Fast-food chain Freddy's is said to be purchased by private-equity firm Rhone Group.

Freddy's Frozen Custard & Steakburgers to Change Hands for $700 Million

In a significant move for the fast-casual dining industry, Freddy's Frozen Custard & Steakburgers is set to change hands. According to reports, private-equity firm Rhone Group will acquire the popular brand for approximately $700 million, including debt.

Founded in Wichita, Kansas in 2002 by Bill and Randy Simon, along with friend Scott Redler, Freddy's has been one of the better performing fast-casual brands and burger brands in the U.S. in recent years. The brand was previously owned by Thompson Street Capital Partners, who bought it from its founders in 2021.

Thompson Street Capital Partners had initially set a higher asking price for Freddy's, but Rhone Group has reportedly acquired it for less. This acquisition comes amid a string of other splashy deals for franchised restaurant chains, with Blackstone acquiring Jersey Mike's and Tropical Smoothie for $8 billion and $2 billion, respectively.

From 2019 to 2024, Freddy's system sales increased an average of 13% per year, and in 2024, the company's system sales grew 6% to more than $987 million. As of the end of 2024, Freddy's had a total of 550 locations.

Rhone Group, based in New York City, invests in various industries, including consumer brands. The firm has a stake in Illycafe, the Italian coffee company. Interestingly, Rhone Group previously owned Brazilian steakhouse chain Fogo de Chao for about five years before selling it to Bain Capital in 2023.

Joe Guszkowski, a senior editor with Restaurant Business covering technology and casual-dining chains, wrote the article about the sale. Earlier reports from Reuters suggested that Thompson was considering a sale of Freddy's at a valuation of $1 billion. However, Freddy's declined to comment on the report Friday afternoon.

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In conclusion, the acquisition of Freddy's Frozen Custard & Steakburgers by Rhone Group marks a significant shift in the fast-casual dining industry. The brand's impressive growth over the years and its continued success in the market make it an attractive investment for Rhone Group. As the details of the acquisition unfold, the industry will be keenly watching to see how this move impacts Freddy's and the broader fast-casual sector.

Fast-food chain Freddy's is said to be purchased by private-equity firm Rhone Group.