Red Rooster, Oporto and Chicken Treat owner Archer Capital has cashed out of the scandal-plagued franchise sector, selling the fast-food brands in a deal believed to be valued at half-a-billion dollars.
The chicken chains, which trade under parent Craveable Brands, have been bought by private equity giant PAG Asia Capital in a move expected to see the company refocus on international expansion.
Involved parties asked not to be quoted on the purchase price for legal reasons, but SmartCompany has been told the deal was valued at about $500 million.
It comes after Craveable became one of the brands spotlighted in the recent Senate inquiry into the franchising sector, with Red Rooster franchisees raising a series of serious grievances about the operation of the company.
But Archer Capital managing partner Peter Gold said the sale had nothing to do with ongoing scrutiny over the franchise sector.
“Yes, there’s scrutiny, but we’ve been relaxed with the long-term place of franchisors, and we’ve continuously evolved the business,” Gold says.
“It’s a great result. Now there’s a new owner who’s got a bigger balance sheet and international experience that can provide more avenues for growth.”
PAG has more than $30 billion behind it and a track record working with Australian retail brands, buying the Cheesecake Shop back in 2017.
Chairman and chief executive Wijian Shan described Craveable as a “terrific asset” in a statement circulated late last Friday.
“We see great opportunities for Craveable and look forward to working with management on the next stage of portfolio innovation,” he said.
There are 580 stores in the Craveable network, primarily split across Red Rooster and Oporto.
Oporto has already dipped its toe into international waters, announcing plans earlier this year to open stores in Sri Lanka and Singapore.
Current Craveable management will remain in place, including chief executive Brett Houldin, who said the deal will begin an “exciting new chapter” for the business.
“Archer has given us strong support over the last eight years, and we are now very excited to be partnering with PAG and benefiting from their wealth of experience and international connections,” he said in a statement.
No word yet on how franchisees feel about the move, but last year a group of disgruntled Red Rooster franchisees savaged the company over its business practices in a submission to the Senate inquiry into the sector.
They said many franchisees were on the “verge of bankruptcy” as a result of third line forcing and the “huge cashflow impact” of Red Rooster’s home delivery program.
Houldin dismissed the allegations last year, labelling them as “ridiculous”.