The Restaurant Group acquires Barburrito

The Restaurant Group plc (TRG) has announced its acquisition of Barburrito – an award-winning, Mexican-style fast-casual restaurant chain. 

The total consideration of £7m will be paid entirely in cash by TRG and represents a 4.4x run-rate EBITDA multiple. The transaction has been done on a debt-free and cash-free basis. TRG is acquiring the business from its existing shareholders.

Barburrito currently operates 16 sites in high-footfall locations across a range of formats – including shopping centres, city centres and transport hubs. 

TRG believes the Mexican restaurant brand is well aligned with key consumer trends, including healthy eating, convenience and customisable cuisine. It also offers high-quality products at alternative prices with an average spend per customer of c.£10. 

The strength of Barburrito's proposition is reflected in its trading performance, with sales up 20% for the 25-week period to 26 June 2022.

TRG believes there is significant scope to further develop and expand the Barburrito concept, particularly in the south of England, where the brand has a limited presence. The group has confirmed that the initial expansion plan would be to double Barburrito's existing estate over the next four years. 

The brand will be integrated into TRG's Leisure & Concessions (L&C) division, retaining Barburrito's key operational team. The L&C department is already familiar with the business, having previously operated two sites as franchises in UK airports. 

For the period ended 26 September 2021, Barburrito’s profit before tax was £1.7m and as at 26 September 2021 its gross assets were £3.9m. The profit before tax (PBT) figure for the period benefitted from significant temporary government support (i.e. VAT reduction and property grants).

The 16 existing sites are expected to contribute adjusted company level EBITDA and PBT of c.£1.6m and c.£0.8m respectively to TRG over the next 12 months.

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