A more creative approach
to restaurant investing.

Unlike other lenders or private equity investors,
we deliver a broad range of customized solutions
to meet the needs of a transaction.

STRUCTURED LOANS
Stretch Senior / Unitranche, Second-lien,
and Mezzanine Financing


EQUITY INVESTMENTS
Preferred Equity, Minority / Partnership Equity,
and Control Positions


CAPITAL USES
Acquisition, Refinancing, Development,
Buyouts, and Recapitalization


INVESTMENT SIZE
We target investments in the $10M - $100M+ range

Investing across the industry,
from QSR to full-service.

We’re interested in opportunities that span the entire spectrum of the restaurant business. Multi-unit franchisees and franchisors. Company-owned chains. Prepared food retail. Real estate. And vendors / technology platforms that serve the restaurant industry.

Acquisition Financing

We offer customized senior and mezzanine financing solutions to franchisee consolidators, private equity funds, and management teams seeking more creativity than offered by conventional lenders.

  • DEEPER
    ADVANCE
  • LIMITED
    AMORTIZATION
  • SPEED TO
    CLOSE
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FRANCHISE CONSOLIDATION

  BACKGROUND

  • Seasoned operating partner of a large QSR franchisee required financing to support the acquisition of 30 units, resulting from the break-up of a prior partnership
  • Capital need was in excess of what traditional lenders would provide and also included follow-on capacity for future acquisition opportunities
  • Operator had limited equity yet desired a non-dilutive capital solution, where he would own nearly all of the business

  OUR SOLUTION

  • CapitalSpring provided a one-stop financing solution that allowed the operator to fully separate from his existing partner and then quickly double the size of his business through an add-on acquisition
  • Our comfort in the operator allowed us to underwrite on pro forma EBITDA, despite high going-in leverage, and provide flexible terms for quick deleveraging and ultimate take out with conventional bank debt
  • CapitalSpring Value-Add
    • Sourced and provided follow-on financing for multiple add-on acquisitions
    • Supported new unit growth with customized build-to-suit financing
    • Enhanced operations through mystery shops, detailed 4-wall benchmarking, and improved back office processes
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FRANCHISE CONSOLIDATION

  BACKGROUND

  • A leading private equity firm required committed financing for the acquisition of a substantial franchisee within a large full-service brand
  • The Company had a proven management team, a history of solid financial results, and an exclusive development agreement with ample whitespace
  • Buyer’s preference was for a subordinate lender with i) a knowledge and comfort level with restaurants, ii) a working relationship and form inter-creditor with the chosen senior lender, and iii) a willingness to allow future debt incurrence to fund remodels and new development

  OUR SOLUTION

  • CapitalSpring worked quickly to underwrite the transaction, issuing a hard commitment letter within several weeks, and ultimately provided a mezzanine loan with a “silent” second lien on collateral and market inter-creditor rights
  • Our comfort with the credit and aggressive advance limited sponsor equity contribution to 27%
  • CapitalSpring Value-Add
    • Sponsor leveraged CapitalSpring’s due diligence assessment and Strategic Operations Group’s unit economic analysis
    • Acted as a sounding board on select remodel and operational items post-closing
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  BACKGROUND


  OUR SOLUTION

Complex Financing

While we avoid true distress, we provide customized financing to fundamentally sound businesses navigating complexity and transition.

  • ABILITY TO LOOK
    PAST
    THE “STORY”
  • ONE-STOP
    SOLUTION
  • CREATIVE
    STRUCTURING

  BACKGROUND

  • Proven operator of a multi-brand family dining franchisee with ~40 units and a track record of leading SSS growth
  • Operator previously owned a separate QSR business that became insolvent during the recession, resulting in personal bankruptcy and meaningful legacy liabilities straining the business
  • Situation required a lending partner to look past temporary complexities in the business by leveraging existing cash flow and to close on an expedited timeline

  OUR SOLUTION

  • CapitalSpring provided an interest-only 4x unitranche financing that offered satisfactory payment to creditors through a court-approved bankruptcy plan and a capital structure that allowed the operator to focus on running the business
  • 60 day close from term sheet execution
  • CapitalSpring Value-Add
    • Crafted court-approved reorganization plan and supported negotiations with creditors’ committee
    • Worked with operator to devise and execute post-closing sale-leaseback strategy that led to additional unit development

  BACKGROUND


  OUR SOLUTION

  BACKGROUND


  OUR SOLUTION

Growth Investment

We provide debt and equity solutions to accelerate new restaurant development where there is a proven base of existing stores.

  • COMMITTED
    GROWTH FINANCING
  • LESS DILUTIVE
    STRUCTURES
  • PRO FORMA
    UNDERWRITING

  BACKGROUND

  • Rapidly growing fast casual brand required non-dilutive development capital to accelerate new unit openings and double the store count in 18 months
  • The Company had ~25 established units and best-in-class unit economics
  • Management desired a capital partner with deep industry expertise that could provide strategic guidance and lend against pro forma EBITDA from new units and normalized G&A

  OUR SOLUTION

  • CapitalSpring provided a minimally-dilutive debt and warrants financing to fund aggressive new unit growth
  • The Company received a large development line commitment with a pro forma run-rate incurrence ratio to fund future development
  • 45-day closing from execution of LOI
  • CapitalSpring Value-Add
    • Worked with management to refine and improve new store analytics, including introduction to leading technology vendor
    • Supported menu engineering, procurement, and labor optimization, and advised on deployment of new cooking equipment
    • Guided brand / consumer elements and portioning / value positioning

  BACKGROUND


  OUR SOLUTION

  BACKGROUND


  OUR SOLUTION

Buyout & Recapitalization

We invest in recapitalizations, partial sales, partner buyouts / dividends, and change of control transactions in connection with proven management teams.

  • INDUSTRY-EXPERT
    INVESTOR
  • PARTNERSHIP
    APPROACH
  • PASSIVE OR
    CONTROL
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BUYOUT
TRANSACTION

  BACKGROUND

  • A ~20 unit family dining brand with 60+ year history was put up for sale by family owners who sought liquidity for estate planning
  • The Company had strong unit performance and brand equity in the region
  • The seller owned multiple restaurant real estate properties that needed to be acquired in parallel

  OUR SOLUTION

  • CapitalSpring designed a comprehensive offer that allowed the sellers to interface with a single buyer for both the operating company and real estate with no financing contingency
    • Back-stopped sale-leaseback financing for real estate properties
    • Single source financing for the operating company purchase
  • CapitalSpring partnered with a proven external management team to drive meaningful 4-wall improvement, while maintaining a commitment to the Company’s culture, history, and employees
  • CapitalSpring Value-Add
    • Implemented new leadership and elevated existing employees
    • Optimized restaurant operating processes, menu, and marketing
    • Updated and professionalized above-store support center
    • Developed new unit prototype and accelerated opening pace
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PARTNERSHIP
RECAPITALIZATION

  BACKGROUND

  • The owner of the largest franchisee in a leading fast casual brand desired a partial liquidity event by engaging an outside equity partner
  • The Company was an entrepreneurial, family-owned business with a strong culture that the owner did not want to upset
  • Given ongoing family ownership and involvement, the focus was on finding a strategic financial partner with a deep understanding of the restaurant industry and capability to support the next phase of growth while not interfering in daily management and operations

  OUR SOLUTION

  • CapitalSpring delivered a one-stop mezzanine and equity solution that provided significant liquidity to the key shareholder while preserving meaningful post-close ownership in a ~50/50 partnership
  • Family members & management maintained autonomy to operate the business
  • CapitalSpring Value-Add
    • Active strategic involvement on Board
    • Advised on credit agreement negotiations with third party lenders
    • Acted as sounding board on operational and new development issues
    • Identified real estate arbitrage opportunities in existing lease portfolio
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DIVIDEND
RECAPITALIZATION

  BACKGROUND

  • Owner of ~60-unit QSR franchisee desired liquidity for estate planning purposes but was hesitant to seek a full exit of his business
  • The Company operated strong stores in a core brand territory with SSS growth outpacing the system
  • There was also a desire to consolidate existing disparate credit groups and lender relationships across multiple entities to unlock additional debt capacity

  OUR SOLUTION

  • CapitalSpring provided a unitranche solution through 6.0x that consolidated operations under a single loan with a flexible structure to support future acquisition activity
  • The owner received a ~$30M special dividend and maintained 100% ownership in his business
  • CapitalSpring Value-Add
    • Acted as strategic partner to owner by assessing growth opportunities
    • Sourced acquisition opportunity in a contiguous territory and advised on divestiture of select units in non-core markets
    • Assisted in optimization of back office functions through recommendation of in-sourced solutions
    • Ongoing financial backer and source of creative capital to fund growth

Real Estate &
Other Opportunities

We actively seek adjacent investment and financing opportunities in the following areas: real estate portfolios (including sale-leaseback transactions), prepared food retail companies, restaurant vendors, and restaurant technology platforms. We also welcome syndicated and independent sponsor opportunities.

  • QUICK
    FEEDBACK
  • EFFICIENT
    EXECUTION
  • VALUE-ADDED
    PARTNER