Founded in 1976, Great Harvest Bread Company has about 165 locations in over 30 states.
NewSpring Capital said it’s ready to initiate a “major refresh” of Great Harvest Bread Company after the Radnor, Pennsylvania-based private equity firm acquired the 48-year-old fast-casual bakery and café concept.
“We’re looking to supercharge a wonderful bakery and nearly 50-year-old company by refreshing some of the stores that need refreshing to drive new unit growth and create the next great chapter for this brand,” said Patrick Sugrue, NewSpring’s general partner.
Sugrue said NewSpring Franchise, the franchise operating arm for the firm, will work with existing Great Harvest franchisees to repaint older stores and update the exterior and interior signage where needed. He also talked about building more stores with the company’s “hub-and-spoke strategy” that utilizes the three storefront revenue model of a bakery, a sit-down cafe and a deli counter for grab-and-go sandwiches, breads and coffees.
The strategy is designed to improve unit economics and extend each store’s reach. “Our hub is a full-service bakery cafe where we bake all of our products and the baking capacity is greater than the volume of a single location,” said Sugrue.
“By adding a spoke that can use the hub to provide baked goods, you increase sales, more efficiently use production capacity and have a second location at a fraction of the cost of a second full-service location,” he continued.
Sugrue said there are no immediate plans to make executive changes at Great Harvest; CEO Mike Ferretti and his staff will continue to run the day-to-day operations.
“We just had our kickoff meeting with them and we think very highly of the management team at Great Harvest,” said Sugrue, who along with NewSpring co-general partner Satya Ponnuru joined Great Harvest’s board of directors. “We’re in a growth mode right now and we’re going to need more people, not less people.”
“Partnering with NewSpring Franchise is the perfect next step, as their impressive track record of elevating and expanding franchise concepts, coupled with their deep investment and operational experience, will be critical to driving our continued success,” Ferretti said in a statement.
Great Harvest, with about 165 locations in more than 30 states, got its start in 1976 in Great Falls, Montana. Sugrue believes the brand, which has built a loyal following with freshly baked breads and sandwiches, salads, soups and breakfast items, has the potential to grow it store count by three times.
“We have an underwritten belief that could be a 500-store brand across the country,” Sugrue said.
Patrick Sugrue, NewSpring Capital co-general partner.
“With the exemption of a few older stores, the Great Harvest stores are performing well,” he continued. “We’re confident in our ability to create more efficiencies and enhance franchise development, supply chain and marketing to accelerate growth.”
Average gross sales for a single-site Great Harvest bakery were $907,502 in 2023, according to the company’s franchise disclosure document, and just under $1.7 million for a hub-and-spoke concept. The investment range for a store is $168,262 to $984,154. Great Harvest’s net unit count dropped by six last year as it opened five new units but closed 11. That follows the closure of 20 locations between 2021 and 2022.
The acquisition of Great Harvest is NewSpring’s fourth major franchise investment. The firm acquired Duck Donuts in 2021, and made strategic investments in Federal Donuts and Chicken in 2022 and Shake Smart earlier this year. It also invested in beauty brand Blo Blow Dry Bar, dog daycare concept Central Bark and home care brand Green Home Solutions.
In addition to its investments in franchise brands, NewSpring has invested in more than 200 companies across the business services, enterprise and infrastructure technology, security and business intelligence sectors. Founded in 1999, the firm manages $3.5 billion in capital.
“If you look at our franchise portfolio, about half of our companies are specialty food and the other half is service brands,” Sugrue said. “What’s common to all seven of our platforms is that these are franchise business models, which is the engine of the American dream to own your own company while being part of a national brand.”
Sugrue said NewSpring will continue to explore investment opportunities in franchising.
“As you can see from our portfolio, we’re pretty evenly distributed between specialty foods and service brands, and we’ll continue to look at what’s out there and where we feel we can help great brands grow,” he said.