Wagamama
Transaction Background
In October 1996 Graphite Capital invested in Wagamama to fund the expansion of its chain of noodle restaurants. At the time Wagamama had two outlets, one of which had only recently opened. The company was founded in 1992 and was trading profitably. In 1998 we acquired a majority holding.
Deal Attractions
Wagamama had great popular appeal due to word of mouth and excellent reviews from the industry. Despite only having two outlets in secondary locations the restaurants were extremely busy. The turnaround of seats in its first outlet was an incredible 12 times a day! There was strong demand for its brand of food and, with better locations, we felt there was an opportunity to grow the business.
Achievements
- the number of restaurants grew from two to 50 by summer 2005
- following the departure of its founder we built a strong, experienced management team to grow the business
- Wagamama expanded outside its original London sites across the UK and through franchised restaurants abroad
- turnover increased from £2.5 million to over £45 million
- operating profit grew from £0.4 million to £5.7 million
- in the Zagat restaurant survey Wagamama was voted most popular London restaurant and was the only chain in the top 10
Exit
- Graphite and the management looked at exit options in early 2005, as sector ratings were strong and the business was performing well
- Wagamama was sold in June 2005 in a £103 million secondary buy-out to Lion Capital
- Graphite retains a 12% stake in the business
- total proceeds to-date represent a multiple of 10.2 times our initial cost of investment and an internal rate of return of 39 per cent
