Turnaround Firms Gobbling Up Distressed Restaurant Chains Even Faster
When brand-name restaurant chains are losing money, private-equity firms begin to salivate. The down economy has laid a feast for these acquisition players, which have bid recently on eateries from upscale Benihana (BNHN) to pizza take-and-bake chain Papa Murphy’s. If the acquisition price is right and investors can improve performance at these eateries, investors could reap big profits reselling when the economy turns and restaurant sales improve.
Of course, it’s often hard to tell whether investment firms are buying right, as PE firms hate to say publicly what they’ve paid. Papa Murphy’s sale this week by Charlesbank Capital Partners to busy consumer-retail acquirer Thomas H. Lee Partners had an undisclosed price tag, for instance. But it’s likely at a good value — Lee is also in the process of acquiring CKE Restaurants (CKR), owner of the Carl’s Jr. and Hardee’s burger chains at a relatively cheap $928 million.
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