The telecoms billionaire Sir Charles Dunstone is seeking new investors to take a big stake in Five Guys Europe, the casual dining brand he launched in Britain more than a decade ago.
Sky News has learnt that Sir Charles’s investment vehicle, Freston Ventures, has retained investment bankers at Goldman Sachs to identify a buyer for a chunk of the burger chain, which employs about 6,000 people in the UK.
This weekend, City sources said a stake of up to 50% in Five Guys Europe was likely to be made available to bidders, although all options are expected to be considered.
Teaser documents have been circulated by Goldman Sachs to potential bidders in recent weeks, with large buyout firms said to be among those interested.
One insider said that based on its projected earnings, the entirety of Five Guys Europe could be worth in the region of £600m.
The investment process has been facilitated by a deal that Sir Charles is understood to have reached to acquire the 50% stake in Five Guys Europe owned by the Murrell family, which established the business in Arlington, Virginia, in 1986.
Under that deal, Five Guys Europe will pay a royalty fee to the US brand-owner for its future use.
Sir Charles brought the business to Britain in 2013, after striking a deal with the Murrell family following a family holiday in New York.
Its first UK site opened in Covent Garden, central London, before hitting 100 outlets six years later.
The chain now trades from close to 300 stores in the European territories in which it operates, which include France, Germany and Spain.
In the UK, it has 177 outlets, while including the US business it boasts more than 2,000 stores across 26 countries.
Five Guys Europe employs about 9,000 people across the Continent, and has plans to expand into countries including Italy and Portugal.
Read more from Sky News:
Post Office compensation scheme is ‘half-baked’, Alan Bates warns
Why Sky-ITV deal makes sense in shifting entertainment landscape
Be the first to get Breaking News
Install the Sky News app for free
Goldman is said to have been picked for the Five Guys Europe mandate after overseeing the recent disposals of stakes in Wingstop, the fried chicken chain, to investor Sixth Street in a £400m deal; and the Indian restaurant group Dishoom, which was backed by private equity firm L Catterton in a transaction worth about £300m.
The launch of the process comes with the hospitality sector on edge ahead of the budget amid fears of further rises in business taxes aimed at helping the Treasury fill an estimated £30bn fiscal black hole.
Last year’s budget saw Rachel Reeves hike employers’ national insurance contributions, prompting employers in the hospitality and retail industries to warn of mass job cuts and business collapses in its wake.
Since then, a string of casual dining businesses have fallen into administration, including, most recently, Pizza Hut’s UK operation.
Other well-known chains, including Cote and TGI Fridays, have changed hands in the last few months.
The pandemic sounded a death knell for many casual dining businesses, particularly in the gourmet burger segment of the market, where Byron Burger has been through several insolvencies in recent years.
Five Guys Europe’s performance has bucked that trend, however, and now accounts for a large share of the UK’s premium burger sector.
Follow our channel and never miss an update
Five Guys Europe recently completed a £185m debt refinancing, which placed its borrowings on a longer-term footing amid the challenging climate for restaurant operators.
The company is run by John Eckbert, its chief executive.
Sir Charles is best known as co-founder of the Carphone Warehouse and TalkTalk, the latter of which he remains actively involved with and is currently engaged in a process to sell.
This weekend, he declined to comment when approached by Sky News.
