July 1 Buyout firm Berkshire Partners LLC is in advanced talks to acquire Portillo's Restaurant Group, the largest privately owned restaurant chain in the U.S. Midwest, for close to $1 billion, according to people familiar with the matter.
Berkshire Partners has outbid other private equity firms for the Chicago-based restaurant group, the sources said on Tuesday.
The sources, who asked not be identified because the talks were not public, cautioned that negotiations had not yet been finalized. Portillo's hired investment bank Piper Jaffray Cos to shop it to potential buyers, they added.
Berkshire Partners, Portillo's and Piper Jaffray did not immediately respond to requests for comment.
Portillo's, known for its hot dogs and Italian beef sandwiches, has 38 locations in Illinois, Indiana, California and Arizona, according to its website.
Founded in 1963 by Dick Portillo out of a small trailer, Portillo's posted revenue of more than $300 million last year. The company had annual earnings before interest, taxes, depreciation and amortization of more than $70 million, the sources said.
Other restaurants owned by Portillo's include Barnelli's Pasta Bowl, Luigi's House and Honey-Jam Cafe.
A sale of Portillo's would come as a slew of restaurant chains try to sell themselves or go public as market valuations for the sector hold strong.
Mexican restaurant chain Del Taco is in the early stages of exploring a sale, Reuters reported last week.
In May, Darden Restaurants Inc agreed to sell its Red Lobster seafood chain to private equity firm Golden Gate Capital LLC for $2.1 billion.
Carlson Restaurants Inc agreed in May to sell its TGI Fridays casual dining chain to private equity firms Sentinel Capital Partners and TriArtisan Capital Partners for more than $800 million.
Recent restaurant-chain public offerings have included Zoe's Kitchen Inc, Potbelly Corp and Papa Murphy's Holdings Inc. Restaurant groups El Pollo Loco Holdings Inc and Dave & Buster's Inc are also pursuing IPOs.
An investment in Portillo's would make it the only restaurant chain in Berkshire Partners' portfolio.
Boston-based Berkshire has invested in a number of retail and consumer companies, including children's toy company Melissa & Doug, grocery retailers Grocery Outlet and Farm Boy, and apparel brand Citizens of Humanity.
Berkshire is currently deploying capital from its Berkshire Fund VIII, a $4.5 billion private equity fund it raised in 2011. (Reporting by Olivia Oran and Greg Roumeliotis in New York; Editing by Jeffrey Benkoe)