Repositioning Businesses
Huddle House is a leading franchisor of more than 350 family dining restaurants serving Southeast communities. Founded in 1964, Huddle House provides high-quality food in a warm, friendly environment that brings communities together. Huddle House offers customers “Any Meal. Any Time.” with a broad menu of cooked-to-order food and 24-hour service.
Background
Huddle House’s prior owners acquired the business in 2006 shortly before the Great Recession. Soon thereafter, the investment group was acquired, and Huddle House became an orphan asset buried in a much larger portfolio of financial assets. No significant investment was made in the business, and the restaurants began to look and feel dated. Nonetheless, given the strength of its brand and unique market position, Huddle House’s business remained stable.
In 2011, Huddle House’s owners retained an investment bank with which Sentinel has a strong relationship to manage a sale. Sentinel was selected as the buyer because of our deep experience in franchising and restaurants and the certainty to closing we offered.
Opportunity
- To reposition Huddle House by updating store interiors, enhancing its menu, and reinvigorating franchisee unit growth, key elements of which included:
– Rejuvenating the management team and company culture
– Developing a new restaurant design and revamped menu
– Rebuilding Huddle House’s development pipeline to restart system growth
Accomplishments
Recruited New CEO: Before the sale, Huddle House’s CEO left and a board member was appointed temporary CEO to see the business through to new ownership. After acquiring Huddle House, we hired as CEO a proven restaurant executive who brought new leadership and a fresh strategic vision. The new CEO also built out a team of passionate and experienced executives to help reinvigorate the brand.
Revitalized the System: Sentinel worked with management to put strong incentives in place to encourage franchisees to reimage their restaurants. Over the course of Sentinel’s ownership, the system went from less than 5% reimaged to more than 50%. The remodeled restaurants experienced a sustained lift in sales performance and helped revitalize Huddle House’s relationships with its franchisees.
Developed Robust Backlog of New Franchised Units: Huddle House hired an experienced development leader who leveraged Huddle House’s reimaging success and steady growth in average unit volumes to grow its new franchisee backlog fivefold.
Outcome
In 2018, having held the investment for more than five years and having achieved our investment objectives, we sold Huddle House to a family office in a successful management buyout transaction.
Case studies have been selected for illustrative purposes for management teams of midmarket companies considering a partnership with Sentinel and should not be considered an offer or solicitation of services or an actual or implied endorsement of Sentinel or any security, investment, or portfolio company. The portfolio companies highlighted are not representative of all current and prior investments of Sentinel. A list and description of investments since Sentinel’s inception is available on this website.