May 28, 2014
With 640 Restaurants and $1.4 Billion in Sales, Flynn Restaurant Group is the First US Franchise Group to be Valued at More than $1 Billion
Positions the Company to Continue Strong Growth through Multiple Initiatives
GS Capital Partners and Weston Presidio Realize Value through Sale of Interests to Ontario Teachers' and FRG Management
SAN FRANCISCO, CA – Flynn Restaurant Group LP (FRG), the largest restaurant franchise group in the US, today announced that it has received a strategic investment of approximately $300 million from Ontario Teachers' Pension Plan (OTPP), one of Canada's largest and most active pension investors.
FRG's management team, led by its founder, chairman and chief executive officer, Greg Flynn, also participated in the investment and has significantly increased its direct ownership position in the company as a result of the transaction. OTPP, through its Teachers' Private Capital (TPC) group, and FRG management purchased certain of their interests from an investment fund managed by Goldman Sachs (GS Capital Partners) and Weston Presidio, which most recently invested in FRG in 2011. A predecessor GS Capital Partners fund was previously an investor in the Company from 2001-2005, and an earlier Weston Presidio fund was an investor from 2005-2011. The current investment by OTPP values FRG at over $1 billion.
"We are pleased to welcome Ontario Teachers' as an investor," said Mr. Flynn. "They have access to large amounts of evergreen capital, and they do not face any of the issues related to fund timing that conventional private equity firms face. They are very experienced investors and have generated an impressive track record over decades of making direct investments into companies like ours. They are also just really great people, and it has been a pleasure completing this transaction with them. We now have enhanced resources to continue to grow through a variety of initiatives, including existing restaurant revitalizations, new restaurant development, and potential new acquisitions."
Since its founding in 1999, Flynn Restaurant Group has grown to become the largest restaurant franchisee in the US, and one of the 50 largest foodservice companies of any kind. It was the first US franchise group to exceed $1 billion in sales, and it is the first group to be valued at greater than $1 billion. With 470 Applebee's and 170 Taco Bell restaurants generating $1.4 billion in annual sales, FRG employs approximately 36,000 people in 27 states. Its focus is to provide exceptional dining experiences to its guests, rewarding career opportunities to its employees and superior returns to its shareholders. FRG works to do this by coupling local empowerment in each of its markets with deep resources and high standards at the corporate level.
"FRG has experienced tremendous growth since its founding and we see a number of opportunities for additional expansion," said Jane Rowe, Senior Vice-President of TPC. "Greg and his team have done an outstanding job of delivering strong financial results by fostering a culture of continuous improvement and by delivering consistently enjoyable and affordable dining experience to its guests. We are excited to have the opportunity to support Greg and his team as they continue to execute their strategic plan and enter the next stage of their growth."
TPC activities include leading deals on a sole or partnered basis, investing in private equity funds in markets and sectors that it cannot efficiently access directly and co-investing with other like-minded private equity funds. TPC manages a global portfolio valued at approximately $14.8 billion.
While neither GS Capital Partners nor Weston Presidio will have an investment in FRG going forward, Sean Honey, the Weston Presidio partner responsible for the investment and a managing partner of Main Post Partners, will remain on the FRG Board. Main Post is a private equity investment firm focused on lower middle market companies in the consumer, business services and industrial growth sectors.
About Flynn Restaurant Group
With 640 restaurants generating $1.4 billion in annual sales, Flynn Restaurant Group LP is the largest restaurant franchisee, and one of the 50 largest foodservice companies of any kind, in the United States. Through its two wholly-owned subsidiaries, Apple American Group LLC and Bell American Group LLC, the company owns and operates 470 Applebee's restaurants and 170 Taco Bell and associated YUM! Brands restaurants. Flynn Restaurant Group directly employs 36,000 people in 27 states across the US. More information is available at www.flynnrg.com.
About Ontario Teachers' Pension Plan
With $140.8 billion in net assets as of December 31, 2013, the Ontario Teachers' Pension Plan is the largest single-profession pension plan in Canada. An independent organization, it invests the pension fund's assets and administers the defined benefit pensions of 307,000 active and retired teachers in Ontario. For more information visit www.otpp.com. Follow us on Twitter @OtppInfo
About Goldman Sachs
The Goldman Sachs Group, Inc. is a leading global investment banking, securities and investment management firm that provides a wide range of financial services to a substantial and diversified client base that includes corporations, financial institutions, governments, and high-net-worth individuals. Founded in 1869, the firm is headquartered in New York and maintains offices in all major financial centers around the world.
Flynn Restaurant Group LP
Goldman Sachs & Co.