OPINIONFinancing

How is Roark Capital's track record? It's complicated

The Bottom Line: The private-equity firm has acquired or invested in 23 restaurant chains over 25 years. Those brands have a mixed track record, according to our analysis of their sales performance.
McAlister's Deli
McAlister's Deli has grown more than 500% since Roark acquired the chain. | Photo: Shutterstock.

Roark Capital acquired its first restaurant chain in 2001 when it bought the ice cream franchised brand Carvel. In the years since then it has been one of the most consistent acquirers of restaurant chains in the U.S., having invested in or acquired another 22 restaurant chains. 

The size of those buyouts has increased over the years, including two of the biggest buyouts in industry history with the 2020 acquisition of Dunkin’ for $11.3 billion and the 2023 purchase of Subway for as much as $9.6 billion. 

Over the years it has made growth investments and mega-buyouts, bought fixer-uppers and growth brands. What it hasn’t done, for the most part, is exit. That lack of exit has generated some question about its performance in the aftermath of the $1 billion purchase of Dave’s Hot Chicken.

But we do have some data points, thanks to Restaurant Business sister company Technomic and Kevin Schimpf, senior director of industry research. That data paints a more complex picture. But on balance the firm’s acquisitions have performed relatively well.

We looked at the system sales growth of Roark’s brands through last year, from the year the firm acquired the chains, and compared it with sales growth among the Top 500 chains over the same period. That helped provide a benchmark for the firm’s performance.

Here are the brands and their growth since acquired, and where they are compared with industry growth:

Roark has had some major wins, some notable losses and a bunch of in-betweens, a track record that is probably to be expected given the frequency of its acquisitions. 

Overall, not counting its recent acquisitions Subway and Dave’s Hot Chicken, Roark’s brands have grown system sales by an average of 90% since they were acquired. The firm’s restaurant chains have outperformed the chain restaurant industry by 3.5% on average since they were acquired.

To be sure, private-equity firms are not judged based on total sales growth but on the returns its investments generate. But because Roark has few exits—three total among 23 restaurant chains purchased—it generates its returns from dividends and other disbursements over time. A brand with better total sales performance is better able to pay such payments, making this as good a data point as anything else. 

Here's a look at some of the firm's investments.

The great

Roark’s best performing acquisition, by a long shot, was McAlister’s Deli. Roark acquired the fast-casual chain in 2005, and the company has grown system sales by 530% over that period. McAlister’s is now a $1 billion restaurant chain, one of the 60 largest in the U.S. What’s more, its sales are 155% what they’d be if McAlister’s simply grew at the rate of the Top 500. 

Roark does not own a controlling share of Culver’s, but its 2017 investment in the burger chain is proving to be one of its savviest. All Culver’s has done is grow since that deal. Cinnabon is another underrated deal for the firm, having more than quadrupled in size since the 2004 deal. Its 2021 deal for treat chain Nothing Bundt Cakes is also proving to be a winner.

Another one is the 2020 deal for Dunkin’, which established Roark as a world-class acquirer while giving Inspire Brands a major global presence. Dunkin’s sales since 2019, the year before Roark bought the chain, have performed about in line with the largest chains. But it has also outperformed rival Starbucks over that period.

The good and the in-betweens

Most of Roark’s acquisitions have performed about where they’d have been expected to perform when they were acquired. These brands have grown, but maybe not as much as the industry.

Not all that long ago we’d have labeled Arby’s a major win, largely because what we do know suggests that Roark’s 2011 purchase of the brand has performed exceptionally well. By 2015, it had received about $240 million in dividends from Arby’s, more than enough to cover its acquisition of the chain. That was a decade ago. 

But Arby’s has underperformed the industry by 23% since the acquisition and system sales have slumped in recent years, down 3% since 2021. So it gets downgraded. But Roark has long ago made a return on that deal and then some and then used Arby’s as a jumping-off point to create Inspire Brands.

A few other deals are worth mentioning. Roark bought Moe’s Southwest Grill in 2007 and then Auntie Anne’s in 2010. Both are now part of the operator GoTo Foods, and both have more than doubled in size since they were purchased while besting industry averages. Moe's remains a fraction of the size of Chipotle but based on this analysis it has done fine. Auntie Anne's is one of the more underappreciated restaurant brands in the U.S.

There are also a pair of smaller casual-dining chains in Miller’s Ale House, which has nearly doubled in size since its 2013 purchase, and Jim ‘N Nick’s BBQ, where sales have grown 51%. Both are also coming off relatively strong years in 2024, so the two brands are picking up steam.

There are several other acquisitions that have done OK, including Sonic, Jimmy John's, Baskin-Robbins and Buffalo Wild Wings. Each of them was a large, Inspire Brands deal. They've grown, but not as much as the chain restaurant sector. 

The bad

The worst-performing of Roark’s acquisitions is also its first. Carvel’s sales have fallen 25% since that 2001 purchase, or 75% lower than industry average, by far the worst performance among the firm’s deals. We’re guessing much of its sales are coming through sales of ice cream cakes and other products at retail. 

Two other companies have declined since they were sold to Roark: Hardee’s and Jamba.

The 2013 purchase of CKE Restaurants, at least from a sales standpoint, has been a problem for the private-equity firm. Hardee’s global sales have declined 2.4% since the acquisition. Carl’s total sales are up 22%, thanks largely to international growth. But it has struggled domestically, too.

Jamba has underperformed both. The juice chain’s sales are down 7.5% since its 2018 acquisition. 

A more complex story is the sandwich chain Schlotzsky’s, which has grown 27% since the 2006 acquisition, but which has underperformed the industry by 45%. 

The exits

Roark Capital has sold three chains: Wingstop, Naf Naf Grill and Corner Bakery. Wingstop was a major win. Roark acquired the chicken-wing chain in 2010 and took it public in 2015. That IPO has proven to be the best in a string of offerings from 2011 through 2015.

The same can’t be said for Naf Naf or Corner Bakery. Roark acquired Corner Bakery from Bruckmann Rosser Sherrill in 2010. The fast-casual chain never really fulfilled its potential and Roark unloaded it for cheap to the owner of Boston Market in 2020. Roark made an investment in Naf Naf in 2015, which it unloaded in 2021 after OK but not great performance.

Conclusion

Roark’s track record largely mirrors that of the overall industry. The firm has acquired a lot of restaurant chains at a range of sizes and valuations and, particularly early in its history, took on a bit of risk in doing so. And for the most part it has held onto them. 

The company’s brands didn’t perform great last year, on average, which makes it more difficult to take public, say, Inspire. But as the Arby’s example demonstrated, Roark has been able to generate returns without heading for the exits. So there is no need to rush it.

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