Private-equity firm buys controlling stake in large Burger King franchisee

PNC Riverarch Capital, a private-equity firm and a division of PNC Capital Finance LLC, has acquired a controlling interest in Dothan, Ala.-based Burger King franchisee Goldco LLC.

Terms of the agreement were not disclosed, but in a statement Pittsburgh-based PNC Riverarch Capital noted the firm typically seeks investments valued between $10 million and $50 million.

Alongside the acquisition, Goldco took on 33 previously company-owned Burger King locations in Broward County, Fla. Goldco now operates 96 Burger King locations in Alabama, Georgia and Florida, making it one of the top 10 largest Burger King franchisees in the country.

Goldco was previously a core investment of Equicorp Partners LLC in Atlanta.

Michael Hand, PNC Riverarch Capital’s managing director, said the company decided to acquire Goldco because the quick-service restaurant segment is currently a strong and stable investment. Consumers rediscovered quick-service restaurants during the recession, he said, and they’re remaining loyal even as the economy is beginning to bounce back. “It tends to be very stable in terms of growth,” he said of Burger King. “It won’t go up by a certain percentage every year, but it also won’t go down.”

Hand added that the private-equity firm plans to begin expanding Goldco immediately. “We are going to pretty aggressively grow the business by acquiring other stores and opening new stores in the Burger King system,” he said. “We’d like to be pretty aggressive with it, but we’re also going to be disciplined.”

Initially, PNC Riverarch Capital will focus on developing Goldco’s Burger King locations in the Southeast United States, he said. However, the plan is to expand into other parts of the U.S., as well. “We’re already thinking about which markets to look at and where to go next,” he said.

The past couple of months have brought big changes for some major Burger King franchisees. In October, Burger King agreed to refranchise 42 restaurants to GPS Hospitality, a company owned by Tom Garrett, the former president of Arby’s Restaurant Group Inc. In December, Alsea S.A.B. de C.V., the company’s largest Mexican franchisee, acquired 97 company-owned Burger King locations.

During the second quarter last year, Burger King refranchised 386 company-owned restaurants domestically, including 278 locations to Syracuse, N.Y.-based Carrols Restaurant Group Inc., now the world’s largest Burger King franchisee.

Miami-based Burger King operates or franchises more than 12,600 worldwide. About 90 percent of the company’s locations are franchised.

Contact Erin Dostal at [email protected].
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