Brazilian restaurant chain plans to open ten new restaurants in next six months, nine in U.S.
08/23/2023
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Barry McGowan — Foto: Leo Pinheiro/Valor
Fogo de Chão, the renowned Brazilian restaurants chain, specializing in animal protein, intends to put in practice a global expansion plan in the next few years following its recent acquisition by Bain Capital, a private equity firm. The sale, which was announced last week, saw the company purchased from Rhône Capital. The company plans to open ten new restaurants in six months, nine of them in the United States, CEO Barry McGowan told Valor.
The executive said that by 2024, the idea is to open about 20 to 22 units around the world, including the Brazilian market. Brazil, the origin of the brand — founded in the south of the country in the 1970s — is likely to receive one or two new restaurants next year. Today, the country has 8 of the chain’s 76 units. Most of them are in the United States. With the expansion, the chain is betting on appealing to a wide range of customers, be they millennials, Generation Z or even vegetarians, Mr. McGowan said.
The acquisition by Bain Capital, a Boston-based American investment firm, does not alter the management or the plans for organic growth of the brand, stressed the executive. “Our strategy [for operational growth] remains intact. Bain Capital sees it the same way we do,” he remarked. “Remember, we are still relatively small. We only have 60 restaurants in America [United States]. Some of our biggest competitors have 700 to 1,000. So, we are just a small company growing one restaurant at a time, but we are building our global brand, and we are excited to work with Bain.”
Mr. McGowan did not confirm published figures that put the value of the deal at $1.1 billion, including the brand’s debt. The chain does not disclose sales figures for last year or projections for 2023. However, the chain told Valor last year that revenue in 2021 was $430 million, 110% higher than in 2020 and 23% higher than in 2019. The Brazilian business represents 4% of total revenues.
The executive reiterated that the brand maintains annual investments of $30 million to $40 million for opening new restaurants. “This planning remains in place with the new partnership with Bain Capital,” he said.
With restaurants in the United States, Puerto Rico, Mexico, the Middle East, and Brazil, the chain is set to open its first branch in Asia in 2024, in the Philippines. The brand is also studying the markets of Japan, South Korea, and Singapore.
“In the upcoming year, globally, we will open, I would say, around 13 to 15 [restaurants] in the U.S. And internationally, we will probably open four to five franchises, and then in Brazil, one to two [restaurants],” he elaborated.
For existing markets, Brazil holds a special place in the chain’s plans, according to Mr. McGowan. “If we open two restaurants [in 2024], it’s a 20% growth [in the number of units] in Brazil,” he said. “I would say that in the next three to five years, we can maintain a growth rate of 20% to 25% [in the number of restaurants] in Brazil,” he added.
The brand’s aim is to cater to a diverse demographic of customers through a greater number of restaurants, offering a range from premium meat cuts like the “N.Y. Strip” and “Wagyu Brisket” to exclusive “happy hour” drink options like the ones at “Bar Fogo,” found in their Barrashopping location in the western zone of Rio. “We have always had vegetarians ‘dining’ with us,” he added, noting the diverse salad buffet and other side options. “Our primary source is animal protein, but if someone at your table is a vegetarian, that’s fine,” he said. “We can make grilled tofu with black bean noodles,” he assured.
Given its robust expansion plans that require resources, the executive said he does not know yet whether was asked whether the company will be able to make an initial public offering (IPO) to raise funds and sustain the growth plan: “We don’t know. The most important thing is to grow our restaurant, one restaurant at a time,” he said.
*Por Alessandra Saraiva — Rio de Janeiro
Source: Valor International