September 5, 2014
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A new report by UNITE HERE is available here.

Amidst rising concern over wages in the fast food industry, will missteps in human capital management at fast food operator NPC International place Olympus Growth Fund V investors in the middle of mounting backlash against the fast food industry?

Key Points:

In late 2011, Olympus Partners invested more than $234 million in equity, approximately 15% of Olympus Growth Fund V, into NPC International, an owner of Wendy’s and Pizza Hut franchises throughout the US.

Within a year of NPC’s acquisition by Olympus, NPC entered into a confidential settlement of the case covering more than 4,500 drivers who claimed their compensation had been below federal and state minimum wage.

In a separate lawsuit, a second group of drivers is now arbitrating their wage and hour claims.

In January 2013, NPC was hit with another group of class action lawsuits as employees alleged further minimum wage violations including a claim that workers were asked to perform work “off the clock” without being paid.

NPC’s operations have struggled; comparable stores sales and adjusted EBITDA both contracted in the first half of 2014 and a recent note by Moody’s, which downgraded NPC’s senior credit facilities, questioned the impact that integrating new Wendy’s stores would have on the company’s ability to turn-around the core Pizza Hut operations.

Despite facing a series of lawsuits and struggling operations, NPC paid $10.7 million in fees to Olympus Partners during the two most recently completed years.

The growing movement of fast food workers has captured the attention not only institutional investors, but also President Barack Obama who highlighted their aspirations in a 2014 Labor Day address.

Full report available here.

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