Last week, the Tokyo-based Create Restaurants Group (CRG) acquired six restaurants operated by Minneapolis-based Nova Restaurant Group.
Nova had three brands. But the concept most of interest to CRG was Hazelwood Food and Drink, a four-unit casual dining concept with a solid reputation in the Minneapolis region.
The acquisition for a reported $23.1 million was a relatively small deal in the world of restaurant mergers and acquisitions.
What was interesting about it, however, is the strategy CRG appears to be putting into play. It’s a strategy that stands out for its simplicity:
Buy great brands and don’t change them much.
So explains Shun Maki, the U.S.-based head of CRG’s North America M&A Division.
CRG is a division of 25-year-old public company Create Restaurants Holdings Inc. in Japan, with roughly 1,200 restaurants across 280 or so brands, mostly in Asia. About 95% are company-owned.
The acquisition last week was CRG’s third in the U.S., where the group would like to continue to grow. The U.S. is CRG’s second largest market, outside Japan.
“We think North America is a growth market for us, and we’ll grow through acquiring more brands,” he said.
CRG, for example, first acquired the Italian concept Il Fornaio in 2019, which at the time had 19 casual dining restaurants, but it appears some have closed. Now, Il Fornaio has 15 units, and CRG has opened two of those since the acquisition.
Then, in 2024, CRG bought Wildflower for $28.2 million, an Arizona-based bakery-café chain founded in 1995 by Louis Basile Jr. At the time, Wildflower had 16 units. Now, the chain has 14, including a new one CRG is about to open in the Phoenix area.
And now the group will look at growing Hazelwood, said Maki. But the group is not in any big hurry.
In fact, CRG is fundamentally a very different kind of parent when it comes to acquisitions, Maki said.
“We like to buy a brand and slowly grow it,” said Maki.
CRG deliberately does not go at the pace of, say, an American private equity investor, which might look to open two or three restaurants a year in different regions, looking for a certain return on the investment by a certain time.
“We don’t grow the business that way,” he said.
CRG is a “buy-and-hold acquirer,” said Maki.
“We’re not running against some kind of time clock, where you show a return or show a hope of growth or portability within five years,” he said. “We’re owning it for a lifetime, and we want to make the right judgment and investment. And those things take time.”
CRG likes the fast-casual and casual-dining segments, said Maki. They are not so interested in quick service or fine dining. But they are open to all types of cuisine and geography.
“The core difference is that we’re not buying it for the sake of selling it a few years down the road,” he said. “And that changes a lot of the dynamics of the type of restaurants we like, then how we manage it. And that results in a unique situation where a particular brand would not be an ideal target from a private equity fund or a financial investor, but would be an ideal target for us.”
Maki said CRG tends to work better with a brand that’s been “run by someone that’s really cherished their brand, and they want to see that brand be handed over to someone that would put in as much love as they would, as opposed to treating it as a financial instrument to make money.”
In addition, CRG doesn’t put in a lot of debt, he added.
“Debt makes it difficult to run a stable restaurant. And a lot of companies end up having to do shortcuts, or to make cash flow in the short term to service the interest payment over debt payments,” he said.
Because CRG is a long-term investor, they’re making longer-term decisions, he said.
If, for example, they were thinking about selling the concept five years down the road, they might try to open in different cities to demonstrate portability and sell at a higher multiple.
“But we’re not thinking about selling, so we don’t have to window dress our restaurants,” he said. “We’re trying to grow the business in the right way, with the highest probability.”
And that means staying in the markets where the concept has roots. It also means keeping the people that have grown the business to that point, he noted.
But this is not a charity, Maki noted. “We’re not trying to lose money or give money away.”
CRG would like to build a sizeable restaurant portfolio in the U.S.
But the group is not looking for what Maki describes as an “outsized return,” one that perhaps reflects what too many financial investors expect these days.
“We’re definitely trying to make money, but not at the scale of the financial investors,” he said.
When it comes to emerging brands, people often say “slow and steady wins the race,” but they don’t usually mean it.
Here’s one company setting more reasonable expectations for brands that would likely benefit from time and stability.