Allied Capital in $124m restaurant chain buyout

Allied Capital Corporation, a Washington, DC-based provider of finance to the middle market, has committed approximately $124 million (€94.2 million) to buy Huddle House, Inc., a franchise of full-service, family dining restaurants, Allied Capital said in a statement.

Based in Scottsdale, Georgia, the Sparks family founded the Huddle House in Decatur, Georgia in 1964. “Huddle House was built upon the concept and desire to provide families in Decatur, Georgia a place to ‘huddle’ around with their friends after Friday night high school football games,” the statement said. “Huddle House restaurants feature moderately priced food and beverage items, served during all day parts with full table service.” It is best known for its breakfast options, the statement said.

Since its inception, Huddle House has expanded from one store into more than 400 stores located in 17 states, primarily in the southeast and mid-Atlantic regions. It has expanded greatly in the last four years, opening more than 120 stores in Virginia, West Virgina, Ohio, Illinois, Missouri and Texas. In partnering with Allied Capital, the company hopes to expand into new markets, Phil Greifeld, Huddle House’s president and chief executive officer, said in the statement.

With assets in excess of $4 billion, Allied Capital has invested in more than 100 companies with more than $12 billion in revenues per year and with a staff size greater than 85,000 people, the statement said. The company went public in 1960 and trades on the New York Stock Exchange under the ticker symbol “ADL”. The firm sold portfolio company, Advantage Sales & Marketing, a national sales and marketing agency based in California, to JW Childs Associates and Merrill Lynch Global Private Equity in March. Allied Capital realised $430 million in the $1 billion deal.

Allied’s acquisition of Huddle House is one of many restaurant deals to take place in the private equity industry recently. Boston-based Bain Capital and Greenwhich, Connecticut-based Catterton Partners bought OSI Restaurant Partners, a Tampa, Florida-based restaurant company that is the parent of numerous chain restaurants, for approximately $3.2 billion in early November. MidOcean Partners, a firm based in New York and London, agree to buy Sbarro, a quick service Italian restaurant chain based in Melville, New York for approximately $450 million later that month.