PE Firm Buys Gatti’s Pizza, Plans Expansion

Sovrano LLC acquired the pizza buffet chain with plans to expand its U.S. footprint in the Southeast region and beyond

A private equity firm specializing in the restaurant industry recently purchased Fort Worth, Texas–based Gatti’s Pizza. This new owner, Sovrano LLC, has plans to grow the brand with new stores in Texas and to extend the chain’s franchise network throughout the Southeast.

“Our hope is to help this near–50-year–old brand reach its potential, with a re-energized franchising initiative and filling out its Texas and Southeastern U.S. regional footprint,” Sovrano president Michael Poates tells Privcap. “Above all, we’re committed to retaining Gatti’s strong heritage of providing great food [and] great entertainment…served in a family-friendly environment.”

Poates—a restaurant industry veteran who has held various leadership roles in companies including Papa John’s, Dairy Queen, and Whataburger—will serve as Gatti’s president and run the day-to-day operations of the corporation for the foreseeable future.

“Our investment thesis always places owners in key strategic roles,” says Poates. “We feel that the best way to lead is to become part of the team. We don’t want to separate ourselves from the franchisees and staff. And we have significant skin in the game at Gatti’s, both as franchisors setting the stage for growth and as operators with 20 percent of the system being corporate-owned.”

Sovrano purchased the chain from turnaround specialist Blue Sage Capital.

Terms of the deal were not disclosed, but Poates says that Gatti’s entertainment offerings and unique recipes more than justify the cost. He plans to grow the brand in the Southeastern regional corridor before setting sights on a national footprint.

Sovrano is an affiliate of Fort Worth–based FundCorp, Inc. (FCI), a sponsor entity for two family offices that co-invest in small and medium-sized businesses with attractive growth prospects. FCI focuses on control investments in lower-middle-market companies with revenues of less than $300M.

Gatti’s was founded in Austin, Texas, as a hamburger and pizza restaurant and today has more than 100 locations across 12 states.

Poates says the deciding factor in the acquisition was the people. “Gatti’s has a thriving franchisee network and dedicated corporate staff who are eager to take the brand to the next level.”

The next level will likely include a bigger outreach through television, the Internet, and social media, and a general refocusing of the chain’s marketing. And while the firm believes Gatti’s is the best pizza in the space, they relish the competition.

“There are lots of great pizza restaurants in the market, and a number of pizza and entertainment companies,” Poates says. “We respect all of them. Gatti’s is unique, best in class, and its entertainment offerings are top-drawer.”