Cooper’s Hawk Winery & Restaurants has reached a sale agreement with private equity firm Ares Management, according to a report this week in the publication Mergermarket.
Sources have confirmed the deal to Restaurant Business.
According to Mergermarket, Ares is paying more than $700 million for the chain, which is based in suburban Chicago. According to a source, company founder and CEO Tim McEnery will remain with the company and keep a “significant equity stake” in the chain.
A representative for Cooper’s Hawk said the company would not comment on the deal. “Given our increasing viability in the market, there is bound to be speculation, but it would not be prudent to comment at this time,” the company said in a statement.
Representatives from Ares Management did not respond to requests for comment.
The firm would be getting one of the hottest restaurant chains in the U.S. System sales have tripled over the past five years, according to data from Restaurant Business sister company Technomic.
The upscale-casual chain generated $282.3 million in system sales and operated 35 locations in 2018, according to Technomic. Both numbers were up nearly 17% from the previous year.
Cooper’s Hawk also boasts a wine club that has more than 350,000 members, who have formed a loyal base of customers that visits the restaurant more frequently and take part in regular, special events.
The company has been working to increase those members’ benefits, even letting them pay for their meals with a signature.
“Every brand has aficionados and folks who are really into what they’re doing,” McEnery said in an interview with Restaurant Business last year, speaking of its wine club members. “But they are just incredibly passionate about what we do. They feel like they’re part of something.”
McEnery and company management own a controlling interest in Cooper’s Hawk, with a minority investment from private equity firm KarpReilly.
The chain’s rapid growth and that wine club had given the company some expectations of a strong valuation when it hired the investment banking firm North Point Advisors to run an auction. But a source said that the deal ultimately exceeded those expectations.
According to Mergermarket, Ares is initially funding the deal with equity, rather than debt. The $700 million price would imply a valuation multiple of at least 17.5 times earnings before interest, taxes, depreciation and amortization, or EBITDA.
That’s a strong multiple for a smaller midsized full-service chain, particularly one being sold to a private equity firm rather than a strategic buyer. It would rival the historically high valuations given to Panera Bread and Popeyes Louisiana Kitchen.
UPDATE: This story has been updated to add additional information.