Roark Capital signs $1 billion deal for Dave's Hot Chicken, sources say

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Feb 25 (Reuters) - Private equity firm Roark Capital has signed a deal to acquire Dave's Hot Chicken for roughly $1 billion, according to sources familiar with the matter, in a deal that will reinforce its foothold in the restaurant industry.

Drawn by their steady royalty revenue and relatively low operating costs, private equity firms have long favored restaurant franchise operators.

Atlanta-based Roark, with $38 billion in assets under management, already owns a portfolio of major restaurant brands such as Arby's, Culver's and Subway, which it bought last year.

The deal comes as restaurant operators such as Dave's grapple with rising labor costs and seek to offset inflation by raising menu prices.

Known for its Nashville-style hot chicken, Dave's has capitalized on the growing consumer demand for chicken in recent years.

The Pasadena, California-based company was working with investment bank North Point on a sale process and had attracted interest from private equity firms, Reuters exclusively reported earlier this month.

Dave's currently operates over 250 locations globally and generates roughly $1 billion in annual sales.

The company is majority owned by its founders Dave Kopushyan, Arman Oganesyan, Tommy Rubenyan and Gary Rubenyan. It also counts rapper Drake among its investors.

Roark, Dave's and North Point did not immediately respond to requests for comment.

The talks between Dave's and Roark were first reported by the Wall Street Journal.