Circle Peak cinches restaurant buyout

Circle Peak Capital has taken over family-restaurant chain Shari’s Management. The deal is coming ahead of an anticipated fund launch for the New York firm.

New York-based Circle Peak Capital acquired family-restaurant chain Shari’s Management Corp. in what is being reported as a roughly $80 million (€67 million) deal.

Shari’s represents Circle Peak’s first deal in the restaurant space.

Shari’s, a Portland, Oregon-based family-style dining chain, operates 100 units in the Pacific Northwest with a heavy concentration in Oregon and Washington. The company generates annual revenues of approximately $150 million.

The acquisition marks new territory for Circle Peak in that it represents the firm’s first buyout of a restaurant. The group has, however, been active in the foods space, and counts sugar-free baked-goods company Hill & Valley, meat-product manufacturer The Steak-Umm Company, and even pet “candy” maker Chomp Inc. among its portfolio companies.

Circle Peak founder and managing partner Adam Smith also has past experience in the restaurant space, including the successful investment in Buffets Holdings from his days at Caxton-Iseman Capital.

The Buffets link came in useful for this latest investment, as Kerry Kramp, an operating advisor at Circle Peak and former CEO of Buffets, helped advise the firm on the transaction and will serve as a non-executive board member for Shari’s.

In describing the deal, Smith told PEO that Circle Peak was drawn to Shari’s strong presence in its respective markets and its appealing real estate base in those same areas.

“This is a unique regional chain. It has a very strong brand in its market and possesses an unusually attractive real estate base,” Smith said, adding that the company shares many similarities to Buffets, which makes Kramp’s addition even more compelling.

No deal terms were disclosed. Circle Peak tapped Carlyle Mezzanine Partners, Falcon Investment Advisors and Bain Capital-affiliate Sankaty Advisors to provide junior financing, while Capital Source Finance, Magnetar Capital and Wells Fargo Foothill stepped in to supply the senior debt.

Circle Peak has historically invested on a deal-by-deal basis. The firm is currently preparing a fund launch for its debut vehicle, although Smith couldn’t disclose any details for the anticipated fund. It is expected to exceed $100 million in size.

Houlihan Lokey Howard & Zukin advised the sellers on the transaction, while Akin Bump Strauss Hauer & Feld served as legal counsel to Circle Peak on the deal.