Food and beverage M&A held its footing in Q2 2025. Volumes were measured, not exuberant, but strategic acquirers stayed active in defensive categories such as beverages, protein, and snacks, and selectively backed brands with health-forward, premium, or tech-enabled profiles. The market continues to shift from "buy anything" toward disciplined, theme-driven dealmaking.
Four takeaways from Q2
Surging input costs accelerate reformulation
Persistent cost inflation in Q2 pushed manufacturers to reformulate products and optimize sourcing to preserve margins. Brands are substituting expensive ingredients, simplifying SKUs, and emphasizing resilience over short-term volume. This cost-to-innovate cycle is driving greater investment in ingredient technology and nearshoring.
Functional beverages and global snack innovation lead growth
Functional drinks and globally inspired snack formats outperformed in Q2, merging novelty, health benefits, and premium flavor. Adaptogen-infused beverages, probiotic sodas, and international snacks are capturing spend as consumers seek wellness and experience. Pairing functional claims with clean, distinctive flavors continues to win share.
Franchise models under pressure, but disciplined expansion persists
Value-seeking consumers drove traffic toward affordable quick-service concepts, pressuring premium franchises to simplify menus and introduce bundle offers. Strong franchisors and multi-unit operators still expanded selectively, focusing on lean formats, data-driven tools, and efficient operations. The sector is bifurcating: disciplined systems gain share while overextended brands retrench.
M&A activity tilts toward health, tech, and efficiency themes
Q2 deal flow remained steady but selective, favoring businesses with health-forward, premium, or tech-enabled profiles. Buyers are targeting functional and automation-driven platforms with defensible economics, while legacy portfolios lose appeal. The focus has clearly shifted from scale to sustainable, efficiency-driven growth.
M&A trends and outlook
Despite macroeconomic caution, F&B M&A remained active in Q2 2025, driven by strategic acquirers pursuing health-oriented, premium, and efficiency-enhancing assets. Overall deal volumes were steady, but buyers exhibited greater selectivity, focused on profitability, supply-chain resilience, and defensible market positioning. The sector continues to transition toward quality over quantity in deal flow, reflecting a preference for sustainable growth and operational discipline in a higher-rate environment.
Strategic buyers lead selective dealmaking in defensive categories
Strategic acquirers accounted for the bulk of activity in Q2, focused on categories with stable demand such as beverages, protein, and snacks. While overall volumes remain modest under macro pressure, companies still backed brands with strong moats, operational scale, or health and wellness appeal. The era of buying anything is giving way to more disciplined, theme-oriented M&A.
Profitability and execution trump growth
In a cautious market, acquirers are rewarding brands with consistent margins, efficient operations, and clear paths to cash flow. Growth still matters, but buyers are favoring scalable, well-run businesses that demonstrate financial discipline and operational control.
Tariff, supply chain, and global trade risk shape deal strategy
Trade uncertainty, tariffs, and sourcing volatility are increasingly shaping F&B M&A decisions. Buyers favor targets with flexible sourcing or favorable geographies. Brands exposed to import risk or complex global supply chains face greater headwinds in deal review. Acquirers are looking at deals not just for growth, but for resilience and agility in a shifting trade and regulatory environment.
Deal volume in context
Quarterly F&B deal counts since Q3 2022 show steady, range-bound activity, with Q2 2025 closing at 142 transactions, 61 PE-backed and 81 strategic. The trailing pattern: 152, 160, 196, 188, 142, 157, 148, 171, 162, 181, 152, 142. Volumes have softened from the 196 peak in Q1 2023 and the 181 high in Q4 2024, but the strategic-buyer share has held steady, consistent with the theme of disciplined consolidation rather than scale-at-any-cost.
Recent transactions: multi-location restaurants and chains
Activity in restaurants and multi-unit concepts spans casual dining, QSR, fast casual, bakery, and coffee, with both strategic operators and PE-backed acquirers active. A selected list of 2025 transactions through November (* = PE-backed acquirer).
Selected 2025 restaurant and chain transactions
Nov-25, Tijuana Flats Restaurants to &pizza*, Tex-Mex fast-casual chain.
Oct-25, BarFly to Uncommon Equity, Grand Rapids bar and restaurant chain.
Oct-25, Potbelly Sandwich Works to RaceTrac, sandwich-focused QSR.
Oct-25, Bravo Brio Restaurants to R&R Brands, full-service Italian concept.
Oct-25, Bar Louie to Sun Holdings, casual dining bar and restaurant chain.
Oct-25, Gracious Bakery to Callais Capital Management, artisan bakery and cafe.
Sep-25, BOJ of WNC (Bojangles) to EYAS Capital, quick-service food establishments.
Sep-25, PDQ (select locations) to Yum! Brands, fast-casual restaurant.
Sep-25, 7 Brew Coffee to Franchise Equity Partners and WJ Partners, drive-through coffee.
Sep-25, Freddy's Frozen Custard & Steakburgers to Rhône Group, fast-casual steakburgers and frozen custard.
Aug-25, Mac & Bob's to Larsen MacColl Partners, casual American dining and bar.
Aug-25, Philz Coffee to Freeman Spogli, handcrafted coffee chain.
Aug-25, Qdoba Restaurant to Apollo Asset Management, Mexican fast casual.
May-25, U.S. Pizza Company to FoxDen Capital, regional pizza chain.
May-25, Ted's Bulletin to Feenix Venture Partners, Washington, D.C. restaurant chain.
Apr-25, Cupbop to Sandlot Partners, Korean barbecue street food in a cup.
Apr-25, Santo Taco to Innova Capital Partners, New York City taco restaurant.
Mar-25, On The Border Mexican Grill & Cantina to Pappas Restaurants, contemporary Mexican.
Mar-25, Café Yumm! to CapitalSpring, Pacific Northwest fast-casual chain.
Recent transactions: manufacturers and distributors
On the food and beverage manufacturing and distribution side, recent activity spans dairy, spice and seasoning, snacks, baked goods, alternative proteins, craft beer, ice cream, confectionery, produce, and specialty ingredients.
Selected 2025 F&B manufacturer and distributor transactions
Nov-25, Dairy Distributing to Odeko, dairy products distributor (Bellingham, WA).
Nov-25, Creative Spiceworks to Midas Foods International, seasoning and spice producer.
Nov-25, Fresca Foods to Cerealto Siro*, shelf-stable snacks and baked goods for natural and organic brands.
Nov-25, Caulipower to Urban Farmer*, cauliflower-based gluten-free meals.
Nov-25, Wine Exchange to Spectrum Wine Auctions, online wine and spirits retail.
Oct-25, Merlino Foods to The Erickson Family, Italian foodservice distributor.
Oct-25, Orbillion to Fork & Good, alternative-protein producer.
Oct-25, Ne-Mo's Bakery to Cotton Creek Capital, fresh bakery and confectionery.
Oct-25, Spiceland to Midwest Foods, spice blending for chefs and foodservice.
Oct-25, Altes Beer to Benchmark Beverage*, regional craft lager.
Oct-25, International Spices to Woodland Gourmet*, online specialty store.
Oct-25, Ice Cream Factory to PNC Brands Group, handcrafted ice cream (Lebanon, MO).
Oct-25, Genesee Candy Land to NxGen Brand, novelty confectionery distributor.
Oct-25, Ohio Eagle Distributing to Heidelberg Distributing*, Southwest Ohio craft beer.
Oct-25, Caro Nut Company to Certified Origins Italia, nut spreads and snack products.
Oct-25, Forestwood Farm to Red Arts Capital, fresh produce distribution.
Oct-25, Sol Group to Martori Farms, melon producer for the North American market.
Oct-25, American Botanicals to MartinBauer, crafted spice and herb producer.
Oct-25, Arps Dairy to Barfresh Food Group (NAS: BRFH), dairy producer (Defiance, OH).
Case study: Yum! Brands acquires 13 PDQ sites for "Saucy by KFC" expansion
Yum! Brands acquired 13 restaurant leases from PDQ in Florida to accelerate the rollout of its new chicken-tender concept, Saucy by KFC. The transaction was structured as a lease and asset acquisition rather than a full company buyout, which let Yum quickly repurpose existing sites in strong QSR markets. Over time, the PDQ locations will be converted into Saucy by KFC and other Yum concepts, enabling faster market entry and lower development costs versus new builds.
Strategic rationale
Rapid rollout of a new chicken-focused brand using existing sites. Lower cost and faster speed versus new builds. Tests a new format before wider expansion. Florida provides a strong QSR growth market.
Value creation thesis
Speed: converts operating units quickly to revenue. Scale: draws on KFC supply chain and Yum's operating platform. Brand diversification: adds a fresh, sauce-centric concept. Real estate efficiency: repurposes quality PDQ locations.
Risks and challenges
Concept is still unproven, with brand acceptance risk. Conversion capex and layout fit. Overlap with KFC menu positioning. Execution risk in employee and site transitions.
The deal shows Yum's strategy of quickly scaling new concepts by acquiring and converting existing sites. Repurposing PDQ locations accelerates Saucy by KFC's rollout, reduces build costs, and enables real-world testing before national expansion, illustrating how real estate agility drives growth in the quick-service sector.
Where this leaves the market
The F&B story in Q2 2025 is one of discipline, not retreat. Volumes are off their peak but still healthy; strategics are leading and choosing carefully; private equity is selective but very much in the game; and the themes driving conviction (health and functional positioning, premium positioning, operational efficiency, supply-chain resilience) are consistent enough to plan around. For owners of F&B businesses, the message is that buyers reward brands with clear positioning, demonstrable margin, and a credible story on resilience.
For our 1Q25 read on the consumer side, including consumer preference data and category-level multiples, see A Fresh Take on Food & Beverage Preferences.
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