Private Equity has found a niche in the restaurant industry, where a slew of high-profile deals have made their mark in recent years. The most active restaurant private equity firms aren’t necessarily restricted to one country, with deals increasingly cropping up in Asia, the Middle East, and Latin America, and chains in nearly every corner of the globe finding investment.
Below, we round up the most active restaurant Private Equity (PE) firms in each part of the world.
GLOBAL PRIVATE EQUITY TRENDS
Global investment activity has remained relatively steady in recent years. In 2016, Private Equity assets under management totaled $2.5 trillion. More than half of that was found within North America, and 24% was in Europe.
Within North America, 63% of PE assets are allocated to buyouts, and 22% to Venture Capital.
MOST ACTIVE RESTAURANT PRIVATE EQUITY FIRMS IN NORTH AMERICA
Canadian PE firm Claridge has a record of investing in companies across several sectors, from entertainment to food. It sold its stake in Prime Restaurants, one of the largest operators in the Canadian casual dining industry, in 2000. In July 2017, it announced the sale of one of its portfolio companies, Les Plats du Chef Inc., to Texas-based C.H.Guenther & Son Inc. Terms of the deal, which includes three of the frozen food manufacturer’s plants in Quebec and Ontario, were not disclosed.
Luxury conglomerate LVMH’s private equity arm, L Capital, had historically invested in brands in Europe and Asia when it began to contemplate expanding into the US. Meanwhile, its counterpart (PE firm Catterton) was contemplating expansion into Europe and Asia. So, in January 2016, the two merged to become L Catterton, the largest consumer-focused investment firm in the world. Since its founding in 1989, Catterton has grown to $5.5 billion in equity capital to deploy through leveraged buyouts and growth investments. The company has invested in a slew of well-known American restaurant chains over the years, including P.F. Chang’s, Baja Fresh, and First Watch. It also holds stakes in fast-casual chains Noodles & Company and Chopt.
With over $1 billion invested since its inception in 2005, CapitalSpring focuses on the branded restaurant sector, targeting investments ranging in size from $10 million to $100 million. As recently as April 2017, the firm collected more than $371 million for its fifth fund, according to filings with the US Securities and Exchange Commission. The New York firm purchased both Beef ‘O’ Bradys restaurant chain and the Brass Tap Tavern in July 2017.
Private equity group Brentwood Associates has invested in a handful of restaurant chains, including Veggie Grill (in which it initially invested in September 2011) and “polished casual” concept Lazy Dog, which it acquired in July 2013. In July 2017, Brentwood made a “significant, non-controlling investment” in fast-casual Blaze Fast-Fire’d Pizza.
Restaurant Commercial & Operational Due Diligence
Charlotte, North Carolina-based Axum Capital Partners focuses on making strategic equity investments in lower middle market, privately-held businesses throughout North America. The firm’s target markets include food and beverage and educational services. In 2012, it acquired Wild Wing Café and in July 2017, Axum announced its acquisition of 55-unit chain Back Yard Burgers. The firm’s interest in restaurants makes sense, considering co-founder Edna Morris’ resume. Morris is the former president of Red Lobster, Quincy’s Family Steakhouse, and the James Beard Foundation.
Roark Capital Group is an Atlanta-based private equity firm with over $7 billion in equity capital and commitments raised since its inception. Throughout its history, affiliates of Roark have acquired 60 franchise/multi-unit brands which generate approximately $24 billion in system revenues from 27,000 locations located in 50 states and 78 countries. Its portfolio includes Arby’s (Wendy’s sold its majority stake to Roark in a $430 million deal in 2011), Auntie Anne’s, CKE, Jimmy John’s, and Moe’s, among others. In July 2017, Roark announced it had bought the 37-unit Jim ‘N Nick’s Bar-B-Q.
San Francisco-based Golden Gate Capital touts more than $15 billion in committed capital. Unlike conventional private equity firms, it operates as a private holding company to recapitalize and restructure businesses in partnership with management over time. Its restaurant investments include California Pizza Kitchen and Red Lobster.
The Carlyle Group is a global alternative asset manager with $162 billion of assets across 287 investment vehicles. Founded in 1987 in Washington, DC, Carlyle now operates in offices across North America, South America, Europe, the Middle East, Africa, Asia and Australia. Its portfolio includes Alamar, a master franchise operator of Domino’s pizza and Wendy’s hamburgers for the MENA region (except for Wendy’s in Saudi Arabia ); Babela, an Italian-style restaurant chain based in Shanghai; and Dunkin’ Brands.
Greenwich, Connecticut-based Rosser Capital Partners targets emerging concepts and brands within the restaurant, retail and consumer industries. Current investments include Hickory Tavern, Barcelona Wine Bar, and bartaco. In 2016, the firm acquired a majority stake in Florida breakfast restaurant Skillets, with plans to expand the concept into other Florida markets.
Sentinel Capital Partners focuses on the lower end of the middle market, investing in management buyouts, corporate divestitures, acquisitions of family businesses, going-private transactions, and operational turnarounds in the United States and Canada. Portfolio companies include Taco Bell, Checkers, Pizza Hut, and Tony Roma’s. Sentinel acquired Fazoli’s nearly two years ago, and the brand has since set new records for average unit volume in fiscal 2017, including a record AUV month in March 2017. The chain also recently signed agreements to develop 30 restaurants with 13 franchise groups.
Global PE firm Sun Capital Partners has invested in a slew of sectors since its 1995 founding, including food and beverage, industrial, packaging, chemicals, and building products. The firm has active investments in Johnny Rockets, Friendly’s, Bar Louie, Boston Market, and Smokey Bone’s. The company has offices in Boca Raton, Los Angeles and New York, and affiliates in London, Frankfurt and Shenzhen.
Arbor Investments focuses primarily on acquiring middle-market food and beverage companies. Founded in 1999, Arbor has acquired 50 F&B and related businesses to date. Active investments include Artisanal Brewing Ventures, seasonings producer Concord Foods, ice cream company Mister Cookie Face, and Rise Baking Company.
Anaheim-based Fairmont Capital focuses on investments in middle-market consumer-related businesses. Past investments have included Shari’s Management Corporation, a Pacific Northwest chain of family-style restaurants; VICORP Restaurants, a family-style restaurant chain operating under the names Baker’s Square and Village Inn; and a 2003 acquisition of the parent company of Souplantation and Sweet Tomatoes.
Private equity firm Advent International is an American global private equity firm focused on buyouts of companies in Western and Central Europe, North America, Latin America and Asia. In July 2017, Advent announced it had taken a majority stake in cafe operator First Watch Restaurants, in a deal reported to value the company between $300 million and $500 million.
Since its founding in 1990, Argosy Private Equity has focused on generating returns in the lower middle market. In early 2017, Argosy and MTN Capital Partners LLC announced they had acquired a controlling stake in Italian ice chain Rita’s Franchise Co. from Falconhead Capital. MTN has formerly held investments in specialty food retailer Balducci’s and high-end grocery chain Kings Supermarkets.
Founded in 2003, the Atlanta-based Argonne Capital Group seeks to make equity investments in a diverse range of middle market enterprises. Argonne is the largest franchisee of IHOP, with nearly 300 restaurants across four partnerships. It also holds active investments in Applebee’s, Krystal, On The Border, and Sonny’s BBQ.
KKR is an American multinational private equity firm, specializing in leveraged buyouts, headquartered in New York City. In 2014, the firm invested in California’s Lemonade, to accelerate the chain’s continued expansion. Terms of the transaction were not disclosed.
Aaron Allen Capital Partners is an investment group focused on funding the future of foodservice™. The company is a consortium of esteemed restaurant industry executives, investors, and family offices combining resources to solve some of the biggest pain-points for the foodservice industry globally. The firm invests in high-growth restaurant companies and foodservice technology enterprises with the potential to disrupt the industry or dislodge an incumbent. AACP works on square deals that are fair for all parties involved and brings a dynamic perspective to framing opportunity and potential.
Brightwood Capital provides debt and equity solutions to companies in the Tech & Communications, Healthcare, B2B, Transportation & Logistics, and Franchising industries, with EBITDA in the range of $5m-$75m. In 2022 it invested in Yardbird. The company has AUM of $4 billion.
Mercato Partners’ Savory Restaurant Fund invests into U.S.-based restaurant brands, properties, and growth. The fund is focused on the F&B industry and has invested in Hash Kitchen, Pincho, Via313 Pizzeria, The Crack Shack, among others. The fund has a focus on restaurant chains with 2 to 20 units in the fast casual and polished casual segments.
Gala Capital Partners is an investment and holding firm investing in U.S.-based restaurant chains (50 units or more), tech (SaaS with ARR higher than $1m), real estate, franchising, F&B, Pets and the Health & Beauty industries. Mooyah Burger, Famous Dave’s BBQ and Fresh Griller are some of the brands in their portfolio.
Centre Lane Partners is a Middle-Market PE firm founded in 2007. The company looks for majority ownerships, companies with revenue in the $25m-$500m range, negative to $75m EBITDA, in North America. The investment size ranges in the $10m-$250m. In 2022 Centre Lane acquired Captain D’s.
Switchback Capital is a private equity firm headquartered in Texas. The firm acquires and provides growth capital to operating companies with positive cash flow. Smokey Mo’s TX BBQ is one of the companies in the portfolio.
Trispan is a PE firm focusing on MM. The company was founded in 2015 and has offices in NYC and London. The portfolio has 13 companies, some of the F&B portfolio companies are Rosa Mexicano, Yardbird, Shell Shack, Pho, and Naya. Trispan does growth capital and buyouts.
Meritage Group is an investment adviser founded in 1997 with $11b in assets under management. The company invests in public and private equity, credit, and real estate.
Enlightened Hospitality Investments is a VC and PE group affiliated with Danny Meyer’s USHG. EHI has $500m in AUM and invests in hospitality and foodservice technology. Some of the portfolio companies are Joe Coffee, Salt & Straw, Goldbelly, Dig, Tripleseat, Madison Reed, Banza, Clear, Tacombi, and 7Shifts.
Fortress Investment Group was founded in 1998 and has $41b in AUM. The company focuses on credit, real estate, PE, and permanent capital investments. The firm invests in the financial services, transportation, energy, infrastructure, and healthcare industry but also backs SPB Hospitality which owns hundreds of restaurants and breweries in the U.S.
MOST ACTIVE RESTAURANT PRIVATE EQUITY FIRMS IN THE MIDDLE EAST & AFRICA
Fajr Capital is a major player in Middle East private equity investment, specializing in early venture, mezzanine, growth capital, buyout, and infrastructure investments in companies operating across diversified sectors. Fajr acquired Cravia Group, which is based in the UAE, in May 2016. Cravia operates across the MENA region and includes some of the most recognizable F&B franchises around the world: brands such as Cinnabon, Seattle’s Best Coffee, Carvel ice cream, Five Guys and Zaatar w Zeit. Currently, Cravia has 85 restaurants and employs more than 1,500 people. Fajr Capital’s investment will allow for continued growth in the company’s established markets and movement into new markets in the MENA region.
Global Capital Management LTD (GCM) is a division of Global Investment House, founded in 1998 and headquartered in Kuwait. In December 2016, Global bought Yum Yum Tree through PE funds managed by the company. “This acquisition gives our clients unique access into a growing sector which is resilient to economic downturns,” CGM managing partner Sulaiman Al-Rubaie said in announcing the deal. Today, Yum Yum Tree operates across Bahrain, the UAE, Qatar and Saudi Arabia. The company operates more than 20 international and regional brands including Vanellis, Subway (in Bahrain only), Teryaki, Pad Thai, and Al Mangal.
Abraaj has pioneered the private equity industry in many of the growth markets in which it operates, having lead some of the first private equity transactions ever made in its markets. Over the past two decades, Abraaj has invested in a diverse range of businesses across the consumer sector including Kudu, the largest QSR chain in Saudi Arabia by number of outlets; and Wine Connection, a wine-themed restaurant and wine retail chain in Southeast Asia.
Gulf Capital is a leading alternative investment company focusing primarily on late-stage control buy-outs, growth capital and real estate development. In 2016, the Abu Dhabi-based firm bought a 100% stake in Multibrands Trading Co. (Multi brands). A strategic buy, Multibrands is a leader in the F&B industry with products serving KSA through franchised chains, hotels, cafes, bakeries, and restaurants. Gulf Capital has focused much of its investment On market segments with the most projected growth. These include F&B, health care and education.
NBK Capital Partners (NBKCP) is a leading regional private equity firm with $875 million in capital commitments, based in the DIFC in Dubai. Early in 2016, NBK invested in Amo Hamza, a successful casual dining chain in KSA specializing in seafood (Aaron Allen & Associates performed the Commercial Due Diligence and Operational Due Diligence for this transaction). With six additional investments in the region (including Shakespeare & Company and Al Faysal Bakery), NBKCP is a significant and important player in the F&B sector in the GCC/MENA region.
Alghanim Industries is one of the largest privately owned companies in the Persian Gulf region, predominantly in Kuwait. Western fast food giant Wendy’s partnered with Alghanim in February 2016. Based out of Kuwait, Alghanim is a large conglomerate with operations in manufacturing and engineering to consumer credit to advertising. Alghanim has spent the year revamping the brand’s stores, retraining employees, and updating recipes to improve overall business operations. The Alghanim and Wendy’s partnership is expected to branch into Kuwait and KSA.
Restaurant Private Equity Services
MOST ACTIVE RESTAURANT PRIVATE EQUITY FIRMS IN EUROPE
Rcapital provides private investment to transform and grow businesses in the United Kingdom. Since 2004, the firm has made over 50 portfolio investments from a wide range of industries. In 2011, the firm emerged as the private equity group behind the rescue package for UK chain Little Chef. It exited that investment to Kuwait’s Kout Food Group in 2013.
Quilvest is a leading global independent wealth manager and private equity investor dedicated to wealth preservation and generation. The firm operates from thirteen offices across the US, Europe, Latin America, the Middle East, and Asia. It sold its controlling stake in YO! Sushi in 2015 and has also made investments in US chain Luke’s Lobster, PF Chang’s, Anthony’s Pizza, and Dunkin’ Donuts supplier Metro Franchising.
Naxicap Partners is one of the leading providers of equity financing for businesses in France. The company holds mid-cap investments in restaurants, brasseries, pubs, tea rooms, and catering companies. Brands include Au Bureau, Angelina, Burger King, Bert’s, Café Leffe, Irish Corner, and Lipp.
Spain’s Alantra Private Equity is a global, mid-market specialist. The firm specializes in the Spanish and Portuguese markets, with an investment portfolio that includes high-end winery Arco and Spanish-Brazilian restaurant chain Rubaiyat. In 2013, Alantra was born from the merger of Spain’s Mercapital and N+1 Private Equity (now Alantra), creating one of the largest firms in the Spanish private equity mid-market.
21 Partners is a European PE group investing in companies based in France, Italy, Switzerland and Poland. Over the past 25 years, 21 Partners has completed more than 95 investments, with a portfolio that includes pastry distributor DGF and luxury caterer Potel & Chabot.
JAB Holdings operates offices in Europe and the US (Luxembourg, London, Mannheim, Washington, DC) and has a number of restaurant brands in its portfolio. Since 2012, JAB has acquired the American brands Peet’s Coffee, Caribou Coffee, Keurig Green Mountain, and — most recently — Panera. In 2014, JAB (the investment arm of the German Reimann family) bought the Einstein Brothers bagel chain. In 2016, it paid $1.35 billion for donut chain Krispy Kreme.
European investment firm Permira was founded in 1985. It took over the number-one conveyor sushi chain Akindo Sushiro in 2012, and is now considering a stock market listing after almost doubling the company’s value. In the past, the firm invested in Madrid-based Telepizza, which it helped expand internationally.
Getting Deals Done
MOST ACTIVE RESTAURANT PRIVATE EQUITY FIRMS IN APAC
Japanese firm Unison Capital is an independent private equity firm with operations in Japan, Korea and Singapore. In June 2017, Unison acquired bar and restaurant chain DINAMIX, which has about 30 brands under management.
Standard Chartered focuses on investments throughout Asia, Africa and the Middle East. In 2015, it invested $52 million in Crystal Jade, which operates more than 100 outlets (including fine dining, casual and bakery) across the Asia Pacific region with a primary focus in Singapore, Hong Kong and Mainland China. In 2014, it announced the successful acquisition of a significant minority stake in Golden Gate Trade & Services Joint Stock Company, the largest domestic developer and operator of Asian full-service restaurants in Vietnam.
Quadrant Private Equity was founded in 1996 and is now a leading Sydney-based mid-market firm investing in companies in Australia and New Zealand. It has raised more than $3.6 billion and 8 funds in its history. In 2017, the Quadrant-backed Urban Purveyor Group (UPG) acquired control of Australian dining group Rockpool for a reported $77 million.
Partners Group is a global private markets investment manager based in China. In 2017, the firm announced it had acquired a substantial minority stake in Green Tea Restaurant, a leading Chinese casual dining restaurant chain.
In January, PE firm India Value North announced it would invest 80-90% of its capital in four sectors — financial services, consumer, healthcare and technology products and services — and change its name to True North, reflecting the strategy the fund would take moving forward. In 2015, the firm acquired a controlling stake in deGustibus Hospitality, which operates restaurant chains Indigo Deli and Tote on the Turf. The $30 million investment in deGustibus was meant to ramp up expansion in the country’s $700 million premium dining market.
New Silk Route is a growth capital firm focused on investing in private companies in the Indian sub-continent and other rapidly growing economies of Asia. The firm has offices in New York, India, and Dubai. In June 2017, the firm announced it was in the final stages of selling its majority stake in food and beverage company Moshe’s Fine Foods, which owns and operates the Moshe’s brand of cafes and restaurants.
The Everstone Group is a leading private equity and real estate investment firm focused on supporting entrepreneurs, corporations and asset owners throughout India and Southeast Asia. Everstone owns and operates Burger King’s branded restaurants across India and Indonesia and also invests in Modern, one of India’s foremost bread companies.
TVS Capital Funds Limited is a private equity and venture capital arm of TV Sundram Iyengar and Sons Limited specializing in early growth to late-stage investments of India’s mid-cap businesses. In 2016, the firm invested an undisclosed amount in Indian Cookery Private Limited, which owns several restaurant brands including The Yellow Chili, Khazana, and Indii.
India Equity Partners has reportedly earmarked $100 million for buyouts in the food and beverage space. The Mumbai-based firm’s portfolio includes Sagar Ratna Restaurants and Innovative Foods, India’s leading frozen foods company.
MOST ACTIVE RESTAURANT PRIVATE EQUITY FIRMS IN LATIN & SOUTH AMERICA
Glisco Partners, formerly known as Evercore México, was formed in 2016. In 2017, the firm acquired a minority stake in gourmet restaurant chain Grupo Hunan.
Costa Rican private equity firm Mesoamerica is a leading private equity investor in growth markets across Latin America, with an emphasis in Colombia, Perú, Chile, Mexico and Central America. Mesoamerica acquired a majority stake in Chilean restaurant chains Pedro Juan & Diego Chicken Stop in 2016.
Though based in New York, private equity investment firm Castle Harlan has invested $12 million to acquire THE rights to Firehouse Subs in Puerto Rico and Latin America, as well as to build the chains first units in the region. The company acquired Caribbean Restaurant Inc. (CRI), the exclusive Burger King franchisee in Puerto Rico, in 2004.
THE FUTURE OF PE RESTAURANT INVESTMENT
Private Equity interest in foodservice is good news for restaurants — particularly those looking to expand, explore new concepts, or scale up. Of course, financials are just one aspect of the restaurant-investment relationship, and a third party (one who knows the ins and outs of the industry and has experience dealing with both restaurant operators and PE firms) helps streamline the process.
The restaurant industry is growing in many parts of the world, piquing the interest of investors everywhere, who are funneling dollars toward the growing market in the US and elsewhere. For those looking to invest (or those operators interested in seeking investment), ensuring the alignment of values and visions is critical to success.
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ABOUT AARON ALLEN & ASSOCIATES:
Aaron Allen & Associates is a leading global restaurant industry consultancy specializing in growth strategy, marketing, branding, and commercial due diligence for emerging restaurant chains and prestigious private equity firms. We work alongside senior executives of some of the world’s most successful foodservice and hospitality companies to visualize, plan and implement innovative ideas for leapfrogging the competition. Collectively, our clients post more than $200 billion, span all 6 inhabited continents and 100+ countries, with locations totaling tens of thousands.