Freeman Spogli & Co. has acquired a majority stake in Cafe Rio Mexican Grill, the company said on Friday.
Terms of the deal were not disclosed. But existing management of the fast-casual Mexican chain, which has more than 100 units 11 states, will remain and will keep “a meaningful equity stake” in the business.
In a statement, Christian Johnson, a partner with Freeman Spogli, called Cafe Rio a “differentiated restaurant concept,” and cited its made-from-scratch menu.
“The company’s unwavering commitment to food quality and customer service have engendered an extremely loyal customer following, which has led to strong financial results and an impressive track record of consistent growth,” he said.
Cafe Rio generated $192 million in domestic systemwide sales in its most recent fiscal year, according to NRN Top 200 data. That was an increase of 21.5 percent over the previous two years. Unit count has grown by at least 33 percent since the end of 2014.
The chain also had average unit volumes of just under $2.1 million last year, which is strong for a fast-casual chain. Still, that was a decline of nearly 7 percent from two years earlier.
Cafe Rio’s previous owner, KarpReilly, has long been said to be looking to exit its investment. The private-equity group first invested in the business in 2004, when the chain had just 11 locations.
Cafe Rio has been considering an initial public offering since at least 2014, but instead turned to another equity firm.
“We are incredibly proud of the culture we have built during our partnership with KarpReilly, and believe it provides us with a strong foundation for future growth,” CEO Dave Gagnon said in a statement.
The investment from Freeman would help the chain expand into new markets, he said.
This is the second major restaurant deal this year involving Los Angeles-based Freeman Spogli, which sold the breakfast-and-lunch chain First Watch to Advent International in July.
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