Shopping (and selling) tips from dealmaking pros

A Murderer’s Row of industry dealmakers took the stage at the Restaurant Leadership Conference to air their widely different approaches to finding and profiting from restaurant acquisitions.

The four panelists walked the audience through every step of the process, from what makes a good acquisition to what changes they make after buying a concept and what potentially can go wrong.

They also spoke about their plans for specific recent acquisitions, including Arby’s, Corner Bakery and California Pizza Kitchen.

Here are some of the insights that were provided by the panel, which consisted of Rahul Aggarwal, managing director of Brentwood Associates; Josh Olshansky, managing director, Golden Gate Capital; Steve Romaniello, managing director, Roark Capital; and Andrew Taub, partner, Catterton Partners. The session was moderated by Bill Krausse, managing director of GE Capital, Franchise Finance.

What makes a good acquisition
“The two key components we look at are real estate and the brand. Because if they’re not right it’s going to be expensive to fix.” -Golden Gate’s Olshansky.

“The first thing we look at is unit economics. How fast can a new unit pay back?” -Catterton’s Taub

“It’s more personal to us. So we really have to be aligned to management.” -Roark’s Romaniello (who’s also chairman of the private-equity company’s restaurant-operating arm, Focus Brands)

What they value in a target’s management
“Passion for the business is really important. Seeing how they interact with their employees when they walk the floor can be very telling…It says a lot for a leader when they hire people who have skill sets they don’t have.” -Brentwood’s Aggarwal

“We want to find companies that we really like, led by people that we really like. And we buy them So we’ve never had to make a management change.” -Romaniello

Typical changes made post-acquisition
“A much more metric-driven approach to managing the business [is implemented.] You can measure guest satisfaction, labor productivity, you can manage food waste.” -Olshansky

“We get very involved in things like real estate investment, what markets you enter, purchasing…” -Taub

What can go wrong
“Putting too much debt on a company. [Also,] basing a price on an assumption that doesn’t work out.” -Romaniello

“One of the things we worry about is the balance against the guest experiences of the efficiency and the profitability of the business.” -Olshansky

What Obamacare will mean to private-equity owners
“You’re going to see a lot of people playing games with hours. You’re going to see a lot of people get a whole lot of less hours. I think it’s going to be very cumbersome from a compliance standpoint.” -Romaniello

“The conclusion I’ve come to is, very rare is the concept that can absorb that cost without passing it on to the consumer. What result that’s going to have on traffic and on other eating options remains to be seen.” -Taub

Today's top stories

1
In a bid to keep pace with myriad ordering options debuting from major chains, Papa John’s has upped its ante, enabling customers to place orders via Apple TV. The new app—through which patrons can...
2
Chipotle is shotgunning another freebie into the market—its second in two days—in a bid to raise traffic as the fast-casual chain enters the final month of its third quarter. The ailing brand...
3
The Which Wich fast-casual sandwich chain said it has hired Ric Scicchitano to serve as president, starting next week. Jeff Sinelli, Which Wich’s founder, will remain chief vibe officer, a position...
4
The parent of Taco Cabana and Pollo Tropical says it will reconsider the company’s strategic direction after learning of Tim Taft’s plan to retire at year’s end from his posts as CEO and president...
5
Despite consumer interest in healthful fare, some health-focused fast casuals are closing units. Nearly 60% of consumers place a large importance on fast casuals offering healthy options, according...
6
Over the past five years, this column has kept me current on topics ranging from culinary techniques to HR policies to pest control. As a culinary and hospitality educator, one of the things I really...
7
Hot on the heels of DRU, Domino’s delivery robot , the pizza brand is poised to try the next big thing in delivery: drones. Domino’s franchisee Domino’s Pizza Enterprises Ltd. has partnered with an...
8
The nation’s first surtax on sugared soft drinks has significantly cut consumption of the beverages and pushed consumers to drink more water, as advocates had promised, according to a just-released...
9
Despite recent efforts to simplify drive-thru menu boards, 59% of consumers say the rosters of options are difficult to read, especially when cars are lined up to order. That’s one of the findings of...
10
With all the buzz around small plates, it’s sometimes forgotten how a well-planned appetizer or starter menu can add to a foodservice operation’s bottom line. And since consumers today are open to...