Brentwood Associates has sold Fort Smith-based K-MAC Holdings Corp., which is one of the largest Taco Bell franchisees in the country. Terms of the deal were not disclosed, and the private equity firm that bought K-MAC is for now keeping its identity a secret.
Los Angeles-based Brentwood acquired K-MAC in 2011 and began to invest in expanding the franchise footprint with new stories and buying existing stores. K-MAC, which also has KFC, Golden Corral and Long John Silver restaurants, grew from 190 locations in 2011 to 294 as of Dec. 20. K-MAC operates 271 Taco Bell restaurants, 17 KFC restaurants and 6 Golden Corral restaurants and has around 8,000 employees, said K-MAC CEO Sam Fiori. The stores are located in Arkansas, Illinois, Indiana, Kentucky, Mississippi, Missouri, Oklahoma, Tennessee, and Texas. K-MAC was founded in 1964 by Ken McGruder.
Fiori, who began with the company as a cook when it had just three KFC stores, and Chief Operating Officer Tina Reagan will continue to manage the company, according to the Brentwood statement.
“It’s been a pleasure to partner with Sam, Tina and the entire K-MAC team, and be part of the 50-year legacy of excellence at K-MAC,” Brentwood noted in the statement. “Their leadership, along with strong brand stewardship by our franchisor partners, has been a great combination.”
Fiori told Talk Business & Politics that the company will continue to expand, adding around 10 Taco Bell stores a year. He said Brentwood “were really great partners,” and said the new owners also are interested in continuing to grow the business.
The sale of K-MAC is Brentwood’s third transaction in the restaurant industry in 2016. Earlier this year, Brentwood completed equity investments in Pacific Catch, a polished casual seafood concept, and Veggie Grill, a premium fast casual concept, both based in California. North Point Advisors LLC and Houlihan Lokey Capital, Inc. acted as financial advisors, and Burr & Forman LLP acted as legal counsel to K-MAC in connection with the transaction.
K-MAC is operating in a growing sector. According to the National Restaurant Association, the U.S. restaurant industry is estimated to have sales of $783 billion in 2016, representing 4% of the U.S. GDP.
“Although this will represent the seventh consecutive year of real growth in restaurant sales, the rate of growth remains moderate,” the association noted in its report.
Average unit sales at quick service restaurants in 2013 reached $834,000, according to the association. The sector is also estimated to employ 14.4 million workers in 2016, making it the second-largest private workforce. Industry employment is expected to rise to 16.1 million by 2026.