Sponsor-backed restaurant deals proliferated in late May.
The most high-profile deal was
Meanwhile, that same week, Buyouts reported that
Buyout shops appear to be betting that consumers will be more willing to dine out as the slow economic recovery continues. By buying now, these firms are betting they can sell the company at a much higher multiple in a few years if the economy takes off.
“The long-term trends for eating away from home are very good but casual dining has been hurt due to the economy and high gas prices, creating a dip in the industry that will reverse,” the head of a buyout shop with experience in the sector told Buyouts.
Trying to time cycles is a tricky endeavor, of course, and some sponsors who bought restaurant businesses at the top of the market now have their hands full with struggling companies. Sbarro Inc., the struggling pizza chain that
Sponsor-backed restaurant deals have rebounded considerably since the downturn. In 2010, buyout shops bought 24 restaurant companies with $5.66 billion in disclosed deal value, according to Thomson Reuters, publisher of Buyouts. In terms of disclosed deal value, that’s more than any other year in recent memory, including 2007, when sponsors backed 28 restaurant companies with a disclosed deal value of $4.86 billion.
Golden Gate, a San Francisco-based firm known for taking on challenging deals, offered $18.50 per share, a 32 percent premium to the 30-day average price of California Pizza’s stock prior to its search for a buyer. Still, the price was less than was some investors had expected, and it fell short of the stock’s 52-week high of $20, according to sister news service Reuters.
Like MidOcean’s Sbarro’s, California Pizza struggled in recent years as consumers became more cautious and prices rose for essential products like cheese. The company is known for its creative pizzas such as pear & gorgonzola and Jamaican jerk chicken.
Should the Il Fornaio deal close, it would mark a long-awaited exit for Bruckmann Rosser Sherrill, which bought the Corte Madera, Calif.-based company in 2001 for about $93 million, according to the firm’s Web site. The company has done at least one major add-on acquisition under Bruckmann Rosser. In 2006, it bought Dallas-based Corner Bakery Café from Brinker International for $72.5 million, according to data provider Capital IQ.
Established as a baking school in Italy in 1972, Il Fornaio owns and operates 21 full-services restaurants and two bakeries. Most of its restaurants are located in California, although it also has outlets in Colorado, Virginia, Washington and Nevada. Its bakeries are located in Burlingame and Mirada, in northern and southern California, respectively. The company would be a logical target for Roark Capital, which invests in consumer and business services companies, with a focus on franchises.
In the Chuy’s transaction,
Like Bruckmann Rosser Sherrill, Goode Partners is in serious need of an exit. In 2007, the firm closed on $225 million for its first fund, and it has a portfolio of at least six companies, according to its Web site. But, notably, it has yet to sell a company, though Skullcandy, a Park City, Utah-based maker of designer headphones in which Goode took a minority stake in 2008, filed for an initial public offering earlier this year. T