Private-equity firm principals at this week’s RestCon 2019 conference shared their insights into how they use data in making restaurant investments.
Executives from private-equity firms CapitalSpring, Gala Capital Partners LLC and NRD Capital Management discussed Wednesday what they look for in restaurant investment and acquisition deals in a “Data in a Private-Equity World” panel during the RestCon conference in Addison, Texas.
The panel was moderated by Ward Olgreen (right in the photo), chief operations officer for Plano, Texas-based Marketing Vitals, which sponsors RestCon annually.
Among insights:
— John Teza (left in the photo), principal at NRD Capital Management, which has invested in Ruby Tuesday, Frisch’s and Fuzzy’s Taco Shop:
“During the due diligence period, we’re going to collect information. We’re going to collect a lot of data that’s going to help you understand what you need to do once you get into the brand. We recently acquired a brand … unit economics were strong, the comps were very good, the brand was performing well. We were very nervous about the turnover rate and the culture of the business.”
The private-equity firm hired a consulting firm to do a market study, and the data helped the buyer identify the root causes of the turnover. “Very clearly,” Teza said, “they were to lay out that we were not in the market for compensation for every level of our team members, from general manager down to cook.”
NRD Capital was able to outline labor improvement benchmarks in underwriting the deal.
— Anand Gala (second from left in the photo), president and CEO of Gala Corp. and founder of Gala Capital Partners LLC, which has invested in Mooyah Burgers, Fries & Shakes and Fresh Griller, noted:
“The market is looking for what I consider to be great brands that are under-utilized or under-leveraged — not from a capital leverage perspective, but they just haven’t had the right resources — maybe the right people [or] enough of the right people — so they may be struggling. Or they may be extremely healthy and growing quickly, but they clearly have limitations that they see in the business and they don’t know how to get to the next step.”
— Chad Cohen (third from left in the photo), principal at CapitalSpring, which has investments in Beef ‘O’ Brady’s and Buddy’s Pizza, said:
“It’s very key with a lot of brands that we look at where there is a strong affinity to the brand and a loyal customer base, but the brand has outgrown the management team a little bit and needs some support. That’s where it’s nice to come in and kind of bring in an off-the-shelf-type playbook and run it with the brand.”
Contact Ron Ruggless at Ronald.Ruggless@Informa.com
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