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Financing

Elysium Management buys Huddle House

Sentinel Capital sold the family dining chain to private equity titan's family office investor.

Elysium Management, a family office investment firm, has acquired Huddle House from the private-equity firm Sentinel Capital, the companies said on Thursday.

Terms of the deal were not disclosed.

Elysium is a little-known investment firm that manages investments for the family office of private-equity titan Leon Black, who co-founded frequent restaurant chain investor Apollo Global Management.

Apollo is a frequent restaurant chain buyer—it bought the Mexican chain Qdoba from Jack in the Box in December for $305 million, for instance.

For the 349-unit Huddle House, such a deal promises a longer-term horizon because family offices typically hold their investments longer than private-equity firms that frequently buy restaurant companies.

“We certainly like them a lot,” Huddle House CEO Michael Abt said in an interview this morning with Restaurant Business. “We’re very excited about their long-term perspective, where they hold their investments much longer than typical private equity. That will allow us to explore some additional growth strategies.”

Abt said Huddle House management will remain with the company.

The sale continues an active period for Sentinel, a frequent buyer and seller of restaurant chains. The private-equity group bought Captain D’s just six weeks ago, and last year it sold the burger chain Checkers/Rally’s.

Sentinel acquired Huddle House in 2012, and Abt said the private-equity firm helped the chain grow stores and unit volumes and sell “significantly more franchise agreements” than it had previously, while improving the menu and helping with a new remodel program.

Abt said that the chain’s average unit volumes, which according to Technomic data were $665,000 in 2016, are on pace to grow 7% in the company’s current fiscal year, which ends in April.

“That was a period of time that saw meaningful system growth and strengthening of the brand,” Abt said. “We built relationships and trust with our franchise partners, who launched the successful remodel program.”

Abt said that 60% of the chain’s stores are remodeled.

“Throughout our ownership, Huddle House has achieved impressive, systemwide operational results that have increased efficiency and improved productivity at the individual restaurant level,” Jim Coady, a partner with Sentinel, said in a statement.

Elysium now gets a chain in a relatively strong sector, family dining. The breakfast occasion that chains like Huddle House specialize in is expected to grow by 4% this year, Abt said.

And Abt said that Elysium should help Huddle House realize growth while investing in areas that traditional private-equity firms might not be willing to fund.

“It just gives us the opportunity to implement strategies that might take a longer time to materialize than your typical private-equity investors are willing to allow,” Abt said, noting that such firms typically sell their acquisitions within four to six years.

“Elysium has a strong management team, and they have a strong history of investments in the restaurant space. We think they can be very additive to the thought leadership of the Huddle House executive team as well.”

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