Private equity looks for a spicier meatball

Author:
Updated:
Original:

Sick of being called “tossers” in England without having a snappy literal comeback, Blackstone partners have started the next phase of their bold new European investing strategy with the acquisition of a pizza chain. Italian restaurants are all the investing rage this week, as UK millionaire Richard Caring (aside from having one of the greatest porn names of all time) sold his Strada pizza chain for 140m pounds to the PE giant. Caring is known for owning the celebrity hangout The Ivy, and for being, according to the Guardian, “notoriously secretive," and "the first man in the UK to spot the opportunity of manufacturing clothes in the far east, [making] his fortune in supplying the big retailers.” Caring recently bought a 3% stake in the Carluccio’s restaurant chain, which, along with the Blackstone sale, is causing a lot of restaurant shuffling speculation. With the Strada move, Blackstone bolsters its European restaurant asset base of Tragus, the Café Rouge and Bella Italia.
Since fewer Brits can light up in bars these days, they’re actually eating again, creating a boom in the restaurant sector. The complete smoking ban in UK pubs goes into effect on July 1. Without deadened taste buds, the casual restaurant patron is starting to realize just how bad British food really is, forcing chains to serve things in the category of “edible.” For a UK restaurateur or potential investor, things have never looked better:

The [restaurant] sector generates a huge amount of cash and is very fragmented. Out of 20,000 restaurants in the UK, only 350 are owned by the largest independent restaurant group.
The trend towards eating out is growing at a rate of around 4% a year. And the smoking ban, which comes into effect in England on July 1, is also an incentive to invest in restaurants rather than bars or pubs, which are generally less well placed to cope with the change.

Private equity is showing interest in the space, with Cinven’s acquisition of Gondola Group (owner of Pizza Express, ASK and Zizzi) for 559m pounds last October.
Ivy owner sells Strada chain for 140m (pounds) [The Guardian]

Related