Pritzker family-linked PE firm buys foodservice provider

The purchase of C.H. Guenther & Son by PPC Partners marks the debut investment for the mid-market firm affiliated with the heirs to the Hyatt Hotel fortune.

PPC Partners, a mid-market private equity firm established earlier this month by Pritzker Group Private Capital, has acquired C.H. Guenther & Son, a San Antonio, Texas headquartered private label food provider, in its first transaction.

Financial terms for the deal, which was announced last week, were undisclosed and representatives from the firm did not respond to requests for further detail by press time.

Founded in 1851, CHG provides branded and private label food products to customers in the restaurant, club and retail markets. The company maintains 19 food production facilities located in US, Canada and western Europe and its grain-based and seasoning product offerings include breads, buns, rolls, biscuits, gravy mixes, frozen appetizers, spices and deserts. CHG’s products are sold under brands that include Gizella Pastry, Pioneer pancake mix and Williams taco seasoning, among others.

Michael Nelson, a PPC Partners investment partner that participated in the deal, said that CHG’s future growth would likely come through both “organic initiatives” and “accretive acquisitions”.

“We believe CHG represents an excellent platform for us to accelerate our investment in the food manufacturing sector,” said Nelson.

Earlier this month, Pritzker Group Private Capital, an investment vehicle affiliated with the Pritzker family that inherited the fortune derived from building the Hyatt Hotel group (among other companies), announced the creation of PPC Partners. PPC Partners is dedicated to long-term investments in the manufactured products, healthcare and services sectors made on behalf of the Pritzkers, other families and unnamed institutional investors.

The firm counts food among the three subsectors of its manufactured products focus and its website defines PPC’s focus further as being on contract manufacturing and private label flavors and ingredients aimed at end markets including fast food, quick service restaurants, grocery and health stores.

PPC’s CHG deal joins a series of recent investments that reflect investor interest in the foodservice and restaurant sectors.

Last week, California-headquartered foodservice product supplier Lyons Magnus announced the hire of former Campbell’s Soup Company executive Ed Carolan as chief executive of the company, in which Paine Schwartz Partners made an investment of an undisclosed size in November.

Sustainability-focused private investment firm Butterfly acquired farm-to-table restaurant Modern Market in February and last March Vestar Capital made an investment of an undisclosed size in Edward Don and Company, an Illinois-headquartered company that provides foodservice equipment and supplies.

In a global overview of the industry published in January, Rabobank wrote that US foodservice, defined as any meal eaten away from home, saw a 3.2 percent increase in total sales last year, which was the segment’s slowest pace of growth since 2008.

As a result, 2017 was an active year for foodservice mergers and acquisitions, according to Rabobank, which highlighted Roark Capital Group’s $2.9 billion acquisition of Buffalo Wild Wings in November, Golden Gate Capital’s $765 million acquisition of Bob Evans in January and Apollo Global Management’s December purchase of Qdoba for $305 million, among others.

Propelled by a trend of consumers eating more meals away from home that analysts labelled as “long-term” and “structural”, Rabobank predicted that this year would likely see a continuation of transactional activity.

“For investors looking to put money into the consumer space, restaurants continue to be an attractive option, despite their recent performance, when comparing them against retail and the onslaught of e-commerce,” Rabobank analysts wrote.