A regional hospitality chain with EUR 15 million in revenue, a proven model, and an expansion opportunity. This case illustrates how a buy-and-build strategy can create significant value in a fragmented sector.
Names, locations, and certain details of this case have been modified to protect the confidentiality of the parties involved. The figures and results are representative of the actual transaction.
An organised restaurant chain in an autonomous community on Spain’s Mediterranean coast, with 8 establishments, EUR 15 million in revenue, and 210 employees. The founder, a hospitality professional with 25 years of experience, had built a casual dining concept with a recognisable brand identity, a standardised operating system, and a loyal customer base.
EBITDA was EUR 1.8 million (12% of revenue) — above the sector average, which sits around 8-10% for organised restaurant operations in Spain. The key to that superior profitability was a meticulous operating system: standardised recipes, gram-level waste control, centralised supplier negotiation, and a staff training programme that reduced annual turnover to 25% (compared to the sector’s typical 50-60%).
The founder, at 58, was clear about the opportunity — the kind of situation where growth capital makes the difference: the concept worked, there was demand to expand to other cities, and the market was full of independent establishments with good locations but poor management that could be acquired at reasonable valuations. What he lacked was the capital to finance the expansion and the management team to operate 15 or 20 establishments instead of 8.
Scaling without diluting quality. The greatest risk of expansion in hospitality is losing what makes the original special. Many chains grow by sacrificing quality, consistency, and attention to detail — exactly what differentiated this company from its competitors.
Financing the expansion. Opening a new establishment from scratch cost between EUR 350,000 and EUR 500,000. Acquiring an already-operating location (with clientele, staff, and licences) cost between EUR 200,000 and EUR 400,000. To reach 15 establishments in three years required EUR 2 to 3 million in investment.
Building central structure. With 8 establishments, the founder could personally supervise each location. With 15 or 20, he needed area managers, an operations director, reporting systems, and a central kitchen or production facility.
The founder’s legacy. As with many family businesses, the founder wanted to grow but also wanted to preserve his philosophy, his brand, and the way he treated his employees. He needed a partner who shared those values, not a fund that measured everything in quarterly EBITDA.
Investment and structure. Blue Mountain invested EUR 2.5 million in exchange for 45% of the shares. The founder retained 55% and the role of managing director, with a shareholders’ agreement that included an agreed expansion roadmap, mutual veto rights on strategic decisions, and a put/call mechanism from year 5.
Team reinforcement. Hiring of an expansion director with experience in restaurant chains, a financial controller with sector knowledge, and an operations director who freed the founder from daily supervision of all 8 existing locations.
Systems. Implementation of a restaurant management system (point of sale, inventory, personnel costs, per-establishment dashboard) enabling real-time monitoring of each location’s KPIs.
Production facility. Construction of a central kitchen that prepared the most complex products, guaranteeing consistency and reducing production costs by 8-12% depending on the item.
Selection criteria. We defined strict criteria for acquisitions: high-footfall location, premises with a valid activity licence, minimum annual revenue of EUR 400,000 (demonstrating the location works), maximum price of 4 times the establishment’s EBITDA (or potential post-conversion EBITDA).
First four acquisitions. We acquired four establishments within 12 months:
Total investment in acquisitions was EUR 1.4 million (business purchases and refurbishments). The remaining capital was allocated to the central structure and working capital.
Conversion. Each acquired establishment went through a 4-6 week conversion process: refurbishment to match the brand image, training existing staff in the operating standards, integration into central systems, and a relaunch with local marketing.
Results from the first acquisitions. The four acquired establishments improved their average revenue by 22% and their EBITDA by 65% in their first 12 months post-conversion. The application of the chain’s operating systems — cost control, centralised supplier negotiation, staff training — transformed mediocre establishments into profitable ones.
Second wave of acquisitions. With the results validated, we completed three additional acquisitions and one new opening, bringing the chain to 16 establishments in 36 months.
Brand and marketing. Development of a unified brand strategy with a refreshed visual identity, digital presence (website, social media, loyalty app), and a local marketing programme tailored to each establishment.
| Metric | Start | 18 months | 36 months |
|---|---|---|---|
| Establishments | 8 | 12 | 16 |
| Revenue | EUR 15.0M | EUR 21.6M | EUR 31.2M |
| EBITDA | EUR 1.8M (12%) | EUR 2.8M (13%) | EUR 4.7M (15.1%) |
| Headcount | 210 | 310 | 425 |
| Average revenue per location | EUR 1.88M | EUR 1.80M | EUR 1.95M |
| Average EBITDA per location | EUR 225K | EUR 233K | EUR 294K |
| Staff turnover | 25% | 22% | 20% |
Revenue doubled in 36 months. EBITDA increased 2.6x, with a margin that improved from 12% to 15.1% thanks to economies of scale (central purchasing, central kitchen, shared structure). Revenue and EBITDA per location also improved, demonstrating that growth did not dilute quality.
Most significantly: staff turnover fell from 25% to 20%, in a sector where turnover is one of the biggest problems. The key was a training and development programme that gave employees a clear career path within the growing chain.
Operations are the strategy. In hospitality, the difference between success and failure lies in daily execution: cost control, product consistency, customer experience. A chain that masters these elements can scale. One that does not deteriorates with every opening.
Buy-and-build works in fragmented sectors. The Spanish hospitality sector has thousands of establishments operated by individuals or small businesses without the resources to professionalise. An operator that brings systems, brand, and purchasing power can transform these establishments and capture significant value.
The founder is the most important asset. The brand, the concept, the culture — all of that existed thanks to the founder. Our role was to give him the resources to scale what already worked, not to reinvent the wheel.
Disciplined growth beats fast growth. We turned down several acquisition opportunities that did not meet our criteria for location, price, or potential. The temptation to grow quickly always exists, but every bad acquisition consumes disproportionate management resources and can damage the brand.
If you operate a hospitality chain or a restaurant concept with expansion potential, and you are looking for a partner who brings capital, structure, and experience without imposing an artificial pace of growth, let’s talk. The best chains are built one establishment at a time, not one PowerPoint at a time.
Founder of Blue Mountain
Over 15 years investing in Spanish companies with patient capital. Expert in business succession, corporate governance, and middle-market investment.
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
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