Inspire Brands cofounders Paul Brown and Neal Aronson at company headquarters. Inspire owns 19% of its restaurants, compared with 1% for Burger King parent Restaurant Brands International.his spring, when restaurants across America were struggling to survive or closing down, business was booming for Neal Aronson’s Sonic. The retro chain of car-hop joints he acquired through Roark Capital in 2018 was perfect for the pandemic. Sales were booming, including a record 30% jump in May.
Roark declined to provide data for 2020 but the best-case scenario, if its publicly traded peers are any indication, is that sales are flat. Drivers at sandwich chain Jimmy John’s spent key lockdown weeks idle because the delivery zones of the stores were narrowly focused on the suddenly shuttered areas full of offices and university campuses. Sales at Buffalo Wild Wings, which contributes about 35% of Inspire’s annual cash flow of $260 million, were down 40% by May.
Aronson created Roark in 2001, and in the past decade has been the money behind half the industry’s biggest deals. Some trophies: Carl’s Jr. and Hardee’s, purchased for $1.75 billion in 2013, and, most recently, preferred shares in The Cheesecake Factory, snapped up for $200 million in April, just as the pandemic was taking hold.
Buyout firms at the time preferred operating companies with lots of divisions that were easier to dismember over the messier entrepreneur-driven franchise operations. It was slow going at first, each deal funded with one-off capital raises. Ace Mortgage and Wood Structures. “What saved this place was my wife, Wendy, one day grabbing me by the shoulders and saying, ‘I know you love Jack and I know how important he was, but there are people that are counting on you. You’ve got to get it together.’”
“[Coming from hotels] gave me the excuse to ask a lot of questions,” Brown, 53, recalls in an interview at Inspire’s headquarters just north of Atlanta last July. “It gave me the latitude to not be expected to come in with the answers.”