Private-equity firm Roark Capital purchases 385-unit Schlotzsky's Ltd. from Bobby Cox Cos

Nation's Restaurant News,  Nov 27, 2006  

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ATLANTA -- Roark Capital Group, the private-equity firm that owns the McAlister's Deli chain, said it has acquired the rival Schlotzsky's Ltd. concept from Bobby Cox Cos. Inc.

Terms were not disclosed, but Atlanta-based Roark said franchised and company-operated locations of the 385-unit Schlotzsky's chain generated $210 million in systemwide sales last year.

Roark has made Schlotzsky's a subsidiary of its Focus Brands Inc. holding. Focus operates or franchises 1,400 foodservice outlets, including the Carvel and Cinnabon chains as well as units of Seattle's Best Coffee on military bases. McAlister's, a 170-unit chain based in Ridgeland, Miss., is operated separately from Focus.

The company did not say what interaction, if any, may be established between the two deli chains. Schlotzsky's offers made-to-order sandwiches, soups, salads and pizza, adding a center-of-the-plate concept to Focus' pair of treat brands.

Bob Barnes, president and chief executive of Schlotzsky's, said his company and Roark initially had discussed co-branding opportunities, but talks eventually turned into a sale. Bobby Cox Cos. of Fort Worth, Texas, purchased the Schlotzsky's chain out of bankruptcy in January 2005 after the publicly owned operation filed for Chapter 11 protection in August 2004. At the time of the filing, it had about 490 units.

Roark said founder Bobby Cox would join Focus' board and invest part of the proceeds of his stock into the company.

Employees at Schlotzsky's have been offered jobs with Focus. Schlotzsky's headquarters will remain in Austin, Roark said.

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