Freeman Spogli & Co. has acquired Cafe Rio, a fast-casual Mexican restaurant company, from KarpReilly, which invested in the business in 2004.
Cafe Rio focuses on made-from-scratch food and offers its customers a variety of menu items including burritos, tortillas, salads and tacos. Cafe Rio operates over 100 company-owned restaurants across Arizona, California, Colorado, Idaho, Maryland, Montana, Nevada, Utah, Virginia, Washington, and Wyoming.
Cafe Rio is led by CEO Dave Gagnon and is headquartered in Salt Lake City (www.caferio.com).
“Cafe Rio is a differentiated restaurant concept with a focus on serving craveable food that is 100% made-from-scratch,” said Christian Johnson, a Partner at Freeman Spogli. “The company’s unwavering commitment to food quality and customer service have engendered an extremely loyal customer following, which has led to strong financial results and an impressive track record of consistent growth. We are excited to partner with Dave Gagnon, Steve Vaughan and the management team at Cafe Rio as the company enters its next phase of growth.”
Golub Capital (www.golubcapital.com) was the Administrative Agent, Sole Bookrunner and Sole Lead Arranger on a $146 million debt facility to support the acquisition of Cafe Rio by Freeman Spogli. “We have a longstanding relationship with Golub Capital based on their deep sector expertise, professionalism and a track record of mutually-successful investments,” added Mr. Johnson. “Their ability to reliably and consistently provide flexible, growth-oriented financing solutions will benefit the Cafe Rio platform in the years ahead.” Troy Oder, a Managing Director at Golub Capital, led the transaction.
Freeman Spogli invests in middle market consumer and distribution companies. Since its founding in 1983, the firm has invested over $4 billion in 57 portfolio companies with an aggregate transaction value of approximately $22 billion. Freeman Spogli is presently investing out of FS Equity Partners VII which closed in October 2014 with $1.3 billion in commitments. The firm has offices in Los Angeles and New York (www.freemanspogli.com).
“We are proud of the significant growth Cafe Rio has undergone during our ownership,” said Allan Karp, Co-Founder of KarpReilly. “During our time together, the company has grown from 6 restaurants in Utah to over 100 restaurants in 11 states today. We have enjoyed working with the Cafe Rio management team and look forward to watching the business continue to grow under Freeman Spogli’s stewardship.”
KarpReilly invests in consumer growth companies at the lower end of the middle market through a variety of transaction types including growth equity, management buyouts, acquisition financings and recapitalizations. The firm’s investment size is from $3 million to $75 million of equity capital. Industries of interest include retail, e-commerce, direct-to-consumer; restaurants; branded consumer products; apparel; food and beverage; and natural products. KarpReilly is based in Greenwich, CT (www.karpreilly.com).
Piper Jaffray was the financial advisor to Cafe Rio and KarpReilly.
© 2017 Private Equity Professional | September 11, 2017
