Anand Gala
Gala Capital Partners bought two brands last year, Rusty Taco and Dunn Brothers Coffee, to add to a portfolio started only in 2017 with the purchase of Mooyah Burgers Fries & Shakes and later Cicis Pizza, among others.
Founder and Managing Partner Anand Gala has a quick answer when asked how he raises funds for the deals. “I raise it from my pocket. It’s all our capital. We do not have limited partners, it is our capital that we invest, and that gives us tremendous flexibility in doing deals,” he said.
(Two exceptions that prove the rule: He did the Mooyah deal with Balmoral Funds because he’s good friends with the founder, and the Cicis deal with Sunil Dharod because Dharod is his cousin.)
He also rejects debt. “We have not sought debt on any of the deals. They are all cash,” he said. “We like to have the flexibility to get the business in the shape it could be, and those early years are very critical. It’s better to not have those outside pressures from the lenders.”
Rusty Taco was owned by Inspire Brands, also owner of Dunkin’, Baskin-Robbins, Arby’s, Jimmy John’s and more. Rusty came along for the ride when Inspire bought Buffalo Wild Wings, but at about 35 units it looked nothing like the others.
Brendan Mauri
“They are very good” at operating mega-brands, said Gala about Inspire. “It was very much a different fit for them, because every other brand was 1,000 units or larger.” Meanwhile, Gala had been searching in the taco category, even bidding on a couple of other deals but failing to win one.
“It just so happened that somehow our named popped up, as they were considering what was the best home for Rusty, and what was the best fit for Inspire,” he said. “Let’s find someone that specializes in smaller brands, and someone who will really care.”
Brendan Mauri is president of Rusty Taco, and he invested in the new entity alongside the rest of the management team when Gala acquired Rusty. The former senior director of marketing for Rusty, he was named by Inspire as president in February 2020. He held marketing positions at Main Event Entertainment and Applebee’s before that.
“It was great in the sense that I think the goal in the process was to really set up our franchisees and our brand and our team for the most success,” Mauri said. “Because that was the focus, it led to Anand and his team, and his team is certainly the right buyer for a variety of reasons.”
Such as? “Just the way he focuses on franchisees, and his knowledge of having been a franchisee, and then connecting more with brands of a similar size,” Mauri said.
Tacos, chips and dip, and margaritas are on the menu at Rusty Taco
Kim Plahn, president and CEO of Dunn Brothers Coffee, echoes the point. “The thing originally that piqued my interest when I met Anand and the team, was their experience. He wasn’t only bringing in capital, but he also had experience as a franchisee and franchisor,” she said.
“We had three offers when I met Anand. I felt like, this is your baby and you want to make sure you put it in good hands. I felt he understood that relationship differently, sitting on both sides of that,” she said, referring to the franchisor-franchisee relationship.
“As he shared with me, he was looking for things that are ingrained in Americans’ life,” she added, such as coffee. “I could see that multi-brand strategy coming, with the acquisition, and understanding the strategic investments and alliances he had.”
Plahn joined Dunn Brothers Coffee as its CFO in 2007, and was promoted to president soon after. Chris Eilers and Skip Fay bought the franchising rights in 1998 from founders (and brothers) Ed and Dan Dunn; Eilers was bought out several years ago. Fay is still involved as chief coffee officer.
Gala shared his biggest lesson learned in acquisitions. “Very simply I would say, be upfront. Be transparent with the leadership team, and ensure that they are aligned with you as early as possible,” he said, including other constituents such as the seller and especially the franchisees. “Get in front of them early and often.”
