Private Equity Loves QSRs

Smoothie King announced Main Post Partners has bought  a minority stake in the purveyor of blended fruit beverages and bowls for an undisclosed price. Wan Kim, who bought Smoothie King in 2012, remains majority shareholder; his company said it plans to use the funds to accelerate growth, innovation and market leadership. (The Dallas-based chain currently has 1200-plus stores nationwide.)

In its coverage of the deal, the website of QSR Magazine noted that Smoothie King has plenty of company when it comes to obtaining added capital by either selling partial stakes or full ownership of their brands to private equity. According to a variety of publications, such deals typically involve high-growth franchise brands that offer relatively predictable revenues and scalable models.

Deals along those lines include:

• Blackstone’s buy of Jersey Mike’s and Tropical Smoothie Café, along with a partial stake in 7 Brew;
• Roark Capital’s deal to buy Dave’s Hot Chicken for roughly $1 billion;
• TSG Consumer Partners, which made a minority investment in dessert bakery chain Crumbl.

The news release from Smoothie King on the Main Post deal sheds some light on why the parties involved made the move, including this from Kim: “We have been extremely impressed by Main Post’s track record of growing franchise brands the right way – by building a strong culture, focusing on the guest and always thinking long term.”

In a similar vein, Main Post Managing Partner Jeff Mills said “this investment is more than capital — it’s a powerful alignment of vision and capability.” Main Post’s investments over the years have included Jimmy John’s and franchisee businesses like Flynn Group, which operates franchise restaurants for such chains as Applebee’s, Arby’s Taco Bell, Panera Bread and Pizza Hut.