Roark Capital Buys Il Fornaio, Corner Bakery Café–UPDATED

Atlanta-based buyout shop Roark Capital Group is buying Il Fornaio Corp., the owner of Corner Bakery Cafe and Il Fornaio restaurants and bakeries. Terms of the deal were not released. However, for BRS, the combined proceeds from the sale of Il Fornaio Corp. and an earlier recapitalization represented a gross multiple of invested capital of approximately 5.7x and generated a gross IRR in excess of 22%. Based in Dallas, Il Fornaio has 119 restaurants across the U.S. Roark has more than $1.5 billion of equity capital under management.

PRESS RELEASES
Roark Capital Group, an Atlanta-based private equity firm, announced today that its affiliates have acquired Il Fornaio (America) Corporation, owner of Corner Bakery Cafe and Il Fornaio Restaurants and Bakeries.

Beginning in 1991 as a small bread bakery in Chicago, Corner Bakery Cafe has emerged over the last 20 years as a leader in the growing fast casual segment, serving guests made-to-order, hand-crafted favorites for breakfast, lunch and dinner, and boasting segment-leading catering services. Headquartered in Dallas, Texas and operating 119 locations nationwide, Corner Bakery Cafe launched a strategic franchise development program in 2007 to attract seasoned franchise partners with multi-unit restaurant and retail experience.

Il Fornaio, averaging over $5 million in annual sales per restaurant, has been a recognized leader in the upscale Italian segment for over 20 years. Founded in Italy and based in Corte Madera, California, Il Fornaio owns and operates 22 full-service Italian restaurants in California and across the United States that serve creatively prepared, premium-quality Italian cuisine based on authentic regional Italian recipes. Il Fornaio’s wholesale bakeries produce a wide variety of hand-made breads, pastries and other artisan baked goods for sale at their own locations and to high-quality grocers and food service customers across the US.

Neal Aronson, Managing Partner of Roark, said, “Mike Hislop and his outstanding teams at Corner Bakery Cafe and Il Fornaio have built two terrific brands with strong points of differentiation and excellent consumer appeal. We are very excited to partner with Mike to help grow the business.”

“The partnership with Roark is a perfect fit, providing each brand with unique opportunities,” said Hislop, CEO of Il Fornaio (America) Corporation. “Our ability to leverage Roark’s strong background and extensive resources within the franchise and restaurant industries allows us to better serve our current Corner Bakery Cafe partners, while accelerating our pursuit of new franchisees.”

With this acquisition, Roark has invested in 20 franchise businesses that operate in 50 states and 43 countries. Corner Bakery Cafe and Il Fornaio will be Roark’s 10th restaurant investment along with FOCUS Brands, parent company of Carvel Ice Cream, Cinnabon, Schlotzsky’s, Moe’s Southwest Grill, Auntie Anne’s Pretzel’s and the Franchisor of Seattle’s Best Coffee on certain military bases and in certain international markets, as well as McAlister’s Deli, and Wingstop, which are not affiliated with FOCUS Brands. Other franchise and brand management companies owned by Roark include Batteries Plus, Pet Valu, Bosley’s Pets, FastSigns, Money Mailer, and Atkins Nutritionals.

About Roark Capital Group
Roark Capital Group is an Atlanta-based private equity firm that specializes in business and consumer service companies with attractive growth prospects. Roark focuses on middle-market investment opportunities through family-owned business transfers, management/corporate buyouts, recapitalizations, going-private transactions, and corporate divestitures. Specific areas of focus include franchise, food and restaurants, brand management, marketing services, environmental services and business services. The firm has more than $1.5 billion of equity capital under management. For more information, visit www.roarkcapital.com.

About Corner Bakery Cafe
Corner Bakery Cafe is a fast-casual restaurant serving breakfast, lunch and dinner to guests in Atlanta, Chicago, Clifton, NJ, Dallas/Fort Worth, Denver, El Paso, Houston, Jackson, Miss., Los Angeles/Orange County, Philadelphia, Phoenix, Salt Lake City, San Diego and Washington D.C. Established in 1991, Corner Bakery Cafe restaurants are owned and operated by CBC Restaurant Corp. with 119 company-owned and franchised locations around the country. Founded on a philosophy of creating a place for people to relax and gather with family and friends, Corner Bakery Cafe features innovative, seasonal menu options while delivering a premier bakery cafe experience in the heart of neighborhoods everywhere. For more information, visit www.cornerbakerycafe.com .

About Il Fornaio
Il Fornaio owns and operates 22 full-service Italian restaurants in California and across the United States that serve creatively prepared, premium-quality Italian cuisine based on authentic regional Italian recipes. The restaurants also house retail markets offering Il Fornaio’s unique baked goods, prepared foods and a variety of Il Fornaio-brand products. Il Fornaio also operates wholesale bakeries that produce more than 100 varieties of fresh, hand-made breads, pastries and other baked goods for sale at their own locations and to high-quality grocery stores, coffee retailers, hotels and other fine restaurants.

PRESS RELEASE:

NEW YORK, June 13, 2011 — Bruckmann, Rosser, Sherrill & Co. (“BRS”), a New York-based private equity firm, announced today that it has completed the sale of Il Fornaio (America) Corporation (“Il Fornaio Corp.”) to Roark Capital Group. Il Fornaio Corp. is a leading operator of upscale Italian restaurants under the Il Fornaio brand and fast casual bakery cafes under the Corner Bakery Cafe brand. Il Fornaio Corp. also operates a state-of-the art bakery that manufactures artisan breads for both retail and wholesale distribution.

BRS acquired Il Fornaio Corp. in 2001 in a public-to-private transaction. In February 2006, Il Fornaio Corp. more than doubled in size following the acquisition of Corner Bakery Cafe from Brinker Corporation. The combined proceeds from the sale of Il Fornaio Corp. and an earlier recapitalization represented a gross multiple of invested capital of approximately 5.7x and generated a gross IRR in excess of 22%.

“We are very pleased with the outcome of our investment in Il Fornaio” said Nicholas Sheppard, a Managing Director of BRS. “During our ownership period, Il Fornaio and Corner Bakery Cafe achieved substantial growth, driven by same-store sales, new unit development, the investment in the bakery business and the initiation of a franchisee program at Corner Bakery Cafe. We are confident that, under the leadership of Mike Hislop, both Il Fornaio and Corner Bakery Cafe will continue to flourish.”

Mike Hislop, Chief Executive Officer of Il Fornaio Corp. stated “BRS was an exceptional partner; throughout a range of economic cycles, BRS provided management with the resources and guidance needed to create substantial shareholder value. The acquisition and subsequent growth of Corner Bakery Cafe has been a key part of our success and would not have been possible without the support shown by BRS.”
BRS is one of the most successful private equity investors in the restaurant industry. Since 1995, BRS has completed 16 transactions in the sector, including a current investment in Ruth’s Hospitality Group, Inc. “The restaurant industry continues to be a core area of focus for BRS. We have closely evaluated a number of opportunities in 2011 and we expect to make several investments in the sector out of our current fund”, said Stephen Sherrill, Co-Founder and a Managing Director of BRS.
BRS and Il Fornaio Corp. were advised in the transaction by North Point Advisors.

About BRS
BRS is a New York based private equity firm with $1.4 billion of committed capital under management in three investment partnerships, focused on investing in middle market consumer goods and services businesses. Since 1996, BRS has purchased over 40 portfolio companies for aggregate consideration of over $6.4 billion. In addition, BRS portfolio companies have completed approximately $1.9 billion of add-on acquisitions. Prior to forming the firm, the founders of BRS were in the financial acquisition business at Citicorp Venture Capital where they closed 25 transactions with aggregate transaction values totaling $5.8 billion.