Dive Brief:

• Checkers Drive-In Restaurants, the parent company of Checkers & Rally's, has landed a $20 million capital injection from private equity firm Oak Hill Capital Partners, according to a company release. The funds will be used to fuel the restaurant chain's five-year growth plan.
• Checkers & Rally's added 40 franchisees to its network in 2020 and has 72 new restaurants in development. Oak Hill Capital approved the investment following the restaurant company's successful debt amendment efforts at the end of 2020, according to the press release. 
• Last summer, Checkers' parent company solicited financial advisors to explore a potential restructuring to better manage the close to $300 million in debt it was carrying at the time, which came from its 2017 buyout by Oak Hill Capital Partners. The chain has been selling stores to franchisees to trim that debt load, and the pandemic has boosted its same-store sales growth thanks to its robust drive-thru channel. 

Dive Insight:

This capital injection was part of CEO Frances Allen's restructuring strategy to significantly accelerate the chain's growth. Allen told Restaurant Business last summer that such a cash infusion, which is needed to "unleash growth," wasn't possible under the chain's old debt structure. 

But Checkers is beginning to experience an organic return to financial health as well, unlike many restaurant chains that are being battered by the pandemic's economic disruption. This turns over a new leaf for the restaurant company, which has seen sales spiral since Oak Hill's acquisition in 2017.

"Company and franchised restaurants recorded high single digit same-store-sales (SSS) gains in 2020 and that momentum is continuing into the first weeks of 2021 because of the strategic marketing and operations plans rolled out before the pandemic, which were enhanced by the demand for contactless drive-thru and delivery experiences," Peter Armstrong, principal of Oak Hill, said in a press release. 

This financial improvement is driven in large part by the chain's unique real estate model, which features many double drive-thrus — a format that QSR giants like Taco Bell, Burger King and Del Taco are now developing to meet diner demand for convenient, contactless restaurant experiences. 

Checkers is also seeing gains following the launch of delivery in 2019 in partnership with Uber Eats, DoorDash, Postmates and Grubhub. Before the pandemic, delivery brought in between 4% and 5% of sales for Checkers & Rally's, but weighed in at 10% as of October, Forbes reports. The company has also converted about 50% of its company-owned stores to using one of two drive-thru lanes exclusively for order-ahead business.

With this new cash in its pockets, Checkers may be able to better compete with larger legacy QSRs. But as the segment pours new investments into off-premise channels and the digital integration of those channels, competition will still be steep, and won by the brands with the fastest drive-thru times and most seamless ordering experiences.