Control of Yard House is sold to growth-minded equity firm

IRVINE Calif. An investor in Terra Chips and other mid-sized growth companies has acquired a 70-percent interest in the privately held Yard House casual-dining chain with intentions of expanding the 16-unit operation into a national brand.

 

Terms of the purchase by TSG Consumer Partners LLC, a San Francisco-based private-equity company, were not disclosed.

 

 

No changes are expected within the management of parent company Yard House USA Inc., insiders say. Founder and chief executive Steele Platt and an unspecified number of his partners have retained a “meaningful portion” of the company, according to statements by the concern.

 

 

About 100 former investors “cashed out” and about 80 employees with equity holdings also tendered their interests, Platt said.

 

 

The sale caps a long, publicly disclosed search for an equity investor in Yard House. After talking to a number of parties over the course of several years, Platt said he chose TSG “not so much for the price but for their partnership. I see them as a strategic partner.”

 

 

Yard House will be the first restaurant brand in TSG’s portfolio. Other food-related investments for TSG, which specializes in middle-market consumer companies, include Garden of Eatin’ snacks, as well as the Terra Chips and Famous Amos retail brands.

 

 

Platt, who in the past has projected that Yard House could grow into a 100 to 150-unit chain, added, “I think we can grow this into a billion dollar company, but it’s not about speed, it’s about doing things the right way. We’re going to develop a short- and long-term strategic growth program.”

 

 

Two more Yard House restaurants are scheduled to open before the end of the year, in Newport Beach, Calif., and Riverside, Calif. Four to five restaurants are scheduled to open in 2008, including a Yard House in Las Vegas and a smaller Yard House Bar and Grill prototype in Chino Hills, Calif., in March or April.

 

 

Known for its wide selection of draft beers, upscale fusion fare and classic-rock soundtrack, Yard House units average about $8.5 million in sales. The first unit in Long Beach, Calif., in 1996, and, though the core market is Southern California, units are now open in Florida, Hawaii, Kansas, Colorado and Illinois.

 

 

Hadley Mullin, managing director of TSG, said Platt and his team have developed a successful and exciting restaurant concept.

 

 

“They have grown Yard House at a compounded rate of over 30 percent per year over the past five years, and we are highly enthusiastic about the company’s future growth prospects,” she said.