Philz Coffee, a growing coffee chain with 77 U.S. locations, has agreed to be acquired by strategic investor Freeman Spogli.
The transaction is expected to close on Wednesday. Terms of the transaction were not disclosed.
Philz will still be led by CEO Mahesh Sadarangani, who joined the company in 2021, as will the entire leadership team.
“This is an exciting new chapter for Philz as we expand and continue our mission to deliver a high-quality, personalized coffee experience to our loyal customers,” Sadarangani said in a statement. “Freeman Spogli’s deep experience in the consumer and restaurant sectors, along with their collaborative approach, makes them an ideal partner as we look to expand our footprint and continuously improve our offerings. We’re proud of the strong foundation we’ve built and look forward to accelerating our growth together.”
The brand, which refers to itself as the “unofficial coffee of Silicon Valley,” was founded in 2003 in San Francisco by Phil Jaber and his son Jacob. A single cafe on the corner in San Francisco’s Mission District has transformed into dozens of locations from California to Chicago. The company is supported by a roasting facility in Oakland, California, that supplies all of its stores and products. Philz can be purchased at retail locations, in select grocery stores, and online and is also available in Philz K-Cup pods.
“From day one, Philz has been known for its distinct approach to coffee and the community it has cultivated around the brand. It was personally important to us to find a partner that fully appreciates and is firmly committed to our mission. With continued leadership from Mahesh and the customer-focused approach of Freeman Spogli, Philz is well positioned to continue scaling while staying true to what makes it special,” Jacob Jaber said in a statement.
Freeman Spogli has invested over $6 billion in 72 portfolio companies since its founding in 1983. The company exclusively targets “consumer and distribution companies in the United States.”
The private equity firm has previously invested in El Pollo Loco, First Watch, and Popeyes. Freeman Spogli plans to expand Philz in new and existing markets, according to a Q&A published on the chain’s website. Philz also assured employees that benefits, pay, raises, hours, and promotions will continue as historically and that there are no plans to shutter any shops.
“Philz is a beloved brand with a passionate customer base, distinctive, handcrafted coffee offerings, and significant room for expansion,” Brad Brutocao, partner at Freeman Spogli, said in a statement. “We are committed to preserving and building upon Philz’ rich heritage and will continue delivering the unique, authentic coffee experience that makes the brand so special. We believe the company is well-positioned for meaningful growth in the attractive and growing specialty coffee category, especially with Mahesh and the talented Philz team to help drive this new chapter of success.”
Piper Sandler & Co. acted as exclusive financial advisor to Philz Coffee, and Kirkland & Ellis LLP served as its legal counsel. Morgan, Lewis & Bockius LLP acted as legal counsel to Freeman Spogli.
