NRD Partners Makes Second Major Restaurant Deal In Fuzzy's Taco Shop
NRD Partners, a private equity fund formed by Aziz Hashim, a former Popeyes franchisee and current International Franchise Association chairman, has made its second major investment in the franchise restaurant space. NRD is acquiring the Fort Worth–based franchisor of Fuzzy’s Taco Shop.
Fuzzy’s Taco Shop is a fast-casual brand that serves Baja-style Mexican food including tacos and torta sandwiches with the distinctly simple presentation of spicy slaw and sauces and a focus on seafood.
The first Fuzzy’s opened in Forth Worth, Texas. Father-and-son restaurant veterans Alan and Chuck Bush bought the concept two years later. Soon afterward they began franchising and grew to 41 units by 2012, topping 90 restaurants (83 franchised and seven corporate restaurants) by the end of 2015. Fuzzy's has operations in 11 states including the South and Midwest.
Franchisee Todd Knight operates five units in Texas and expects another three restaurants by the end of the year. He said the investment seems like a good boost for the company.
“The company will get the spark to keep growing,” said Knight. “The growth has been phenomenal, but a big outfit behind you with the infrastructure and that has done it before, I think it’s going to be a big positive.”
That Hashim has a background in franchising is another good sign for the future of the concept and the investment.
“I think the restaurant business has a lot of history of private equity maybe not being so successful,” said Knight. “I think that’s reassuring that Aziz knows what you’re going through as a franchisee instead of the typical, ‘Lets make an investment and squeeze all we can from it.’”
The Bush family will continue to run the company going forward, another assurance for franchisees such as Knight, even as there will likely be some changes coming soon.
“I think there will be some changes, but I think it will be more around systems and things that larger companies need to have to prepare for growth,” said Knight. “I think it will all be positive.”
According to the company’s 2015 FDD, the franchised restaurants pull in an average volume of $1.2 million. Opening costs range from about $330,000 to $1 million and include a franchise fee of $35,000 for the initial unit with discounts for subsequent restaurants. Food costs account for 33.2% of gross food sales, labor accounts for 24.3% of net sales and occupancy comes in at 7.9% of net sales for the typical 3,000- to 4,000-square-foot location. The chain sports an average check of $11 to $12. Franchisees pay a royalty of 3.5% of gross sales during the first 52 weeks of operation and 5% of gross sales thereafter.
In its first deal, NRD acquired Frisch's Restaurants for $175 million this past summer.