Brentwood Associates, a private-equity investor in Los Angeles, has acquired K-Mac Holdings Corp., Taco Bell’s third-largest franchisee, from Olympus Partners, a private-equity firm in Stamford, Conn.
K-Mac, based in Fort Smith, Ark., operates 167 Taco Bells, mainly in the Southwest, as well as KFC and Golden Corral units for a total of 190 stores.
Terms of the transaction were not disclosed, but a Brentwood spokesman confirmed the deal.
Brentwood Associates’ portfolio includes Zoës Kitchen, a 45-unit fast-casual concept based in Birmingham, Ala.; and Pacific Island Restaurants Inc. of Honolulu, the sole franchisee of Pizza Hut, Taco Bell, A&W and Long John Silver’s in Hawaii and Guam, and the sole franchisee of Pizza Hut in Saipan. Pacific Island operates 89 restaurants.
Paul Rubin, a partner in Olympus, said Thursday, “K-Mac has been one of the most successful investments for Olympus, earning a return of more than eight times the initial equity funded by our investors.” K-Mac generated sales of about $250 million in 2010.
Olympus Partners acquired majority control of K-Mac, then known as K-Mac Enterprises Inc., in late 2004, when it had 144 stores. The purchase price was not disclosed at the time, but G.E. Commercial Finance said it provided more than $200 million in financing for the then-144-store franchise group.
In 2003, Arkansas Business had rated K-Mac as the state’s 48th largest private company, with $147 million in revenue.
Olympus said that since 2004, it had opened or acquired 46 restaurants and expanded to several other states.
Olympus, in announcing the deal, said K-Mac’s “cash flow has more than doubled since 2004. Employment has increased by 30 percent.”
The K-Mac sale marks a continuation of a buying spree by private-equity firms that began last year. Companies like Pick Up Stix, CKE Restaurants, Burger King and Noodles & Co. are among the brands that changed hands since private-equity investors once again began stepping up their activity in the foodservice industry.
Olympus, which invests in a range of industries from healthcare and financial services to consumer products and restaurants, was represented in the K-Mac deal by John Schoenfeld and Roger Rhoten of Kirkland & Ellis LLP.
Contact Ron Ruggless at [email protected].