Captain D's and Del Taco. More to Come?
Sun, 02/26/06 11:12 AM
Here's an article about a Maryland Venture Capital Firm and their recent purchase of Del Taco and pairing them up with Captain D's.
Mentioned in the article is adding a chicken and burger concept to the existing pair of acquired restaraunts. Sound similar to Yum's offerings?????? Any conjecture on who the Chicken and Burger acquisition might be?
From the Baltimore Sun, published 2/14/06
by Tricia Bishop.
"Though not exactly known for its mastery of Mexican food, a venture capital firm in Timonium has become part-owner of one of the country's largest such restaurant chains.
Grotech Capital Group announced yesterday plans to finance the acquisition of Del Taco Inc., a chain of 461 "quick service" Mexican restaurants concentrated west of the Mississippi. Terms of the deal, which is expected to close next month, were not released, but Grotech's founder said it will be the largest outlay the company has ever made.
Del Taco, with headquarters in Lake Forest, Calif., is the second major food chain acquired by Sagittarius Brands. That is a holding company Grotech created in 2004 to oversee another acquisition, Captain D's Inc., a chain of seafood restaurants based in Nashville, Tenn. Together, Del Taco and Captain D's have more than 1,000 locations across the nation and annual sales of more than $1 billion.
Other investors in the deal include Sagittarius shareholders Charlesbank Capital Partners, which has offices in Boston and New York; Stockwell Capital LLC of Chicago; and Leonard Green & Partners LP of Los Angeles.
Food establishments as well known as Starbucks Corp. and Outback Steakhouse Inc. have roots in venture capital investment, but the restaurant business is an odd choice for most venture capital firms. They typically focus on biotechnology or technology startups, which present bigger risks and, consequently, the potential for bigger returns.
"It's not one of the traditional areas where venture capitalists invest," said Emily Mendell, vice president of strategic affairs for the National Venture Capital Association, a trade group based in Arlington, Va.
Grotech acquired A&W and Long John Silver's restaurants in the 1990s, then sold them in 2002 to Yum! Brands - owners of Pizza Hut and Taco Bell - for more than $300 million, a sixfold return on the initial investment.
"Restaurants may be slow and not produce 40 percent returns," Grotech's founder, Frank A. Adams, said in an interview last month. "But they're stable and safe and secure."
Restaurant businesses have recently attracted renewed investor interest. Last month, Chipotle Mexican Grill Inc., a Denver-based chain owned by McDonald's Corp., raised $173 million in an initial public offering. Restaurants are being appraised at all-time high prices, Del Taco spokeswoman Barbara Caruso said.
Sagittarius Brands, which is run by the same executives who joined A&W with Long John Silver's for Grotech, plans to also "co-brand" Del Taco and Captain D's, meaning the restaurants will coexist in some of the same locations.
"It is only the beginning for Sagittarius," Adams said yesterday. "We had determined from the beginning that we were going to do a fish concept and a Spanish concept, and we have left on our plate a chicken concept and a burger concept to be done."
Grotech is in talks to acquire the last two categories, Adams said. "I envision all the different brands under one roof," he said.
As for whether Mexican food and seafood are a natural pairing, Del Taco launched its "crispy fish taco" a year ago and sold more than 3 million in two months.
"This achievement makes the Crispy Fish Taco one of the chain's top three best-selling menu items," according to Del Taco's Web site."