Church’s Chicken Acquired By Investment Firm High Bluff Capital Partners

By Forbes August 2, 2021

By Alicia Kelso

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