Zaxby’s, quietly one of the country’s fastest-growing restaurants, on Wednesday said it will receive a strategic investment from Goldman Sachs in a deal that should help the Athens, Ga.-based chain take its concept further beyond its Southeastern home.
Goldman Sachs Merchant Banking Division will acquire “a significant stake” in the 900-unit chain, which has locations in 17 states. The deal is expected to be finalized by the end of the year.
“This partnership symbolizes the strength of our company and their involvement will accelerate our growth and expansion into a national brand,” Zach McLeroy, Zaxby’s cofounder and CEO, said in a statement.
McLeroy and Tony Townley cofounded Zaxby’s in Statesboro, Ga. 30 years ago. The company has grown throughout the Southeast in the years since—system sales have grown an average of 8.4% the past five years, according to data from Restaurant Business sister company Technomic. U.S. system sales were $1.9 billion in 2019. Unit count over that time grew an average of 6.7%.
The investment also comes amid heightened interest in the chicken category, and especially fast-casual chicken chains such as Raising Cane’s and the wing chain Wingstop—not to mention category leader Chick-fil-A, the third largest restaurant chain in the U.S.
Nicole Agnew, managing director for Goldman Sachs, called Zaxby’s “a fantastic company with a founder-led culture, loyal customers and talented employees.”
“We are confident we can grow the brand while remaining authentic to what people love about the restaurants.”
Zaxby’s said the deal should help the company accelerate growth and expand into new sales channels. The company said there is “unprecedented demand from franchisees” to add new units after strong same-store sales growth the past three years.
“This new partnership is a testament to what our employees and franchisees have helped us create thus far,” Townley said in a statement, noting that “Goldman Sachs’ knowledge and resources will help continue to build upon the strong foundation we have laid out.”
Morgan Stanley and Stephens served as financial advisors to Zaxby’s, while King & Spalding and Fortson, Bentley and Griffin served as legal advisors. Wil, Gotshal & Manges was Goldman Sachs’ legal advisor.