Piper, the former backer of Loungers, has completed a deal to take a significant minority stake in Flat Iron, which is thought to value the ‘single-steak’ dining concept led by Charlie Carroll at c£20m, MCA understands.

As revealed by MCA earlier this week, Piper had moved ahead in the race to invest in the four-strong group, beating off competition from Active Private Equity, Livingbridge and the Business Growth Fund.

The private equity firm, which currently also backs Turtle Bay, Be At One and Hickory’s, is making a £10m investment in Flat Iron, that will see early backers exit the business.

It will also allow necessary funding to build Flat Iron’s existing team and enable further units to open in and around London, at an initial pace of around two or three openings a year. MCA understands that the group’s four sites are currently generating average weekly sales of c£210k combined.

Carroll, who founded the concept in 2012 as a pop-up above the Owl & Pussycat pub in Shoreditch, retains a controlling stake in the business and will remain as managing director.

Flat Iron currently has four London sites (Soho, Tottenham Court Road, Covent Garden and Shoreditch) with two due to open later this year – on the former John Doe restaurant in Golborne Road, Kensington in May, followed by an opening in Caledonian Road, King’s Cross.

This is the first investment from Piper’s recently raised sixth fund and follows on from its successful exit from Loungers, which was acquired late last year by Lion Capital in a £137m deal.

Carroll said: “I wanted to work with a partner who shared my vision for Flat Iron and my ambition to build restaurants that focus on being better and different at every stage of the guest experience. Piper’s passion for Flat Iron has been evident from the outset, they have taken great care to build a relationship with me and to really understand what we are trying to do. This, coupled with their deep understanding of the sector and ability to add significant value through their networks, knowledge and in-house expertise, led me to select them as my partner.”

Peter Kemp-Welch, partner at Piper, said: “The consistently long queues outside Flat Iron are testimony to Charlie’s passion for providing outstanding quality steak at great value, offering customers an ‘everyday occasion’ – special enough for visits to be planned but quick, convenient and affordable enough to attract spontaneous as well as regular visits. We are looking forward to working with Charlie to continue growing Flat Iron into a beacon brand of excellence.”

Piper was advised on the deal by Bond Dickinson and Sentio Insight. The company and shareholders were advised by GCA Altium and Jones Day. NatWest has provided new banking facilities to support the growth of the business.

Sam Fuller, managing director of GCA Altium, said: “Flat Iron is one of the most sought-after casual dining concepts out there at present, disrupting the market by delivering great quality steak at an affordable price. Charlie is building something special and, in Piper, the company has found the perfect partner to help it become a real force in the casual dining sector.”

Comment by MCA editor Mark Wingett

The last time MCA sat down for a proper catch up with Charlie Carroll last June, the founder of Flat Iron had recently taken a two-week holiday. In fact, he came back on the day the company’s new 75-cover Shoreditch site, its fourth, was handed over, one week before opening. That he has been able to go away at such a critical time says a lot, not only about his confidence in the fledgling affordable quality steak concept, but also the way he operates it and his personality.

He said: “We opened Beak Street [the first permanent site] in November 2012 and in April 2013 I went and spent some time in America. I had the view from the outset that the sites were going to have to be able to operate independently of me from very early on.” It was also clear from the outset, that Carroll had a clear plan for Flat Iron and had certainly done his homework on, and some hard yards in, the sector he wanted to succeed in.

While at university, he did free shifts in the kitchens at Heston Blumenthal’s Fat Duck and Gordon Ramsay’s Royal Hospital Road restaurants, which although put him off the whole restaurant career idea for a few years, convinced him that when he did decide to pursue it again, it would not be from the bottom up. Instead he took a graduate job at Parthenon-EY strategy consultancy, which gave him invaluable experience related to the industry he is now in, including running the slide rule over Carluccio’s for a potential buyer.

It was at that point that Carroll started formulating an idea based around quality, affordable steak and decided he needed a grounding in how a restaurant company operates. A meeting with Mark Selby, co-founder of Wahaca, led to a job as operations advisor at the Mexican-led group, where his analytical skills were put to use to help the chain’s expansion. It also gave him an opportunity to effectively trial a start-up when he was given free rein to launch a takeaway outlet operating from a van, initially serving the Canary Wharf area.

Carroll then toyed with the idea of getting some general manager experience before launching on his own, but discussions with Selby and Tom Byng, founder of Byron, encouraged him to “crack on”, which led to Flat Iron.

Carroll says he was inspired to start the business because he felt the steak market at the time was served either by good quality but very expensive high-end restaurants or poor quality, mass market offers. He said: “Flat Iron was created to challenge traditional perceptions of steak, offering customers a modern take on the traditional steak house – no fuss, no frills, just delicious high quality steak for £10.”

The current steak market remains stretched from the higher-end operators in Gaucho and Hawksmoor to the more entry level Miller & Carter/Beefeater models. Gaucho’s more accessible sister concept CAU was launched to bridge that gap but after a promising run, which helped persuade Equistone to back the business at the start of last year, it is thought to have come off the boil in terms of performance and pulled back on its expansion plans, not that it is alone on that front.

Carroll’s consultancy work gave him a strong commercial and analytical outlook from day one and he set up Flat Iron to have the systems and processes in place to make growth as painless as possible – capex required is relatively low, with operations fairly simple and front-of-house stripped back. With the new investment from Piper, he believes that two to three openings a year will suffice for the concept in the short to medium term, with the focus for the time being on further growth in the capital. Not that he isn’t thinking about the long-term picture for the business.

Last year, he told MCA that he believed the concept could work anywhere in the UK. He said: “People who have opinions I respect have said it could be a 100 to 200-site chain and I think it could be. With about £16 per head spend and serving something as mass appeal as steak, there are very few places it couldn’t go. But do I want that? Probably not imminently. Am I conscious of expanding too quickly? Definitely.”

There is no doubt that in Piper he has found an investor who understands how to perfectly pace a growth story. The former backer of Las Iguanas and Loungers is building a strong reputation in the sector especially through its work with the businesses already mentioned, but also the ongoing success of Flat Iron’s now new stable mates, Turtle Bay and Be At One. It will hope for a further successful exit with the cocktail bar chain later this year.

Like many operators that have come up through the pop-up route, Flat Iron still maintains a cultish following. Currently, it does not take bookings (apart from for groups at Covent Garden) and the website is funkily simple and non-interactive. Carroll is wary that if the company over-stretches itself in any way it will make it harder to keep innovating and, therefore, to retain the brand’s freshness and credibility. With new investment on board, this challenge will intensify, but you expect that the former strategist will take whatever happens next in his stride.

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