Hargett Hunter Managing Partners Interviewed by Dallas Business Journal
April 19th, 2017
Dallas, Texas – Hargett Hunter Managing Partners Jason Morgan and Jeff Brock discussed their restaurant investment strategy and future growth of Original ChopShop and Ruggles Green into the Dallas market in an article written by Korri Kezar in the April 17th, 2017 edition of Dallas Business Journal.
The article, “Plano private equity firm putting its dough into growing restaurants“, is available here and below.
A Plano-based private equity firm is mixing financial and operational experience to invest and spur growth in restaurant companies.
Hargett Hunter Capital Partners was founded two years ago by Jeff Brock and Jason Morgan, who bring complimentary skills to restaurant investing. Brock, who serves as managing partner, has worked with financial firms like JP Morgan and GE Capital – Franchise Finance for top 50 restaurant companies like Yum! Brands.
On the other hand, Morgan, who also works as managing partner and CEO of Ruggles Green, one of the company’s investments, has spent a majority of his career in hospitality. He was recruited to Zoës Kitchen in 2008, helping grow the chain to 150 restaurants and take it public in 2014.
Since founding their firm, the duo has invested in Houston-based Ruggles Green, a green-certified company that specializes in healthy food, and Arizona’s Original ChopShop, which also offers nutritious cuisine.
Hargett Hunter generally invests $5 million to $20 million in its platform companies, depending on the businesses’ size and life cycle. Brock and Morgan said they purposely built a firm that invests in restaurant brands that are smaller than companies that usually catch private equity attention.
“In leaving Zoës I sought out trying to buy another brand,” Morgan added. “The size was (lower than) $25 million, and people said it’s just too small to write a check. A lightbulb went off for me that there are brands poised for growth that need someone to help them. As I met Jeff it all came together.”
Morgan and Brock told the Dallas Business Journal more about their firm’s strategy.
Where does the firm draw its capital for investments?
Brock: We have a handful of large family offices from across the country. As we have more success, we’re in the process of adding more institutional partners as well. We’re a product that fits well for family offices and smaller institutions.
What type of restaurants do you invest in?
Brock: Our first two investments have similar characteristics: (They have) strong consumer resonance and they’re more fast-casual in service format. But we try not to limit ourselves to any categories.
We are targeted as any investment firm can be. We only invest in restaurants, but we will invest in a franchisor or franchisee, or an independent chain. And we will generally invest across service formats.
Other than money, how does the firm invest in restaurant companies?
Morgan: What we believe is a core competency is that we’re able to provide operating experience. With the first two companies that we acquired, the founders thought so much of us, they turned over the keys to us. We’ve been able to build a platform in Dallas that supports both brands.
Brock: I can’t overemphasize the differentiation. Large numbers of private equity firms are based off of people with some sort of investing background, more of the finance side of the equation. Because of that, their resources are tied up, and when it’s time to bring in operating capabilities, they have to bring it in on a deal-by-deal basis. We have that option, but we were founded on the convergence of operating and finance.
What does the firm ultimately hope will happen with its investments?
Morgan: Our plan with Original ChopShop is to take it from three to 40 stores over the next four to five years. We believe in building the right foundations and systems and people on the front end, which will help when accelerating later. We’re replicating some of the things we did at Zoës and improving on them.
For Ruggles Green, (we’re looking to expand to) about 30 stores over the next four to five years.
We have patient investors and we’re not under a time horizon, so we can do what is best for the companies. We could exit to a larger private equity group, but there is no desire to have to exit. There are people that will be interested in these business at different points of time.
Is DFW a key market as you grow these brands and invest in others?
Morgan: Yes, it is. Analytics are important to determining markets. We’re using analytics to decide where we put the next stores, and Dallas is a market for both Original ChopShop and Ruggles Green. We’re actively looking for real estate and negotiating leases and letters of intent. We hope to have both brands in Dallas as early as this year.