Sun Capital strengthens restaurant portfolio

Sun Capital has expanded its restaurant portfolio with the acquisition of Pacific Coast Restaurants, an operator of 27 restaurants. The struggling US restaurant industry has been increasingly attractive to private equity.

Boca Raton, Florida-based Sun Capital Partners has purchased Pacific Coast Restaurants for an undisclosed amount.

Pacific Coast Restaurants – which operates 27 restaurants under the names of Stanford’s, Newport Bay, Manzana, Newport Seafood Grill, Portland City Grill, Henry’s 12th Street Tavern, Portland Steak & Chophouse, Marina Fish House and Billy Heartbeats – will be combined with Restaurants Unlimited, a Sun Capital portfolio company that owns 29 restaurants in 12 states.

Each restaurant group “has been successful on its own, but the synergies and efficiencies from joining together, along with the support and resources that Sun Capital can provide, will enable them to go to the next level”, Steven Liff, a managing director at Sun Capital, said in a statement.

US restaurant chains have been popular buyout targets of late. In April The Wall Street Journal reported that restaurants, in particular “mid-priced sit down chains”, had suffered weak sales and earnings” as higher gas prices and lower home values caused customers to eat out less.

Today pancake restaurant operator IHOP agreed to buy Applebee’s International for $2.1 billion (€1.5 billion), after beating out several private equity bidders, including Bain Capital, according to the Financial Times.

Dealogic reported 15 private equity deals in the restaurant sector last year, at a record value of $7.2 billion. Last year also saw the largest restaurant buyout to date, when Bain joined Greenwich, Connecticut-based Catterton Partners to acquire OSI Restaurant Partners – which operates Outback Steakhouse, Carrabba’s Italian Grill and Roy’s, among others – for $3.2 billion.

The restaurant sector makes up about 7 percent of Sun Capital’s portfolio; its investments include Bruegger’s Enterprises, Garden Fresh and Fazoli’s Restaurants. The firm bought Restaurants Unlimited in March of this year for an undisclosed amount.

Sun Capital closed its sixth fund on $6 billion in April.