PE feeding frenzy in the restaurant sector

Restaurant and fast food chains appear to be the latest “must have” portfolio company given the amount of recent deals either transacted, on the verge of being transacted or reported as being about to happen!

In the last few months there have been nine transactions either formally announced, completed or rumoured to be happening involving some of the UK’s more well-known restaurant chains. Familiar family chains such as PizzaExpress, TGI Fridays, Las Iguanas and now even Gordon Ramsay’s restaurant company, Kavalake Ltd,  have been acquired or are being linked to a possible acquisition by private equity firms.

In addition to this, two of the largest private equity deals globally have also involved restaurant/fast food chains. July saw Golden Gate Capital complete its USD 2.1bn acquisition of America’s Red Lobster Seafood as well as the USD 1.5bn acquisition of Pizza Express by China’s Hony Capital.

If you then look further than the menu and look at coffee shops, there is clearly an appetite for deals whether it be a strategic buyer or a PE buyer, given that Burger King are in the process of completing their USD 11.3bn public takeover of Tim Hortons, the Canadian based coffee and donut shop operator.