Eagle Merchant Partners (EMP), an Atlanta, Ga.-based private equity firm focused on middle-market buyouts in the Southeastern United States, has acquired Vasari LLC, the second largest franchisee in the Dairy Queen system and the largest franchisee in Texas.
The Dec. 5, 2013 deal is for 74 Dairy Queen restaurants in three states, 71 of which are in Texas. A majority are clustered around Dallas-Fort Worth, Houston, Austin, Waco, East Texas and the panhandle region. The transaction includes an exclusive territory rights agreement for the development of an additional 16 stores in the Dallas-Fort Worth market. The firm is committed to injecting capital into the existing restaurants, with plans to remodel and modernize 70 stores over the next five years.
“We are very excited about our first investment as EMP and to be developing new Dairy Queen stores in the Dallas-Ft. Worth market,” said Stockton Croft, Partner with EMP. “Dairy Queen is an iconic, 80-year-old brand and we bring significant restaurant experience in the state of Texas to the table.”
In 2004, EMP principals were involved in the acquisition of the largest IHOP franchisee in Texas, which is a similar business model to the DQ franchise. In the IHOP deal the team doubled the store base over the hold period. The partners have also invested in other restaurant concepts, including Church’s Chicken and Krystal. EMP is actively seeking to acquire additional multi-unit Dairy Queen operators in the region who are looking for a professional transition and exit.
The partnership is forecasting continued growth in the Quick-Service Restaurant, QSR, category. QSRs represent the largest segment of the U.S. restaurant industry with 2013 sales projected to be $188.1 billion, which would be a nearly 5 percent increase over 2012. Since the beginning of the Great Recession, the industry has grown by 20 percent, showing that during an economic slow down families seek more cost-conscious options when dining away from home.
Eagle Merchant Partners is an Atlanta, Ga.-based private equity firm focused on the acquisition of middle market companies in the consumer, business services and industrial sectors in the Southeastern United States. The partnership is one of the most experienced private equity investors in the region having spent nearly a decade with Arcapita managing 18 portfolio companies with more than $2 billion in revenues. Prior to launching EMP, the partnership was responsible for raising more than $200 million of capital since 2010 for investments on a deal-by-deal basis and will continue to invest on an individual transaction basis. For more information, visit http://www.eaglemerchantpartners.com.