Sprinkles Cupcakes said on Thursday that it was poised for growth after selling an undisclosed amount of its company to KarpReilly LLC, a private equity firm with multiple past and present foodservice investments.
Beverly Hills-based Sprinkles operates 11 bakeries in multiple cities, the Sprinklesmobile cupcake food truck and a gourmet cupcake vending machine.
“With so many exciting opportunities available to Sprinkles, we wanted to make sure we found a partner that could provide us with not only capital to grow, but more importantly, a depth of experience working with and supporting high-growth consumer brands that will allow us to take full advantage of those opportunities,” Charles Nelson, who co-founded Sprinkles in 2005 with his wife Candace, said in a statement about the transaction.
Officials of Greenwich, Conn.-based KarpReilly were not available at press time to clarify whether that company’s investment in Sprinkles amounted to a controlling interest. Other companies that KarpReilly has made investments in include Marie Callender's, Mimi's Cafe, Cafe Rio, the Habit Burger Grill, Cafe Zupas and Burger Lounge.
“We think Sprinkles is truly a world-class brand and look forward to working with Candace and Charles to continue what has been a remarkable success story,” Allan Karp, KarpReilly co-founder, said in a statement about the deal, for which North Point Advisors supplied guidance to Sprinkles and ORIX Leveraged Finance provided debt financing.
News of the investment comes as its publicly traded rival, Crumbs Bake Shop Inc. of New York, helps sell about a third of its outstanding shares on behalf of investors who supplied $9.8 million for new-store expansion and working capital last fall in exchange for stock in the 59-unit baked goods chain.
According to Sprinkles officials, the company successfully introduced Sprinkles Ice Cream and entered into its first international franchising agreement during the past year — two areas it expects to be drivers of future growth. They said the company plans to add a number of additional locations this year in both new and existing markets, the latter of which includes Crumbs Bake Shop's home New York market.
This article has been revised to reflect the following correction:
Correction: Jan. 17, 2013 An earlier version of this article incorrectly reported the amount of the $9.8 million equity investment in Crumbs Bake Shop Inc.