Current management also increases equity in the company
CapitalSpring has acquired a majority stake in FSC Franchising Co. LLC, the franchisor of Beef ‘O’ Brady’s and The Brass Tap, the company said last week. The investment company also owns a majority stake in family-dining chains Shari’s Café & Pies and Norms Restaurants.
Current FSC management, which has also invested in the company as part of the deal, will remain unchanged.
The previous majority owners were Los Angeles-based private-equity firm Levine Leichtman Capital Partners.
“There are many exciting changes happening at FSC as part of this transaction, the most notable of which is that the entire senior management team has chosen to meaningfully invest in the ownership of FSC,” Chris Elliott, CEO of FSC, said in a statement. “This commitment demonstrates our deep belief in both brands [Beef ‘O’ Brady’s and The Brass Tap] and the future of FSC.”
Erik Herrmann, head of CapitalSpring’s restaurant investment group, told Nation’s Restaurant News that FSC’s management team was looking to bring in a like-minded partner to recapitalize the business, while also increasing the team’s ownership.
Herrmann said he liked the brand positioning of the 180 Beef ‘O’ Brady’s and 38 Brass Taps locations, noting that Beef ‘O’ Brady’s franchise model, operations in relatively small markets and community involvement allowed it to outperform larger chains.
“We like the community-centric piece of it,” he said. “They’re much more connected to their communities than national competitors.”
While Beef ‘O’ Brady’s is entrenched in its communities, Herrmann said he saw The Brass Tap as a growth vehicle positioned as a franchised craft beer bar. He also noted the chain’s loyalty program, which makes beer recommendations based on individual customer tastes. Seven or eight new locations are already in the pipeline.
“It’s a very defensible market position that they’ve established,” Herrmann said of both concepts.
CapitalSpring recently raised $725 million in its fifth investment fund. The company was looking to invest in $10 million to $100 million increments, but mostly in the $25 million to $75 million range, Herrmann said. It is seeking partners who are interested in customizable packages, which could be debt, equity or a combination.
“We invest across the entire capital structure,” CapitalSpring managing director Jim Balis said. “We view this as a point of differentiation — specifically the flexibility to invest from a financing and/or equity perspective. CapitalSpring is not locked into an off-the-shelf solution.”
Contact Bret Thorn at [email protected]
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