H.I.G., Chanticleer retain stake as Hooters of America sold
Nord Bay Capital and TriArtisan Capital Advisors have taken a majority stake in Hooters of America from a group of investors led by H.I.G. Capital and Chanticleer Holdings. This selling group retains a stake in the venture. The purchase, which closed for an undisclosed amount, likely sets the stage for continued development of the Hooters brand.
Hooters of America is the operator and franchisor of more than 430 restaurants in 38 states and 27 countries.
Hooters ushered in the “breastaurant” category, although in recent years there has been push back against the concept. Restaurant chains in the space have attempted to publicly reposition their messaging, although the model has not changed significantly.
Nevertheless, Twin Peaks and Tilted Kilt are two other major players that joined the category. Through an assumption of debt deal, Arc Group, purchased Tilted Kilt last November. At around the same time, Twin Peaks disclosed its sales were on an uptick, rising six percent in its Q3 2018.
As Hooters of America is sold, it’s likely the category will remain relatively attractive, in part, because few new players will enter the “breastaurant space.” In addition to its specialized “hospitality,” Hooters also serves a menu focused on chicken wings and American bar favorites, including burgers, fried chicken, french fries, and nachos.
“Hooters is an iconic global brand that has shown strong financial growth and development,” said William Pepper, principal, Nord Bay Capital. “With nine consecutive quarters of same store sales growth and thirteen consecutive quarters outperforming the casual dining bar & grill category, we see Hooters as a real jewel in the restaurant category.”
A deal with many details
Through a debt-to-equity conversion deal, Chanticleer had a significant investment in Hooters of America. In 2008, it purchased Hooters, Inc, an operator and company with various licensing rights for the brand. Hooters, Inc. had been previously listed on the OTC exchange.
Additionally, Chanticleer has experience in structuring and managing complex financial entities and transactions. In the middle-market category, Nord Bay makes investments and co-investments in non-cyclical companies with “strong market positions.”
Based in New York City, TriArtisan is a private equity firm with a diverse investment strategy. It has invested in P.F. Chang’s, T.G.I. Fridays and Caesars Entertainment. TriArtisan invests in leveraged buyouts, growth equity investments, spin-offs, carve-outs, roll-ups, recapitalizations and restructurings.
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