Investing.com -- Private equity firm Roark Capital is set to strengthen its presence in the restaurant industry with the acquisition of Dave's Hot Chicken. Reuters reported. The deal, valued at around $1 billion, is in line with the long-standing preference of private equity firms for restaurant franchise operators, due to their steady royalty revenue and relatively low operating costs.

Roark Capital, based in Atlanta, manages $38 billion in assets and already owns a variety of major restaurant brands. These include Arby's, Culver's, and Subway, which was added to its portfolio last year. The acquisition of Dave's Hot Chicken will further diversify Roark's holdings in the restaurant sector.

The move comes as restaurant operators, including Dave's, are dealing with increasing labor costs and are trying to balance inflation by boosting menu prices. Dave's Hot Chicken currently operates more than 250 locations worldwide and generates approximately $1 billion in annual sales. The acquisition by Roark Capital will provide Dave's with additional resources to navigate these challenges and continue its operations.

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