive because they were already designed for drive-thru service, potentially allowing the coffee chain to expand without constructing entirely new buildings.
If 7 Brew ultimately wins, Salad and Go would owe Dutch Bros a termination fee of approximately $3.8 million, along with certain additional expenses, according to court documents and reporting.
The unusual bidding war demonstrates just how valuable established drive-thru real estate has become as coffee chains continue aggressively expanding their footprints.
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