Dive Brief:

• Goldman Sachs Merchant Banking Division will acquire a significant stake in Zaxby's, according to a press release. Details about this deal were not disclosed, but it is expected to be finalized by the end of the year. 
• The partnership is expected to help accelerate growth at Zaxby's, provide a sustainable competitive advantage and help enhance the guest experience, according to a Zaxby's spokesperson. 
• Zaxby's, which has over 900 restaurants in 17 states, has seen three consecutive years of strong same-store sales and strong demand from franchisees to grow, and its partnership with Goldman Sachs will allow it to become a national and potentially an international chain, a spokesperson said.  

Dive Insight:

While deals have been down for the better part of the year, private equity continues to show interest in high-growth chains that could greatly benefit from a boost in capital. Levine Leichtman Capital Partners acquired Tropical Smoothie Cafe in September. Tropical Smoothie has continued to expand during the pandemic and reached its 900th store opening in November, according to a press release emailed to Restaurant Dive. Opes Acquisition Corp. entered a business combination agreement with fast-growing BurgerFi, which will allow the chain to go public.  

Restaurants, especially QSR chains with drive-thrus, that continued to grow sales and show brand strength during the pandemic will likely continue to attract private equity and other investors.

Zaxby's pivoted operations early in the pandemic to provide support to licensees, employees and enhance the guest experience. The company provided $5 million in financial relief for licensees hit hardest by the pandemic with a royalty abatement program and removed marketing fund contribution fees for all of its 487 licenses. It also offered a retention bonus of $1 per hour worked for restaurant employees at 146 company-owned locations through June 16 and offered $1,000 in bonuses for general managers. 

Licensees allocated different staff to the drive-thru, curbside pickup and order-ahead, which kept wait times at four minutes even though drive-thru traffic rose 35.6%. The addition of Zax Family Packs, which included 20 Chicken Fingerz and 30 boneless wings with sides for four people, contributed to a 22.5% increase in overall check.

The company also bulked up its executive team to prime it better for growth. It hired its first chief development officer in September with the appointment of former Jack in the Box executive Vanessa Fox, who is expected to help the brand to continue to develop in its current markets and expand into new ones. It also hired Keith Anderkin as vice president of supply chain and quality assurance and Alan Ludloff as vice president of branding, both of whom will work closely with Fox to help with future development.