Jean-Pierre Léger was five years old when his parents opened their first rotisserie chicken restaurant on Montreal's St-Hubert street. He recalls zipping around the kitchen, whose counter tops stood higher than he did.
The St-Hubert chain, since-ballooned to 117 restaurants and two food manufacturing plants, has been an intimate part of his life ever since. It was, he once said, kind of like Obélix, the French cartoon character with superhuman strength who's always had a taste for the magic potion after he fell into a cauldron of it as a child.
He'd hoped his own children would take over the business one day just as he took over from his parents 25 years ago, telling an interviewer in 2010: "Succession is important. It's part of my dream."
It didn't quite work out that way.
Mr. Léger announced Thursday that he's selling the entire Groupe St-Hubert company to Ontario-based Cara Operations Ltd., operator of a stable of restaurant brands that include Swiss Chalet, Harvey's and Milestones, for $537-million. Cara acknowledged that at 12 times adjusted earnings before interest, taxes, depreciation and amortization, the price is richer than what it has paid in the past for other assets.
But this is no ordinary acquisition.
With the purchase, Cara gets Quebec's number one full-service restaurant chain, which it considers a platform to expand its other brands into the province. It also gets a retail business that makes restaurant-branded food for purchase in groceries as well as two factories – currently working at about half capacity – that are ripe for developing comestibles.
Perhaps more importantly, however, it gets that which can rarely be bought: A deep pool of emotional capital that comes from 65 years of consumer loyalty.
Started by Hélène and René Léger in 1951, the franchise chicken chain is so ubiquitous in its home province that its 1960s jingle is still recognizable to most Quebeckers. Its restaurants are community gathering places, its meal packs staples on election campaign buses.
As Eric Blais of strategic marketing firm Headspace Marketing Inc. puts it, St-Hubert's secret sauce goes far beyond the actual sauce, famed chicken and creamy coleslaw.
"Drive through any small town across Quebec and you'll see a church, a caisse populaire [credit union] and a St-Hubert," Mr. Blais said. "You'll also see a busy Tim Hortons. They're local and, like Cheers, everyone knows your name."
Mr. Léger, 70, is keenly aware of his company's place within Quebec culture. He said that after he concluded that his two daughters didn't want to carry on the business, he agonized over what to do.
Mr. Léger said he canvassed potential buyers within Quebec, including institutional investors such as pension fund manager Caisse de dépôt et placement du Québec and labour fund Fonds de solidarité FTQ. Although they had the means, he said none had the mandate to take over entire companies. Local industry players, meanwhile, were few and far between and he failed to develop a chemistry with them.
"My main concern was to ensure the long-term existence of the company," Mr. Léger told reporters that had gathered Thursday at the St-Hubert restaurant beside Montreal's Bell Centre, adding that the business employs 10,000 people. "This deal was the one that assured that."
What few people knew until Thursday was that Mr. Léger already had an interested buyer in his back pocket, namely Cara. He'd met Prem Watsa, Cara's controlling shareholder, three or four years ago and the two developed a relationship. Mr. Watsa told The Globe and Mail that there was a long-standing agreement that when Mr. Léger was ready to sell, he'd sell to Cara.
Cara appears cautious about not messing up St-Hubert, saying it intends to keep local management to run both the restaurant side in Quebec and lead a wider pan-Canadian retailing effort. The company said it sees a major opportunity to tap the experience St-Hubert has built up in selling to grocers for its other brands like Swiss Chalet.
This takeover, of course, is not without its challenges. St-Hubert is still riding its decades-long reputation as the place to go for cheap comfort food even as its offerings are starting to look stale against those of some rivals. Customers it could count on to come back week after week are aging and coming less. As of 2011, roughly 80 per cent of St-Hubert clients were 40 or older.
After two recent management shakeups, Mr. Léger is getting out and putting his hopes for the company's longevity in Cara's hands. They might have to learn to like creamy coleslaw as much as he does.
With files from reporter Marina Strauss in Toronto.