EXPERTS hail a “strong appetite” for further consolidation in the casual dining sector following The Restaurant Group‘s £7million purchase of Barburrito.
Dentons law firm acted as sole advisor to The Restaurant Group (TRG) on the acquisition of the Mexican chain.
Brian Moore, Dentons Divisional Head of Corporate in Edinburgh, who led the team advising on the transaction, said buyers with the requisite cash were eyeing opportunities in the UK and Europe.
Mr Moore, an expert on food and drink deals, said: “Even as spending is being squeezed by rising inflation, consumers are sticking with their favorite brands, particularly when it comes to treating themselves to a meal.
“Our experience working with owners of branded hospitality portfolios means we know there are other deals out there just waiting to close.
“There is definitely a strong desire among portfolio owners to add more hotel brands.
“Our experience in the food and beverage sector and in brand protection helped us to close this transaction quickly and achieve the best offer for TRG.”
Dentons was TRG’s sole advisor on the transaction, with Mr Moore being assisted by his partner Lorna McCaa from the UK tax team, along with colleagues Diana Mennie, a senior associate in their Edinburgh office, and Charlotte White, an associate in her Glasgow branch.
They were assisted by tax advisor John Finnick, real estate partner Brian Hutcheson, real estate advisor Graham Ronald and intellectual property partner Ross Nicol.
The law firm can look back on many years of cooperation with TRG in numerous mandates.
Dentons’ experience in portfolio deals for branded hotels includes advising European restaurant operator AmRest on the acquisition of Sushi Shop Group and the German operations of Kentucky Fried Chicken and Starbucks.
They assisted High Bluff Capital Partners in acquiring Church’s Chicken in the US and lead franchise masterclasses at the annual Global Restaurant Investment Forum in Dubai.
Mr Moore’s comments came after TRG revealed plans to double Barburrito’s footprint over the next four years, with a focus on southern England.
Barburrito, which was founded in Manchester in 2005 by Morgan Davies and Paul Kilpatrick, already has 16 locations in the UK.
The company has grown its like-for-like sales by 20% year-to-date, beating the 14% growth of the broader restaurant sector.
TRG – which owns brands such as Chiquito, Frankie & Benny’s and Wagamama – operates around 400 locations across the UK.
TRG said: “The barburrito offering is well aligned with key consumer trends – including healthy eating, convenience and adaptable cuisine – and offers quality products at attractive prices, with an average spend per customer of around £10.
“Barburrito’s strong recent trading gives us confidence in its ability to match and extend TRG’s track record of outperforming the market.
“The sites have historically delivered strong returns on invested capital in excess of 30% and TRG believes there is significant scope to further develop and grow the brand, particularly in the south of England where there is a limited presence .
“The original expansion plan was to double the existing property over the next four years.”