Industry News | May 3, 2017 | By Danny Klein | QSR Exclusive Brief

Fast Casual Mooyah Sold, Preps for Franchise Growth

Mooyah was founded in Plano, Texas, in 2007. MOOYAH Burgers, Fries & Shakes
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Unlike many restaurant chains recently purchased by a private-equity firm, Mooyah Burgers, Fries & Shakes isn’t ready to toss its brand at a dartboard and see what sticks. It’s not about taking the 94-unit chain to 500 restaurants, or 1,000, or more, as quickly as possible. Instead, president and chief operating officer Michael Mabry says the Dallas-based fast casual believes the move will help Mooyah grow from the inside out, and remain focused on the core that made it so attractive to investors in the first place.

“We don’t have our eye on this number of new franchisees we need to bring on or on this amount of new units that we need to open,” he says. “Really, our goals are based on how do we increase sales at current restaurants? How do we better support and service our franchisees with improved training programs with improved assets, whether that’s technology assets or people assets or the like? We want to really focus on the nucleus that got us here.”

Mooyah, which was founded in Plano, Texas, in 2007, announced Wednesday that it was being acquired by an affiliate of Balmoral Funds LLC, a leading lower-middle-market private-equity firm, and Gala Capital Partners, LLC, a private investment company with a focus on hospitality and food service franchises in the U.S. Terms of the deal were not disclosed.

Gala Capital has a controlling investment in Famous Dave’s BBQ’s largest franchise group and owns two-unit Fresh Griller. Gala has also owned, developed, and operated multiple franchise brands, including Appleebee’s, Jack in The Box, Seattle’s Best Coffee, and Del Taco.

Its founder, Anand Gala, who has more than 30 years of franchise business experience, echoed Mabry’s sentiment. “We share a philosophical approach,” Gala says. “Which is if we can help franchisees be as successful as they can be, then something as simple as if every franchisee just opened one more store we could effectively double the business. Now, I am interested in growth, but I don’t have a number out there. Because, honestly, I am looking for responsible growth. I’m looking for healthy growth. I don’t want to grow so fast that we can not support those franchisees in a way that they need to be supported.”

Of Mooyah’s 94 units, only three are company owned. The model moving forward will follow this franchise-heavy path, which inspired both parties to make this agreement. From Mabry’s perspective, it came down to putting the system’s health first. “Really over the last couple of years we’ve sat down and talked about the best way to grow this brand and it’s not looking at the best way for us to grow, it’s what’s best for our franchisees,” he says. “We’ve got to make decisions since we’re really a 99 percent franchise system. We’ve got to make decisions that support and service those franchisees.”

Mooyah’s culture as a franchise-first organization was the glue for Gala.

“One of the things I reference when I say this management team gets it is their passion, not just for the brand but for the franchisees,” Gala says. “They understand that the success of the brand is almost solely dependent on the success of the franchisee. And that is intertwined and ingrained in their DNA and passion for the business—their focus around the success of the franchisee. And that gets me very excited.”

Mooyah’s executive leadership team will remain in their roles under the transition to new ownership from co-founders Rich Hicks and Todd Istre.

Gala and Mabry have known one another for a few years and tossed around ideas for Mooyah’s growth in the past. The brand, which is in 18 states and nine countries, grew by more than 85 percent between 2012 and 2015, opening its 100th store in 2016. There has been some attrition in the last six months but that figure is likely to return to triple digits in the very near future. Mabry says the brand has five more openings expected in the next month or so.

In addition, while Mabry and Gala don’t want to project hundreds of units right now, it doesn’t mean the plan isn’t to turn the fast casual a household name. Even in states where Mooyah doesn’t have a large footprint, like Wisconsin, Louisiana, and Alabama, the brand’s reputation is sizable. This partnership, Mabry, says, gives the team “breathing room” to focus on the big things and continue to enhance brand recognition across the country.

“While we may only have two, three, four, five restaurants in some areas, because of the operators, we own those states, meaning our brand is very, very strong there,” he says.

And at a shade under 100 units, there is plenty of runway for Mooyah to take off. “I’ve learned a lot about how to scale different businesses and different brands,” Gala says. “And this is one that I believe was past critical mass, far past proof of concept, yet nowhere near saturation. And there is an opportunity here to grow this business, and I think to continue to grow it at a faster pace than what it has experienced over the last 10 years.”