Brazilian Steakhouse Looks To Accelerate Expansion Under New Ownership
Fogo de Chão offers meats that are roasted in the churrasco style and carved by gaucho chefs. (Fogo de Chão)Bain Capital Private Equity is buying Fogo de Chão, the chain of Brazilian-style steakhouses, in just the latest big restaurant company sale this year.
The sale price was not disclosed. Citing people familiar with the matter, Reuters reported the deal with Bain valued the Brazilian steakhouse chain at about $1.1 billion, including debt.
The seller of the Addison, Texas-based chain of 76 restaurants worldwide is Rhône Capital, which has owned the eateries since taking the company private in 2018. In 2021, Fogo announced plans for an initial public offering, but that effort may be put on hold with the sale. Bain, based in Boston, didn’t respond to an email from CoStar News seeking comment.
New York-based Rhône, a transatlantic private equity firm established in 1996, bought Fogo for $560 million five years ago.
Like other restaurant chains sold this year, Fogo said having a new owner will let it accelerate its growth and expand. There’s been a flurry of merger-and-acquisition activity in the dining industry as investors return to the sector as Americans seek out experiences and go out to eat again as the pandemic has eased over time.
Just last week Fiesta Restaurant Group, parent of the Pollo Tropical chain, said it was being bought for $225 million by Authentic Restaurant Brands. And Darden Restaurants, the parent of Olive Garden, acquired Ruth’s Chris Steak House for $712 million in June.
Founded in southern Brazil in 1979, Fogo offers fare prepared using the churrasco cooking method. High-quality cuts of meat are roasted over an open flame and then carved by the side of tables by gaucho chefs. The chain expects to continue to operate under its current management team led by CEO Barry McGowan.
Fogo’s Revenue Growth
Under Rhône’s ownership, Fogo enjoyed rapid growth across markets, executing an expansion plan in the United States and internationally. The chain “is in its third year of 15% annual growth,” according to Fogo and Bain.
“Over the past several years, we made significant progress enhancing our unique offering and ability to bring the very best in experiential dining to more guests than ever before,” McGowan said in a statement. “Bain Capital shares our vision, and we are excited to leverage their extensive experience investing in and supporting the global growth of restaurant businesses.”
Bain Capital Private Equity has a history of partnering with companies to accelerate their growth and has experience in the consumer, retail, and restaurant industries. The company’s restaurant and food-related investments have included Bloomin’ Brands, Brakes Group Food Distribution, Burger King, Dessert Holdings, Domino’s Pizza, Domino’s Pizza Japan, Dunkin’ Brands Group, Retail Zoo, Skylark Restaurants, and Valeo Foods.
The firm has also made investments to support the growth of several companies founded in Brazil, some serving the domestic market and others expanding from that country to serve global markets.
For the Record
Morgan Stanley & Co. is serving as the exclusive financial adviser, Deloitte as accounting adviser and Sullivan & Cromwell as legal counsel to Fogo de Chão and Rhône. Debt financing for the transaction for Bain Capital is being led by Deutsche Bank, which is also serving as a financial adviser. Bain’s accounting adviser is PwC and its legal counsel is Kirkland & Ellis.