Atlanta-based Roark Capital Group has acquired restaurant chain, McAlister’s Deli for an undisclosed amount.
McAlister’s, headquartered in Mississippi, operates and franchises a chain of fast food restaurants selling sandwiches, salads, soups, baked potatoes, wraps and beverages.
The business has over 170 franchised and company-owned outlets across the US and generates more than $200 million (€161 million) in sales.
McAlister’s Deli is Roark’s sixth buy in the franchise sector, following Carvel, Cinnabon, Money Mailer, Fastsigns, and some international markets for Seattle’s Best Coffee. Roark is believed to have acquired the latter two brands from AFC for $30.25 million.
Private equity’s attraction to franchises is partly due to the steady and predictable cash flow inherent in the business, along with a large pool of buyers wishing to run their own franchises.
In June this year, New York-based Sentinel Capital Partners exited its stake in a Church’s Chicken franchise business, and the following month CVC Asia Pacific submitted a $113 million offer for Restaurant Brands of New Zealand.
The McAlister’s acquisition is also Roark’s first since the final closing of its first institutional private equity fund Roark Capital Partners in March this year, which capped commitments at $413 million, above its original target of $300 million.
According to Roark, the fund is one of the largest private equity funds raised in Southeastern United States. Combined with debt, the fund provided the firm with over $1 billion at its disposal.
Investors in the fund included Princeton University, Harvard University, Hamilton Lane, Goldman Sachs, ATP, Parish Capital, and Commonfund Capital.