Dive Brief:

• Fogo de Chão has entered into a definitive agreement to be acquired by Bain Capital Private Equity, the company said Tuesday in a press release. Financial terms of the transaction were not shared. 
• Funds affiliated with Rhône Capital have owned Fogo de Chão since 2018, when it bought the brand for $560 million and took it private.
• Bain Capital will help the company accelerate expansion. Under Rhône’s leadership, the company grew to 76 global locations and is in its third year of 15% annual growth.

Dive Insight:

With another private equity firm buying Fogo, its plans to go public will be on hold. This is a switch in strategy after it initially filed S-1 forms in 2021. That year, several other chains went public, including Krispy Kreme, Sweetgreen, and Dutch Bros.

In 2022, going public was a rare affair due to economic conditions and rising inflation. Public markets have become more accommodating since then, with a handful of chains going public during the first half of the year, including Cava and Gen Restaurant Group. 

Fogo’s transaction is expected to close in September and leadership will remain intact, with CEO Barry McGowan continuing in his position. Debt financing was led by Deutsche Bank. As of 2021, the brand boasted average unit volumes of $7.9 million. 

“Bain Capital shares our vision, and we are excited to leverage their extensive experience investing in and supporting the global growth of restaurant businesses. We are excited by this next chapter and believe there is tremendous upside in our future as we continue to execute against our growth plans with Bain Capital,” McGowan said in the press release. 

Fogo has leaned heavily on its ability to provide menu customization, which has been highly attractive to younger generations. It also refreshes its menu each season depending on what’s trending and what’s seasonally available. In addition to its churrasco meats, restaurants also offer various salads and side dishes similar to a buffet. It also offers low-alcohol drinks, which also appeal to its millennial and Gen Z cohorts. 

The company has been expanding, using a three-year timeline, and expects to open 10 to 12 locations this year. This strategy also helps the company better plan where it needs to move its managers as the stores open. The company has roughly 50 managers certified to become general managers and 150 team members certified to become managers. As stores open, the most experienced general managers are moved to the new store and a manager in an existing store is promoted to the GM position .The company is overstaffed by 146% and has never been understaffed, even during the COVID-19 pandemic. 

Fogo’s buyout also shows how M&A activity has ramped up in the last few months. Last week, Authentic Restaurant Brands said it would buy Fiesta Restaurant Group for $220 million, making the company private. Earlier in the summer, Corner Bakery was bought out of bankruptcy by SSCP Restaurant Investors. In May, Darden bought Ruth’s Hospitality Group for $715 million.