The Carlyle Group has used capital from its Peru Fund to acquire a majority stake in a quick-service restaurant franchisor in Chile.
The alternative asset manager has agreed to acquire a 75 percent stake in Gastronomia & Negocios (G&N) from the Duch and Fuenzalida families, which will retain a 25 percent stake in the business. Financial terms of the deal were not disclosed and a Carlyle representative did not return a message seeking further detail.
“We are honored to become part of this staple of Chilean food culture, as well as partner with G&N’s network of franchisees who are instrumental in this success,” said Carlyle vice president Sebastian Berriga in the statement.
G&N was established in 1983 and currently works with more than 70 franchisees operating more than 320 stores throughout Chile. The company also has a presence in neighboring Peru and Brazil, which are the first destinations of G&N’s regional expansion plans, according to the company’s website.
Generating more than $150 million in annual revenue, the company’s brands of quick-service restaurants include hot dog vendor Doggis, traditional sandwich maker Juan Maestro, and Tommy Beans, which sells burritos.
Driven largely by the popularity of Doggis, G&N was the sales leader in Chilean fast food in 2015, securing 16 percent of the overall market according to a report on the industry published in May by Euromonitor International.
Carlyle’s Peru Fund closed on $308 million in 2013 after surpassing an initial target of $125 million. Other investments from the fund – according to the company’s website, otherwise limited to Peru – include companies in the tourism, transportation and security sectors.
“South America is undergoing a transformational change towards more developed economies, with a new middle class being created,” said Carlyle managing director and co-head of the South America buy-out team Juan Carlos Felix in a statement announcing the fund’s close.
A South American country of 17 million, Chile is categorized as an emerging market economy by the International Monetary Fund.
Copper sales provide about 20 percent of government revenue and after a decade of about 5 percent annual growth spurred by rising prices for the soft metal, economic growth in Chile has moderated in recent years. Chile’s GDP grew at 1.7 percent pace last year and is expected to grow by 2 percent this year, according to the IMF.
The slowing economy has impacted the growth of sales in Chile’s fast food market, which shrunk from an average of 6 percent between 2010 and 2014 to 1 percent in 2015, according to the Euromonitor report.
“Even though prospects for the consumer food-service industry in the country are rather pessimistic due to economic deceleration and the fact that the economy has not shown any clear sign of recovery yet, it is expected that fast food will not lose any sales over the forecast period, with the area set to maintain sales inconstant terms,” analysts wrote.