News

City Capital Ventures Acquires Canadian Burger King and Pizza Hut Franchisee Redberry Group

February 8, 2019

City Capital Ventures, LLC, a private investment partnership based in Chicago, Illinois, has acquired Toronto-based Redberry Group, one of the largest quick-service restaurant franchisees in North America with 134 total restaurants consisting of 111 Burger King restaurants and 23 Pizza Hut restaurants, all located in Canada. Redberry is the largest Burger King franchisee in Canada with roughly 40 percent of the brand's footprint in Canada. Financial terms of the transaction were not disclosed.

The sale of Redberry is supported by its two franchisor partners, Burger King and Pizza Hut, who both desire a franchisee partner capable of achieving the growth potential they see in Canada, according to a press release. Founded in 1954, Burger King is the second largest global fast food hamburger chain in the world with more than 17,500 locations. Since being acquired in 2010 by 3G Capital and becoming the cornerstone to Restaurant Brands International, Burger King has enjoyed a renaissance in its business, led by the freshness and innovation of its menu and its market positioning. Pizza Hut was founded in 1958 and has become the world's leading pizza chain with over 16,800 units worldwide.

"We are thrilled to be acquiring two iconic restaurant brands in the highly attractive Canadian QSR market," Dan Kipp, co-founder and managing partner of CCV, said in the press release. "The Burger King brand is underpenetrated in Canada relative to other QSR burger brands, and we see a compelling opportunity for expansion. Similarly, Redberry has a strong Pizza Hut presence in Alberta with a base of nicely profitable units. The opportunity to continue to develop new units in the market is quite attractive to us."

Kipp will join Redberry's board of directors.

CCV has engaged Spencer Stuart to assist in conducting a search for a new CEO for Redberry. The leadership team at Redberry will remain. CCV is also partnering with Gary Graves, a retail and restaurant executive and former chairman of Caribou Coffee, who will become chairman of Redberry. Chicago-based Saxonwold Capital will be an investment partner of CCV's in the transaction, and Rob Selati, its president, will join the Redberry board.

"We are highly impressed with the current management team and excited for them to be our partners in accelerating Redberry's growth in Canada and delivering superior operating results," said Graves. "Redberry's experienced and effective management team, which has been in place since 2014 and combined brings over 100 years of relevant QSR industry experience, provides the foundation for our organic growth."

Senior debt for the transaction was provided by CIBC and Scotiabank. McCarthy Tétrault LLP served as legal counsel to CCV with additional services provided by Perkins Coie LLP. Metronome Partners served as financial advisor to Redberry Group.