Report predicts restaurant chains most likely to be sold

Ed’s Easy Diner

A number of the market’s leading restaurant and food-to-go chains are tipped to change hands this year, although analysts insist pricing for any  transaction activity will “not be excessive”.

In its latest Restaurants & Bars report, business advisory firm BDO said the roll-out potential of numerous chains would attract significant interest from buyers.

Kieran Lawton, M&A director at BDO, cited Ed’s Easy Diner as a chain that has a number of interested parties seeking to take it over, while Gaucho is also reported to be mid-process. Both deals would be expected to complete early or mid 2016, assuming all goes well, he said.

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“Looking at PE portfolios, the likes of Pho (Livingbridge), New World Trading Company (LDC), Be At One (Piper) and Abokado (Kings Park Capital) are probably coming to a point where an exit may be considered, although none are thought to be on the market as things stand,” commented Lawton.

“Turtle Bay continues to be talked about positively by investors but, having only invested in 2013 and with a recent refinancing by Santander, it may be at least a year too early to expect an exit for Piper.”

‘Food on the go’, particularly the healthy version, continues to be of interest to investors although no-one has yet made a real play for this area of the market.

“The interesting thing is that the aforementioned Abokado, along with a number of others such as Vital Ingredient and Pod, have significant roll-out potential beyond their current estate in a sub-market that is of interest to buyers,2 continued Lawton. “However, their respective estate sizes are still relatively small and unproven beyond their London/City heartlands, which creates doubt as to the potential scale of any roll-out. One would expect some activity, though, and there remains potential for a consolidation play.”

The Thai sector is another that is worth watching, with Giggling Squid having just received funding from BGF, Busaba continuing to be backed by Phoenix and Thai Leisure Group sitting on the Santander money it raised last year. All three are significant players that are vying to be the first to establish themselves as the first truly national Thai brand.

In a similar vein, Barburrito’s Pinto acquisition is a statement that the BGF-backed Mexican burrito group is willing to take on its slightly larger and most significant UK rival in Quilvest’s Tortilla, according to BDO.

“With Chilango and others also with cash in their pockets, it will be interesting to see which can use its financial backing to establish itself as the primary national operator,” said Lawton, adding that Bill’s and Loungers – perennial sources of acquisition speculation – could be subject to a significant transaction this year.

Tags : analystFinancialmarketPiperTurtle Bay
Andrew Seymour

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