Roark Capital buys a piece of Cheesecake Factory

The private-equity firm, which owns Arby's and Buffalo Wild Wings, has acquired 200,000 shares of preferred stock for $200 million.
Photograph: Shutterstock

Roark Capital, the parent of restaurant chains ranging from Buffalo Wild Wings to Cinnabon, has made a $200 million equity investment in The Cheesecake Factory, the partners announced this morning.

The deal provides Roark with 200,000 preferred shares in Cheesecake, which itself is the parent of restaurant concepts such as North Italia, Flower Child, Culinary Dropout and a number of additional growth brands.

The deal prohibits Roark from seeking to take control of Cheesecake for three years or until its stake is reduced to less than 5% of total shares outstanding. The conditions state that Roark can start converting its preferred stock to common shares at a rate of $22.23 per share, up to a stake equal to 19.9% of total common shares outstanding. 

It also calls for adding a seat to Cheesecake’s eight-person board for Roark President Paul Ginsberg.

“This transaction not only meaningfully enhances our liquidity position to navigate the near-term COVID-19 landscape and get our affected staff members back to work as soon as practicable, but also, importantly, solidifies our ability to manage the business for the long term for all of our stakeholders once we emerge on the other side of this crisis,” Cheesecake CEO David Overton said in a statement.

“We have long admired The Cheesecake Factory and the culture that David and his team have built,” said Neal Aronson, a founder and managing partner of Roark.

The firm rec called the Roark Diversified Restaurant Fund II LP.

The private-equity firm has already amassed a sizable array of restaurant brands, both directly and through two affiliates, Focus Brands and Inspire Brands.

The former is the franchisor of Jamba, McAlister’s Deli, Moe’s Southwest Grill, Schlotzsky’s, Cinnabon and Auntie Anne’s.

Inspire operates Buffalo Wild Wings, Sonic Drive-In, Arby’s, Rusty Taco and Jimmy John’s.

Roark’s portfolio also includes Miller’s Ale House, Culver’s, Carl’s Jr. and Corner Bakery.

Cheesecake acquired Fox Restaurant Concepts, a Scottsdale, Ariz.-based multiconcept operation, as a restaurant incubator last year. Its operations include Olive & Ivy, Doughbird, Wildflower, The Arrogant Butcher and Blanco.

More recently, Cheesecake has made a number of moves intended to help it weather the COVID-19 pandemic. It furloughed about 41,000 employees, alerted landlords that it would not be paying rent, and focused on delivery and takeout.

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