In 10 years, private-equity firm Roark Capital Group has put together a restaurant conglomerate of nine brands with more than 2,400 U.S. locations and $1.78 billion in domestic systemwide sales. 


And that tally doesn’t include Roark Capital’s pending deal for a majority position in Arby’s, a chain of 3,523 U.S. units and $2.76 billion in domestic systemwide sales, which Roark agreed to purchase last month for $430 million. Nor does it take into account international operations, which for Roark includes franchises of Seattle’s Best Coffee, among other outposts of its chains.


It’s a restaurant investment portfolio that rivals those of Sun Capital Partners, which holds 10 brands, and Bain Capital, which has invested in the likes of Outback Steakhouse parent OSI Restaurant Partners, Domino’s Pizza and Burger King. 


Atlanta-based Roark Capital has about $1.5 billion in funding and a total of 21 holdings in four areas: restaurants and food, business services, direct marketing, and environmental sciences. 


While the back-to-back acquisitions of Corner Bakery Cafe, Il Fornaio and Arby’s seem like a growth spurt for Roark, managing director Steve Romaniello says it is nothing of the sort. 


“We’ve been pretty consistent,” he said. “We don’t sit around looking for the right timing or economic cycles for gain.”


Roark purchased Moe’s Southwest Grill in 2007, “just when [the economy] started coming apart,” Romaniello said. It bought Wingstop in late 2009 when many weren’t investing, and Auntie Anne’s a year later in late 2010.


Roark’s first restaurant investment was Carvel Corp., which it acquired in 2001. The company then quickly added Cinnabon, Seattle’s Best, Moe’s and Schlotzsky’s, all of which operate under the Focus Brands umbrella. Other holdings include McAlister’s Deli, Corner Bakery and Il Fornaio.


Because Arby’s is owned by Wendy’s/Arby’s Group Inc. until the deal closes in the third quarter, Romaniello said he could not discuss that acquisition. 


Roark’s strategy is based on three principles: a conservative capital structure and longer-term investment horizon, the separation of brand cultures, and partnership with existing management.


“We know the restaurant space; we understand it,” Romaniello said. “We’re an operations-focused private-equity firm. We do well because of the strength of ops and growth. We don’t do well because of financial engineering.”


The firm invests significant amounts of equity and not much debt because its horizons on holdings are longer than the three- to five-year time frames employed by many firms. Time is spent on operations and brand growth rather than managing finances surrounding a deal. 


“The management teams we work with can then focus on the restaurants rather than debt management and making [bank] covenants,” Romaniello said.


Roark keeps its brands separate, finding synergies when applicable but maintaining each concept’s positioning, management team and culture. 


Steve Rockwell, an industry veteran and former securities analyst who writes for Nation’s Restaurant News, called the strategy instructive for others. In his latest NRN column he cited Roark’s success as a multiconcept operator: “Keep the acquired company as independent as possible, and retain its culture at almost any cost. Doing so would likely increase the chances of a successful acquisition.”


Finally, Roark looks for restaurant brands with strong management teams.


Romaniello cited the firm’s deal for Il Fornaio America Corp., parent of Corner Bakery Cafe, and the leadership of Mike Hislop as an example. Hislop was enthusiastic about the deal. 


“There is a lot of white space out there,” he said. “When you add Roark to the mix, it’s a match made in heaven. We’re very excited [about] where we can take the brand together.” 


Despite Roark’s large restaurant holdings, Romaniello said there is room for more. He likes quick-service and fast-casual concepts because that is where the firm’s experience lies. But deals in full service and large franchisees of brands that the firm does not already own are of interest.


“I’m generally very positive on where the [restaurant] business is going,” he said.


Contact Sarah E. Lockyer at sarah.lockyer@penton.com.