Yet another fast-casual restaurant chain is being gobbled up by a private equity firm that plans to expand it into new markets.
Wichita, Kansas-based Freddy's Frozen Custard & Steakburgers has been purchased by Rhône, a global private equity firm. St. Louis-based Thompson Street Capital Partners, another private equity firm, was the seller.
Terms of the deal weren't disclosed Thursday. The announcement said that Rhône, which has offices in London, New York, Madrid, and Milan, has "significant experience supporting businesses in their global expansion efforts."
Freddy's has more than 550 locations in the United States and Canada and generated more than $1 billion in systemwide sales in the past year.
"This acquisition marks a pivotal moment for Freddy's," Chris Dull, the chain's president and CEO, said in a statement. "Over the last few years, we've seen steady growth and surpassed many milestones for our brand, while simultaneously strengthening our franchise system and building a loyal guest following. We're excited to take our success to the next level with this new partnership with Rhône."
There's been a surge of private-equity acquisitions of restaurants, particularly fast-casual chains, deals that give those businesses the financial wherewithal to grow. Thompson Street has been both a buyer and seller recently, striking a deal to purchase Bubbakoo's Burritos, a Wall Township, New Jersey-based chain, in June.
Earlier this year, Roark Capital purchased Dave's Hot Chicken for about $1 billion, and in 2023, Roark bought Subway for $9.6 billion. Jersey Mike's Subs, with roots on the Jersey shore like Bubbakoo's, was acquired last year by Blackstone for a reported $8 billion. Another chain founded at the Jersey Shore, Playa Bowls, was purchased by Sycamore Partners last year.
Rhône, in turn, sold Brazilian-style steakhouse chain Fogo de Chao to Bain Capital in 2023 for about $1.1 billion.
"Rhône looks forward to bringing its experience with global consumer brands to its most recent investment in Freddy's as the company expands its footprint and further improves its guest experience," Lucas Flynn, a Rhône managing director, said in a statement. "We see a compelling opportunity to partner with Chris and the rest of the leadership team to help bring the unique Freddy's offering to more customers around the world and support the company in this next chapter of growth."
This summer, Freddy's kicked off its expansion into Canada, with a location in Winnipeg, and more Freddy's locations are slated to open in that city.
Freddy's executive team will remain in place, with Dull continuing as president and CEO, Bill Valentas as chief financial officer, and Brian Wise as chief operating officer.
For the record
William Blair served as the lead financial adviser to Freddy's, with North Point also acting as a financial adviser. Jefferies served as the financial adviser to Rhône.