Lion Capital's add-on investment into Gordon Ramsay Restaurants

Agastya Jain
Feb 25
5 min read

Updated: Mar 9

By: Agastya Jain, Aria Najmabadi, Ben Curtis, and Jed Worthey

2/25/2025

Deal Overview:

Target Company: Gordon Ramsay Restaurants

Investor: Lion Capital

Sector: Consumer

Subsector: Hospitality (Restaurants)

Investment Structure: Add-on investment

Announcement Date: 2/19/2025

Firm Overview:

Gordon Ramsay Restaurants (Target): Gordon Ramsay Restaurants (referred to as “GRR” through report) is a global hospitality group founded by Michelin-starred chef Gordon Ramsay in 1998, specializing in fine dining, premium casual, and fast-casual concepts. The group recorded £9.56MM (FY24) of revenue across their globally-spread restaurants (37 UK, 35 US, and 22 across China, South Korea, Malaysia, France, Dubai, Singapore and Thailand). Expanding beyond fine dining, the company has scaled quick-service brands through franchising and licensing agreements. With strategic growth in North America, the Middle East, and Asia, the company focuses on high-quality cuisine, immersive dining experiences, and innovative restaurant concepts.

Lion Capital (Investor): Lion Capital is a private equity firm founded in 2004, specializing in middle-market, consumer-focused investments across North America and Europe. The firm's investment strategy centers on partnering with established brands to drive growth through innovation and expansion. Lion Capital has invested in over 175 consumer brands, including notable names like Weetabix, Jimmy Choo, Wagamama, and AllSaints.

Sector & Deal-Relevant Trends:

Restaurant Economics Diverge as Consumer Preferences Shift to Extremes: The restaurant industry is experiencing a major shift as mid-tier dining continues to shrink due to larger macroeconomic trends. Rising inflation, shifting discretionary spending, and evolving consumer expectations are making it increasingly difficult for casual dining restaurants to compete. Consumers are now primarily choosing between two extremes: budget-friendly quick-service restaurants (QSRs) that offer value deals, digital ordering, and loyalty incentives, or high-end dining establishments that provide a premium, differentiated, and immersive experience. Mid-market brands that fail to strongly position themselves in either category are losing market share as they struggle with rising costs and declining customer retention. From a dealmaking perspective, as the middle of the market continues to contract, M&A and PE activity in the restaurant sector is increasingly favoring deals that either consolidate QSR brands with proven value propositions or back premium restaurant groups with clear growth trajectories— GRR provides a share of both. Seemingly, investors are prioritizing brands that can adapt to polarized consumer preferences, with a strong focus on scalability, brand equity, and international expansion. Lion Capital’s partnership with GRR will be paramount on capitalizing on a strategy aligned with those aforementioned characteristics.

Private Equity Interest in Hospitality Enabled by Franchising and Licensing: Private equity firms like Lion Capital are drawn to restaurant brands with strong franchising models, as they offer high scalability, asset-light expansion, and recurring revenue streams. Private equity firms are increasingly targeting restaurant brands with robust franchising and licensing models, drawn by the potential for efficiently scalable expansion and consistent revenue streams. Notable transactions that follow this model include Roark Capital's acquisition of Subway for $9.6BN in 2023 and Blackstone's $8BN purchase of Jersey Mike's Subs in 2024. These deals underscore the attractiveness of franchise systems, which enable rapid growth with reduced capital expenditure, as franchisees fund the opening and operation of new locations, thereby minimizing financial risk for the parent company.

Beyond franchising, licensing agreements offer additional value in the food and beverage sector by facilitating the introduction of branded products, meal kits, and retail partnerships. This strategy allows restaurant brands to diversify revenue streams and enhance brand visibility without significant investment in new infrastructure. For private equity investors, these models present opportunities to capitalize on established brand equity and consumer loyalty, driving growth through both traditional and alternative channels.

Projections, Opportunities, and Risks:

Lion Capital Doubles Down on Its Investment, Backing GRR’s Global Growth: In 2019, Lion Capital initially committed $100MM to Gordon Ramsay Restaurants (GRR) to fund expansion across the U.S. and Canada, securing a 50% ownership stake in the brand’s North American operations. Now, with a new (undisclosed) investment, Lion Capital is merging the British and American arms of GRR into a single holding entity, equally owned 50/50 by Ramsay and Lion Capital. This move follows a period of aggressive expansion, during which pre-tax losses increased to £3.4MM from £1.05MM, despite a 21% rise in revenue from FY23 to FY24. However, much of these losses are tied to growth investments, as GRR allocated substantial capital toward new restaurant openings. The company’s resilience is further underscored by its recovery from the pandemic-era downturn, where it suffered £12MM in losses and nearly 300 job cuts—a stark contrast to its current expansion-driven trajectory. GRR's strong brand equity, combined with its diverse portfolio of restaurant concepts, enhances its ability to withstand economic downturns— an important factor for private equity investors.

Despite these upfront costs, GRR continues to outperform industry margins, maintaining a 62.1% gross margin, compared to the 32.9% industry average among public companies. This margin strength is primarily driven by premium pricing, franchising/licensing revenue, unique dining experiences, high-margin alcohol sales, efficient supply chain management, and a globally recognized brand— all factors that originally attracted Lion Capital. With this additional backing, GRR’s international expansion is set to accelerate, particularly through franchising, which allows for capital-efficient scaling via third-party operators. GRR’s QSRs such as Gordon Ramsay Burger, Street Pizza, and Fish & Chips offer substantial runway for growth and portfolio diversification, supported by Lion Capital’s consumer brand expertise and relationships. Execution of this strategy is already underway, as GRR leverages its media-driven appeal to secure a Formula 1 hospitality partnership covering 10 races this season. Additionally, Ramsay is doubling down on UK expansion, unveiling a 25,000 sq. ft., multi-concept dining destination at 22 Bishopsgate in London. With a clear franchising and licensing roadmap, as well as high-profile hospitality collaborations, Lion Capital saw strong conviction in deepening its partnership with GRR.

A Fine Line Stands Between Growth and Brand Dilution: While franchise-based expansion largely drives the investment rationale, this strategy carries significant risks—particularly in a sector as sensitive to consumer sentiment as dining. Rapid expansion could expose GRR to brand dilution if product quality declines, ultimately damaging its reputation. In premium segments like fine dining, where high quality is essential, a tarnished brand image could severely weaken consumer demand.

Additionally, GRR’s expansion strategy aims to diversify its portfolio by incorporating a broader range of restaurant brands and dining concepts. While this diversification offers some resilience, the dining industry remains highly competitive. Intensifying pressure from large-scale QSRs and other celebrity chef-driven brands could limit GRR’s growth potential and long-term trajectory.

“This is an exciting new chapter for our business, building on over five years of collaboration with Lion Capital. Together, and with the support of a brilliant team, we are poised to grow our international reach, create new partnerships and bring exceptional dining experiences to more people around the world.”

- Gordon Ramsay

“The brand is synonymous with excellence and creativity across dining categories — whether Michelin star, premium casual, or casual — and we see significant potential for more growth.”

- Robert Darwent, Co-founder and Partner, Lion Capital

The bottom line...

This transaction underscores Lion Capital’s conviction behind Gordon Ramsay Restaurants aligning with broader restaurant industry trends. Within global dining, the mid-tier restaurant segment is shrinking as consumers move toward value-focused QSRs or high-end dining experiences. Private equity firms are increasingly investing in premium brands with scalable, capital-efficient growth strategies, particularly in global travel hotspots where luxury dining is thriving— all of which are represented by the target in this deal.