Five Guys Europe Seeks New Investors

Telecoms billionaire Sir Charles Dunstone is looking for new investors to take a big stake in Five Guys Europe, the casual dining brand he founded in Britain more than a decade ago.

Background

Sir Charles’ investment vehicle, Freston Ventures, has hired investment bankers from Goldman Sachs to find a buyer for part of the burger chain, which employs around 6,000 people in the UK. A stake of up to 50% in Five Guys Europe is likely to be made available to bidders, although all options are being considered.

Investment Process

Goldman Sachs has distributed teaser documents to potential bidders in recent weeks, with major buyout firms said to be among those interested. The entirety of Five Guys Europe could be worth around £600m based on forecast revenues. The investment process was facilitated by an agreement Sir Charles made to acquire the 50 percent stake in Five Guys Europe owned by the Murrell family, which founded the company in Arlington, Virginia, in 1986.

Company History

Sir Charles brought the company to the UK in 2013 after striking a deal with the Murrell family following a family holiday in New York. The first UK location opened in Covent Garden in central London, before opening 100 branches six years later. The chain now has almost 300 stores in the European territories in which it operates, including France, Germany, and Spain.

Expansion and Employment

Five Guys Europe employs around 9,000 people across the continent and plans to expand into countries such as Italy and Portugal. It has 177 stores in the UK, while it has more than 2,000 stores in 26 countries, including the US business.

Current Market Conditions

The start of the trial comes as the hospitality sector fears a further rise in business rates ahead of the Budget, which is expected to help the Treasury plug an estimated £30bn budget hole. The pandemic was a death knell for many casual dining companies, particularly in the gourmet burger segment of the market. However, Five Guys Europe’s performance has bucked this trend and now accounts for a large share of the UK’s premium burger sector.

Financial Performance

Five Guys Europe recently completed a £185 million debt refinancing, putting its loans on a longer-term basis given the difficult environment for restaurant operators. The company is led by its managing director, and its performance has been notable in a sector that has seen several casual dining establishments fall into insolvency.