Roark Capital is selling an undisclosed stake in its Wingstop franchise business to the public in a stock offering likely to generate at least $86 million. The initial public offering will mark the first divestiture of a restaurant holding by Roark, which owns 13 other restaurant brands.
Rumors have periodically swelled on Wall Street that Roark itself or the subsidiary that operates its holdings, Focus Brands, was poised for an IPO. The announcement of the Wingstop sale could signal a brand-by-brand exit strategy for the private-equity firm.
Roark, which ranks as one of the industry’s largest franchisors, has operated differently than most of its private-equity peers. Rather than buying and flipping brands, it has run them for the long term. It acquired a controlling interest in Carvel in 2001, reviving the Eastern treat chain and franchising it through Focus.
Since buying Carvel, Roark has expanded its restaurant portfolio to include Arby’s, Carl’s Jr., Hardee’s, Moe’s Southwest Grill, McAlister’s Deli, Schlotzsky’s, Auntie Anne’s, Corner Bakery Cafe, Il Fornaio, Cinnabon, Miller’s Ale House and Seattle’s Best Coffee outlets on some military bases.
Its holdings outside of the industry include the Massage Envy and Anytime Fitness chains. All of the companies it owns are franchisors.
Wingstop averaged $1.1 million in sales per unit in 2014. It consists of 712 fast-casual restaurants operating in 36 states and five countries outside of the United States. The chain specializes in chicken wings and a line of dipping sauces. Checks averaged $15.61 in 2014.
The business generated a net profit of $9 million on revenues of $67.4 million for the year ended Dec. 27.
The chain is led by Charlie Morrison, a veteran of Pizza Inn, a public company, and a one-time president of Steak and Ale.
Securities documents filed for the IPO did not reveal how much of Wingstop Roark plans to sell, or what its interest will be after the issue.