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Corporate Finance

CFL Pizza

CFL Pizza operates approximately 90 Pizza Hut restaurants in
the Greater Orlando area, one of America’s foremost tourist
destinations and a vibrant market for quick-service restaurant
and pizza delivery concepts. CFL Pizza was formed in 2009 by
Northwood Ventures in partnership with Andy Rosen, an
experienced quick-service restaurant executive who now serves
as the company’s chief executive officer. CFL Pizza acquired the
Pizza Huts in Central Florida from Yum! Brands, the restaurant-
industry giant that also owns and franchises Taco Bell, KFC,
A&W and Long John Silver’s.

Challenge private equity firm acquire more than 120
No matter how you slice it, pizza is big Pizza Huts in Southern California. Through
business and Pizza Hut is the world’s the Yum! Brands relationship, they learned
favorite pizzeria. With more than 6,000 that the company was ready to sell 91
restaurants in the U.S. and another 5,600 Pizza Hut restaurants in Central Florida,
in 97 countries around the world, Pizza Hut provided they could find the right inves-
serves and delivers more pizza, pasta and tors to back a strong operator.
wings than any other restaurant chain. Based on industry knowledge and a
Close to 90 percent of U.S. Pizza Huts long-term relationship with Northwood’s
are owned and operated by independent principals, CIT’s restaurant practice leader
“CIT was instrumental in bringing
franchisees. That number will grow as Yum! saw a potentially good match between the
Northwood Ventures to the
Brands completes its “refranchising” private equity firm and Pizza Hut. Working
table for me and Yum! Their with colleagues in Corporate Finance, he
strategy that includes selling many of its
knowledge of the restaurant developed an investment thesis for
remaining company-owned restaurants to
industry and understanding of new and existing franchisees. Northwood’s consideration.
the restaurant investors’ mindset Northwood Ventures is a leading private A key element of the proposal was the
were extremely valuable.” equity firm that looks for investments with participation of Andy Rosen, a former
Andy Rosen high growth potential that will create value Yum! Brands executive who earlier in his
CEO and generate superior returns for its career managed the Tampa market for
CFL Pizza investors. Since it was founded in 1983, Pizza Hut. The proposal emphasized that
Northwood has invested in more than 160 Rosen’s involvement would reduce risk for
companies in a wide variety of industries. investors and make the divestiture more
“CIT’s understanding of the Yum! The firm’s consumer experience includes attractive for Yum! Brands, whose interests
Brands refranchising program successful investments in Caribou Coffee, include protecting and building the Pizza
was extremely helpful as was the Buca di Beppo Italian restaurants, Office Hut brand in an important regional market.
introduction of an experienced Depot and Dick’s Sporting Goods, among Presented to Northwood in early 2009,
CEO who will help us realize the others. the CIT proposal also emphasized Pizza
full potential of this investment. Even though 2009 was a challenging Hut’s leading market position including its
CIT was able to recognize and year for the U.S. economy with little consumer appeal, product quality,
merger and acquisition activity in the retail purchasing power and significant national
present a compelling opportunity
and restaurant sectors, Northwood advertising budget. It also noted North-
at just the right moment for
Ventures was open to investing in strong wood’s expertise in the retail and
Northwood.” restaurant sectors and Rosen’s proven
concepts with good value propositions
Hal Wilson and growth potential. ability to refocus and improve operations.
Managing Director
Northwood Ventures
Solution Results
CIT was very familiar with Yum! Brands’ Northwood recognized the soundness of
refranchising strategy. In 2008, restaurant the CIT investment thesis and engaged CIT
specialists from CIT Corporate Finance to act as its exclusive financial advisor
provided debt financing to help another during negotiations with Yum! Brands. The

Based on positive market projections and a recovering economy. providing a strong start for CFL Pizza and validating the soundness of the acquisition. CIT Group Inc. which made this a very good fit for Northwood Ventures. It was gratifying to help create a win- win-win transaction for operator. CIT supported Northwood during several months of negotiations leading up to the closing of the deal in December 2009.771. CFL Pizza has announced plans to add at least seven Pizza Huts in the next five years and rebuild or upgrade 25 older locations in the next decade. On the strength of a national advertising campaign offering “any pizza. 505 Fifth Avenue New York.0505 . firm formed CFL Pizza. any crust for $10. LLC. “There is a lot of value and growth potential for Pizza Hut’s proven business model in Central Florida. NY 10017 212.” Bob Bielinski Managing Director. which made CFL one of the nation’s largest Pizza Hut franchisees. to pursue the Restaurant Practice Leader acquisition and eventually operate the CIT Corporate Finance Central Florida Pizza Huts. Specific terms of the transaction were not disclosed.” same store sales at Pizza Hut locations nationwide rose 5 percent in the first quarter of 2010 and another 8 percent in the second quarter. Andy Rosen was named CEO and became part owner of the new company. investor and franchisor. any size.