Experts have hailed a “strong appetite” for further consolidation in the casual dining sector after law firm Dentons advised The Restaurant Group (TRG) on its £7 million purchase of Mexican-themed chain, Barburrito.
Brian Moore, Dentons’ Edinburgh-based divisional head of corporate, who led the team that advised on the deal, said buyers with the necessary cash were eyeing opportunities in the UK and Europe.
Mr Moore, who is a respected expert on food and drink deals, having advised clients including Macallan-owner Edrington, First Milk and Nc’nean Distillery, said:
“Even when their spending is being squeezed by rising inflation, consumers are still loyal to their favourite brands, especially when it comes to treating themselves to a meal out.
“Our expertise in working with branded hospitality portfolio owners means that we know there are other deals out there just waiting to be done.
“There’s definitely a strong appetite among portfolio owners to buy more hospitality brands.
“Our experience in the food and drink sector and with brand protection helped us to complete this transaction swiftly, getting the best deal for TRG.”
Dentons was the sole adviser to TRG on the deal, with Mr Moore being joined by his fellow partner Lorna McCaa from the UK tax team, along with colleagues Diana Mennie, a senior associate in its Edinburgh office, and Charlotte White, an associate in its Glasgow branch.
They were supported by tax consultant John Finnick, real estate partner Brian Hutcheson, real estate associate Graham Ronald and intellectual property partner Ross Nicol.
The law firm has a long history of working with TRG on numerous mandates.
Dentons’ broad experience in branded hospitality portfolio deals includes advising European restaurant operator AmRest on the acquisition of Sushi Shop Group and the German operations of both Kentucky Fried Chicken and Starbucks, supporting High Bluff Capital Partners’ takeover of Church’s Chicken in the US, and running franchise masterclasses at the annual Global Restaurant Investment Forum in Dubai.
Mr Moore’s comments came after TRG unveiled plans to double Barburrito’s footprint during the next four years, focusing on the south of England.
Barburrito, which was founded in Manchester by Morgan Davies and Paul Kilpatrick in 2005, already has 16 sites in the UK.
The company has grown its like-for-like sales by 20% in the year-to-date, outperforming the 14% growth posted by the wider restaurant sector.
TRG – which owns brands including Chiquito, Frankie & Benny’s, and Wagamama – operates around 400 sites throughout the UK.
The group said:
“The Barburrito proposition is well aligned with key consumer trends – including healthy eating, convenience, and customisable cuisine – and offers high-quality products at attractive prices with an average spend per customer of circa £10.
“Barburrito’s strong current trading gives us confidence in its ability to align with and extend TRG’s track record of market outperformance.
“The sites have historically generated strong returns on invested capital in excess of 30% and TRG believes there is significant scope to further develop and expand the brand, particularly in the south of England, where there is limited presence.
“The initial expansion plan would be to double the existing estate over the next four years.”
