Roark Capital buys Tex-Mex chain

Atlanta-based Roark has added Moe’s Southwest Grill to its food franchise group, which includes Carvel Ice Cream, Cinnabon, Seattle’s Best Coffee and Schlotzsky’s.

Atlanta-based Roark Capital has acquired fast food chain Moe’s Southwest Grill for an undisclosed amount. The chain competes with Chipotle in the Tex-Mex fast food sector, and has dominant market share in the southeastern US.

Roark will add Moe’s to its FOCUS Brands group, which includes prior acquisitions Carvel Ice Cream, Cinnabon, Seattle’s Best Coffee and Schlotzsky’s. There the firm hopes Moe’s will benefit from FOCUS’ expertise in real estate development, menu development, franchise development, training and marketing, said Roark managing partner Neal Aronson.

The business has strong prospects, Aronson said.

“It’s a number two player in a category that’s strong and growing, the brand is well-liked by customers, and it has a fresh menu and a family friendly environment,” Aronson said.

Roark expects the business to expand substantially in the next few years, Aronson said. Moe’s already opens roughly 100 new locations per year, and at the time of the acquisition had a backlog of 250 signed franchise agreements for restaurants that have yet to be built.

Roark targets majority stakes in family owned businesses, with a focus on businesses based in the southeastern US, as well as franchise, financial services and niche marketing businesses located through the US. The firm also owns Pike Family Nurseries and among other businesses.

The firm closed its first, and most recent, fund on $413 million (€303 million) in March 2005. The funds LPs included Princeton University, Harvard University, Hamilton Lane, Goldman Sachs, Danish pension ATP, Parish Capital and Commonfund Capital.

Several private equity firms have bought fast food chains recently. Earlier this month Sun Capital Partners bought Boston Market from McDonald’s for an undisclosed amount. Last year, Catterton Partners acquired OSI Restaurant Partners, which operates Outback Steakhouse, Carrabba’s Italian Grill and Roy’s, among others, for $3.2 billion.