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Au Bon Pain to be acquired by LNK
January 16, 2008
Au Bon Pain and LNK Partners, a private equity firm focused on the consumer/retail sector, have entered into an agreement under which LNK will partner with management to recapitalize the company.
"We've been very fortunate," said Au Bon Pain chief executive Sue Morelli. "We've had strong same-store sales and there was investor interest with getting in. It was a good point to partner with a financial partner to help the company reach its growth potential."
The more than $100 million investment will support Au Bon Pain's expansion strategy in the United States and in select global markets such as Tokyo, Dubai and Kuwait. The 226-unit chain currently operates 182 restaurants in the United States and 34 locations in Thailand, along with locations in South Korea and Taiwan.
"The rest of the world really lives in urban, dense markets," Morelli said. "And Au Bon Pain translates beautifully to these other countries."
In the United States, Morelli said the plan is to expand outside of the chain's core markets of Boston, Philadelphia, Chicago and New York. Two locations have opened in Pittsburgh, further reflecting Au Bon Pain's focus on smaller markets, Morelli said.
The chain plans to open its second bistro concept, designed for suburban areas, at the end of April, and continues to push trade channels such as hospitals and airports for expansion.
"We're very flexible and that's been a large key to our success," Morelli said.
In 2007, Au Bon Pain generated revenue of almost $300 million systemwide. The company has experienced 33 consecutive quarters of same-store sales growth.
Compass Group PLC, a global foodservice company that owned Au Bon Pain from 2000 to 2005, will remain an equity and strategic partner. And an investor group led by PNC Mezzanine Capital, which structured and arranged financing support for management's 2005 acquisition of Au Bon Pain, and including AlpInvest Partners N.V., will sell its interest in the company.
LNK Partners is led by David Landau, the former head of the U.S. consumer/retail group of private equity firm Apax Partners; Henry Nasella, the former president of Staples and CEO of Star Markets; and Bruce Klatsky, the former chairman and CEO of Phillips-Van Heusen, one of the largest apparel and footwear companies in the world.
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