Goldman Sachs is set to acquire a “significant” stake in 900-unit chicken chain Zaxby’s, the companies announced in a joint release Wednesday evening.

Investment funds managed by Goldman Sachs’ Merchant Banking Division will fund the deal, which will support accelerated growth for Zaxby’s as well as expansion into new sales channels with a guest-focused strategy, it said. While terms of the deal were not disclosed, it’s expected to finalize by year-end 2020.

“I look forward to working with the team at Goldman Sachs to continue building the brand I founded 30 years ago in Statesboro, Georgia,” Zach McLeroy, co-founder and CEO of Zaxby’s, said in a statement. “This partnership symbolizes the strength of our company and their involvement will accelerate our growth and expansion into a national brand.”

Today, Zaxby’s is spread across 17 states. Here’s a look at its financial performance in recent years.

Unit count

  • 2019: 904
  • 2018: 898
  • 2017: 877
  • 2016: 818
  • 2015: 731
  • 2014: 662


U.S. systemwide sales (in millions)

  • 2019: $1,913.24
  • 2018: $1,776.39
  • 2017: $1,654.20
  • 2016: $1,540.78
  • 2015: $1,444.52
  • 2014: $1,236.85


Average-unit volume (in thousands)

  • 2019: $2,143.77
  • 2018: $2,034.54
  • 2017: $1,998.70
  • 2016: $2,050.86
  • 2015: $2,155.54
  • 2014: $2,033.41


Zaxby’s said it will leverage “Goldman Sachs’ vast resources” to push forward profitable growth for the brand and its franchisees, “while keeping guests in the forefront.”

“Zaxby’s is a fantastic company with a founder-led culture, loyal customers, and talented employees. We are excited to partner with the management team to provide long-term capital for their next phase of expansion,” Nicole Agnew, managing director in the Goldman Sachs Merchant Banking Division, said in a statement. “We are confident we can grow the brand while remaining authentic to what people love about the restaurants.”

Added Zaxby’s co-founder Tony Townley: “I am excited to have a firm like Goldman Sachs joining the Zaxby’s family. This new partnership is a testament to what our employees and franchisees have helped us create thus far. Goldman Sachs’ knowledge and resources will help continue to build upon the strong foundation we have laid out.”


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Morgan Stanley & Co. LLC and Stephens Inc. served as financial advisers to Zaxby’s. King & Spalding LLP and Fortson, Bentley and Griffin, P.A. were legal advisers to Zaxby’s, including lawyers Keith Townsend, Justin King, Jason Peters, Hillyer Jennings, Alyssa Ladd, and Carli Gish. Weil, Gotshal & Manges LLP served as legal adviser and Goldman Sachs served as financial adviser to Goldman Sachs Merchant Banking.

Childhood friends McLeroy and Townley founded the brand in 1990. McLeroy famously sold a drum set for $8,000 and the pair opened their first store for about $28,000 with the help of credit cards. For all intents and purposes, McLeroy served as the brand’s acting CMO for the next 28 years, helping craft a $2 billion company, until Joel Bulger stepped in April 2018 after holding roles at Johnny Rockets, Wendy’s, Church’s Chicken, Moe’s Southwest Grill, and Darden.

The brand is positioned firmly in one of—if not the—hottest categories in quick service, with virtual chicken wing brands webbing nationwide from every corner of the industry. Brands like Chili’s, Smokey Bones, Outback parent Bloomin’ Brands, Nathan’s, Lazy Dog, and more have brought concepts to life in recent months.

And it’s building off arguably the biggest fast-food story of 2019, when Popeyes challenged Chick-fil-A on Twitter and spawned a chicken sandwich gold rush.

Zaxby’s itself dove into the battle in late October with a “Signature Sandwich” that comes with Zax Sauce or Spicy Zax Sauce and touts size as a differentiator.

At the end of 2019, Zaxby’s ranked fourth among quick-service chicken chains in terms of total domestic systemwide sales. Chick-fil-A ($11 billion) was first, followed by KFC ($4.8 billion), Popeyes ($3.75 billion), Zaxby’s ($1.84 billion), Raising Cane’s ($1.466 billion), Wingstop ($1.4 billion), Bojangles ($1.29 billion), El Pollo Loco ($894 million), and Church’s ($700 million).

By U.S. unit count, however, it was sixth. KFC (4,065), Chick-fil-A (2,500), Popeyes (2,499), Wingstop (1,231), Church’s (1,050), Zaxby’s (904), Bojangles (746), El Pollo Loco (480), and Raising Cane’s (457).

Fast Casual, Finance, Story, Zaxby's