McDonald’s is eyeing private equity firms such as TPG and Bain Capital as potential buyers for 2,800 restaurants in China, Hong Kong and South Korea, according to a Reuters report, part of the company’s plans to transition to a franchise model for its North Asian business. If a deal takes shape, it would in all likelihood be the most significant PE investment in the restaurants & bars industry so far this year. While PE investors have completed 16 such deals in 2016 to date, according to the PitchBook Platform, the majority have involved smaller names—like MOD Pizza, which raised about $34 million led by Perella Weinberg Partners in March.
Worldwide, PE investor activity in eating and drinking establishments has stayed relatively steady since 2011, with annual deal count never falling below 56 and never rising above 70. One noteworthy trend in that period is the changing balance of investment in Europe and the U.S. In 2011, 25% of activity occurred in Europe and 54% took place in the U.S.; by 2015, those figures had morphed to 40% and 44%, respectively. And while it’s still early in 2016, Europe has accounted for 56% of deals in the restaurants & bars industry so far, compared to 38% stateside.
While the list of top investors in the sector includes some industry big boys, more common are smaller firms with more specialized interests in the restaurant space. That includes Argonne Capital Partners, a major franchisee of IHOP, Applebee’s and Krystal, as well as Sentinel Capital Partners, a backer of TGI Friday’s and Taco Bell/Pizza Hut franchisees.
Here are the top PE investors in restaurants & bars since 2007, along with their deal counts (including add-ons):
1. Sun Capital Partners (16)
T-2. Roark Capital Group (8)
T-2. Argonne Capital Group (8)
4. Sentinel Capital Partners (7)
T-5. Standard Chartered Private Equity (6)
T-5. Quilvest Private Equity (6)
T-5. Naxicap Partners (6)
T-5. KKR (6)
T-5. Brentwood Associates (6)