Why Market Fit Still Matters—Even When You’re Buying It
Growth through acquisition is having a moment. Whether it’s franchisee buybacks, roll-ups, or platform acquisitions, brands are finding new ways to scale faster and smarter. But there’s a catch: just because a business is performing well doesn’t mean the market it’s in is set up to support your next phase of growth.
It’s tempting to see acquisition as a shortcut to expansion (and in many ways it is), but if you’re not strategic about where you’re buying, you may be inheriting limitations instead of unlocking opportunity.
M&A activity in retail remains a fundamental growth strategy, with more brands and private equity firms looking to accelerate expansion without waiting on the ground-up buildout process. But the smartest players are asking a deeper question: Does this market have the capacity to support long-term brand growth?
It’s Not Just About the Operator—It’s About the Market
When evaluating an acquisition, many brands focus heavily on the operator’s performance: strong AUVs, solid management, clean books. All critical. But too often, what’s overlooked is the true scalability of the market they operate in.
Here’s what growth-minded brands are digging into behind the scenes:
- Is this operator winning because the market is strong—or in spite of it?
- Can the current footprint be expanded without cannibalizing performance?
- Does the region reflect your customer profile and margin model?
- Are there built-in operational efficiencies by growing near where you’re already established?
- Can your team support this geography, or will it stretch your infrastructure thin?
These questions can be the difference between a deal that adds value and one that drains it.
Case Study: Freddy’s Frozen Custard & Steakburgers
Freddy’s has become a standout example of how to scale with intention. Founded in 2002 and acquired by Thompson Street Capital Partners in 2021, the brand has grown from around 400 units to over 550, aiming for 800 locations by 2026.
But this growth hasn’t been fueled by blind expansion—it’s been shaped by smart market strategy.
Rather than targeting net-new markets at random, Freddy’s leaned heavily on franchisee reinvestment and multi-unit development agreements in markets where their operators had already proven successful. In 2023 alone, the company opened 62 new locations, many tied to existing regional strengths in Texas, Missouri, Idaho, and beyond.
They prioritized:
- Runway: Markets weren’t just viable—they had room for several more units.
- Operational strength: Their team could support growth without creating strain.
- Customer fit: Each new market aligned with their core demographic and price point.
- Efficiency: They avoided fragmentation by growing adjacent to where they were already winning.
The result? A systemwide sales trajectory pushing toward $1B, with top-performing locations nearing $2.5M in AUV.
Freddy’s didn’t just buy volume—they built around what was already working. That’s smart scaling.
How Xpand Helps Brands Underwrite the Market, Not Just the Deal
This is exactly the kind of thinking Xpand brings to the table.
We partner with growing brands who are scaling through acquisitions—not just to help them evaluate the deal, but to dig deep into whether the market behind the deal is worth betting on. Our process combines macro data, street-level insight, and repeatable frameworks to help clients answer the hard questions upfront.
- Can this market support additional units?
- Will growth here complement your existing operations?
- What efficiencies can you gain by expanding near your core base?
- Are you inheriting brand alignment or future friction?
In short: we help brands buy smart, grow intentionally, and scale with clarity.
The Bottom Line: Growth Should Amplify Strength, Not Chaos
Acquisition is a tool, not just a strategy. The strongest brands use it to build stable growth and profit, not to chase one-off opportunities.
If you’re looking to grow through acquisitions, don’t just evaluate the operator, evaluate the runway. Build where you’re already strong. And make sure your real estate strategy is just as sharp as your deal structure.
Xpand can help you get there.