Day: August 2, 2021

SAN DIEGO–(BUSINESS WIRE)–High Bluff Capital Partners (“High Bluff”), supported by various alternative investment funds managed by FS Investments, announced it has entered into a definitive agreement to acquire Church’s Chicken®, one of the world’s largest quick service chicken restaurant chains, from FFL Partners. Subject to customary closing conditions, the transaction is expected to be completed during Q3 of 2021.

Based in Atlanta and founded in 1952, Church’s® has more than 1,500 locations in 26 countries and international territories. Demonstrating considerable resiliency in the face of a devastating global pandemic, the brand in 2020 leveraged its strengths in family meals, digital offerings, delivery and to-go orders to post a strong year of performance, generating system-wide sales of nearly $1.2 billion. Over the next year, the brand expects to expand its already sizable domestic and international presence with the opening of more than 100 new locations, including the roll-out of its highly successful Blaze Image restaurant concept.

Specializing in equity investments in restaurants and iconic consumer-facing brands, High Bluff established its restaurant platform, REGO Restaurant Group, in 2018 with the acquisitions of toasted sub pioneer Quiznos and Taco Del Mar, a fast-casual restaurant chain offering coastal Mexican cuisine. Since then, the firm has had a transformative impact on both brands – driving significant menu innovation, modernizing marketing and branding, enhancing the guest experience, and delivering best-in-class opportunities to franchisees.

“At a time when the entire restaurant industry has faced unprecedented challenges, Church’s has stood out as a notable bright spot, having emerged from the pandemic with considerable tailwinds that strongly position the brand for tremendous growth geographically as well as in the overall chicken category,” said Anand Gowda, who, prior to founding High Bluff Capital Partners served as President and Managing Partner of Metropoulos & Co.

“Our investment strategy continues to center on identifying brands with long-term connections with consumers that can be energized and propelled to greater success through targeted industry expertise, operational efficiencies, innovation and creative brand management,” Gowda added. “Church’s fits squarely within this wheelhouse. We look forward to leveraging our robust platform and working closely with the management team and franchisees to accelerate Church’s positive trajectory.”

“In addition to becoming a premier global franchisor, Church’s has long dominated the value-oriented market in the chicken category, with a highly recognizable brand, consistent quality and delicious offerings,” said Rushabh Vora, Managing Director at FS Investments, which led a structured capital investment in support of the acquisition out of its FS Tactical Opportunities Fund along with other affiliated investment funds. “With the global chicken QSR market forecasted to grow meaningfully over the next few years, and major geographies such as China and Australia still yet to be tapped by Church’s, we see exciting growth potential for this beloved brand.”

“The past few years have been all about growth for the brand and its franchisees,” shared Joe Christina, Chief Executive Officer for Church’s. “Our focus will be to deliver against our strategic plan with new locations in the U.S. and internationally and continued profitable sales growth.”

“I am proud to continue leading the brand with High Bluff and the solid backing of FS Investments, which will give us the added momentum to truly realize our Vision to be the Global Franchisor of Choice,” Christina said. “I thank our teams and franchisees around the world for their ability to deliver and establish a framework to expand what we’re capable of accomplishing as a team.”

About Church’s Chicken®

Founded in San Antonio, Texas, in 1952 by George W. Church, Church’s Chicken® is one of the world’s largest quick-service restaurant chicken chains. Church’s® specializes in Original and Spicy Chicken freshly prepared throughout the day in small batches that are hand-battered and double-breaded, Tender Strips®, Honey-Butter Biscuits™ made from scratch and freshly baked, and classic, homestyle sides all for a great value. Church’s® (along with its sister brand Texas Chicken® outside the Americas) has more than 1,500 locations in 26 countries and international territories, and experienced system-wide sales of nearly $1.2 billion in 2020. During two national media windows, the brand drove sales performance that outpaced the broader QSR category. Church’s international presence also continues to impress as it achieved record-breaking growth for the second consecutive year in 2020 – despite a global pandemic. For more information, visit www.churchs.com. Follow Church’s® on Facebook at www.facebook.com/churchschicken and Twitter at www.twitter.com/churchschicken.

About High Bluff Capital Partners

Based in San Diego, California, High Bluff Capital Partners is a private investment firm that specializes in making control-oriented equity investments in iconic consumer-facing companies. The firm’s team has more than 30 years of experience managing, investing, leading and transforming consumer businesses across the restaurant, entertainment, food, beverage and retail markets.

More information can be found at www.highbluffcap.com.

About FS Investments

FS Investments is a leading asset manager dedicated to helping individuals, financial professionals and institutions design better portfolios. The firm provides access to alternative sources of income and growth, and focuses on setting industry standards for investor protection, education and transparency. FS Investments is headquartered in Philadelphia, PA with offices in New York, NY, Orlando, FL and Leawood, KS. Visit www.fsinvestments.com to learn more.

Deal Advisors

Moelis & Company LLC served as the M&A advisor to High Bluff and FS Investments, and exclusive placement agent to High Bluff; Paul, Weiss, Rifkind, Wharton & Garrison LLP and Dentons US LLP served as legal advisors to High Bluff and REGO Restaurant Group; Orrick, Herrington & Sutcliffe LLP served as legal advisor to FS Investments.

Contacts
Marie Espinel or Hannah Arnold
The LAKPR Group
mespinel@lakpr.com or harnold@lakpr.com

Read full release here: https://www.businesswire.com/news/home/20210802005473/en/Church%E2%80%99s-Chicken%C2%AE-To-Be-Acquired-by-High-Bluff-Capital-Partners-and-Investment-Funds-Managed-by-FS-Investments

High Bluff Capital Partners is adding Church’s Chicken to its growing roster of restaurant brands under its REGO Restaurant Group platform, established in 2018.

The company has entered into a definitive agreement to acquire Church’s from FFL partners for an undisclosed amount. FS Investments led a structured capital investment in support of the acquisition out of its FS Tactical Opportunities Fund along with other affiliated investment funds. The transaction is expected to be completed in Q3.

Atlanta-based Church’s Chicken has more than 1,500 locations in 25 countries and territories. The nearly 70-year-old brand generated systemwide sales of about $1.2 billion in 2020, including its most profitable performance in “many years,” by leveraging a strong demand for chicken and bundled meals, as well as drive-thru and off-premise channels.

This momentum is what attracted High Bluff founder Anand Gowda to the brand.

“At a time when the entire restaurant industry has faced unprecedented challenges, Church’s has stood out as a notable bright spot, having emerged from the pandemic with considerable tailwinds that strongly position the brand for tremendous growth geographically as well as in the overall chicken category,” he said.

Despite those tailwinds, however, Gowda acknowledges that Church’s needs a bit more agility to better compete in an intensifying space.

“My perspective is that situations that appear to be challenged on the outside–like having a dated brand–have tremendous loyalty from the customer base and if you can invest some capital in the physical assets and technology, that’s interesting,” he said. “Church’s has performed very well through Covid, but there is still so much untapped value here. It’ll take some simple blocking and tackling to energize the customer base and that’s what we intend to do.”

Those blocking and tackling efforts include bringing innovative menu offerings to market more quickly, elevating the tech platform, improving the point-of-sale system and getting a loyalty program in place as soon as possible.

Essentially, Gowda wants to bring a faster mindset to the system, which has been under the same ownership since 2009.

“They took a long time to make decisions like implementing price changes. They were late to the chicken sandwich wars. It shouldn’t take two years to develop a loyalty program,” he said. “You have to be quick in this industry–especially now. We have a small group of owners and that gives us the ability to make decisions quickly. Our ownership is narrow and I think that will be a strategic advantage with the brand.”

Taking over a legacy brand at a sprint’s pace has its risks, however. Namely, it could turn off loyal franchisees who have been with the system for a long time. Gowda isn’t worried about this so much, however.

“We all have the same goals. If we’re not working to increase their margin, we shouldn’t be in the market. Our objective is to bring more sales to franchisees in a more agile way and give them more opportunities at growth and more flexibility with technology. They’re in acute alignment with that objective,” he said.

If that alignment is sustained, Gowda expects big things for the Church’s brand. He wants to grow its footprint, including in nontraditional ways such as ghost kitchens–a plan he’s deploying with REGO’s other brands.

Further, consumers have proven their appetite for chicken is boundless and he believes there is plenty of room for Church’s Texas-style chicken alongside the Kentucky-style chicken of KFC and the Louisiana-style chicken of Popeyes (both of which are on a significant upswing, by the way). He also likes the momentum Church’s has with its international business, its strongest driver of growth throughout the past two years.

“We have this wonderful international business and we can take all the flavors that we put into those businesses and import them here that are in high demand. International is one of our strongest assets and it will help us bring forward great products that will generate great sales. Our operators are thirsty for this type of innovation,” Gowda said. “We recognize we’ll fail sometimes but we’ll win big sometimes. In two or three years, we’ll be leading this category versus following in this category.”

With the acquisition of the chicken chain, REGO Restaurant Group diversifies its portfolio that already includes sub chain Quiznos and Mexican concept Taco Del Mar. Gowda would like to get to at least 10 brands and double its EBITDA (earnings before interest, taxes, depreciation and amortization) to north of $100 million in the next few years. REGO plans to continue taking advantage of the mergers & acquisitions market while it remains hot.

“It took us a little while to get the snowball going, but now we have a scalable platform with Church’s. That was our goal–scale to get to scale. Now we focus on buying bigger assets, financing them in a cost efficient way and accelerate opportunities that are either undermanaged, poorly capitalized or growing well but in the mid-to-early stages of growth that we can accelerate,” Gowda said. “We’re just getting started.”

Read full release here: https://www.forbes.com/sites/aliciakelso/2021/08/02/churchs-chicken-acquired-by-investment-firm-high-bluff-capital-partners/?sh=7ec61f504439