Japanese fast food businesses have been an area of focus for the private equity in-dustry, with Longreach the latest to enter the fray with a two-part deal to take over the Japan operations of Wendy’s. Longreach purchased the franchise op-eration in June as part of a two-step deal that then saw Wendy’s use the funding to buy up the 136-outlet First Kitchen line of restaurants from Suntory Holdings. It was the first time Suntory had sold any of its operations to a private equity-con-trolled group, reflecting the somewhat-sceptical pervading view of private equity in Japan.
The company is rebranding the First Kitchen outlets, which sell pasta and sal-ads beyond the main hamburger line of Wendy’s, as Wendy’s First Kitchen.
The concept has already had a test run after the two chains linked up in 2015 in a cooperation deal that helped Wendy’s penetrate the Japanese market more quickly. The company had pulled out in 2009, only to re-emerge in 2011 under the leadership of Ernest Higa, who previously built up the successful Domino’s Pizza franchise and sold that off to another pri-vate equity group, Bain Capital. But growth for the new Wendy’s was slower than expected, given the time required to scout and secure good locations.
Prior to the Longreach purchase, Higa owned 51% of Wendy’s Japan. He still re-tains a minority holding.
Japan has not proven to be hamburger heaven for the industry’s biggest names. McDonald’s has gone through a number of setbacks over the years, shuttering some stores after it over-expanded and more recently when sales were hit by a China-linked food safety scandal. Rival Burger King pulled out in 2001 and came back in 2007.