Canadian retail brand Metal Supermarkets is entering its 40th year in operation with new majority stakeholders.
Last month the company, founded in 1985, received an investment from Riverarch Equity Partners, which now owns a majority of the brand. Riverarch Managing Director Andrew Wiechkoske said the goal of the investment is not just to grow the concept, now at 130 locations in the U.S., Canada and the United Kingdom, but bolster operations as well.
“With each of our investments, we focus on investing in people, processes and systems,” Wiechkoske said. “That’s very much the plan here. We want to support the unit growth, and you have to support the backbone of that growth. So, what we will do is invest across all functions of the company.”
Riverarch Equity Partners Managing Director Andrew Wiechkoske
It marks a new era for the Toronto-based brand, though prior shareholders will retain a minority interest in the company. Stephen Schober, Metal Supermarkets president and CEO, said brnad leadership was comfortable with Riverarch in how the firm understood the importance of unit economics and franchisee profitability.
“I think it’s the right move for Metal Supermarkets, our franchisees and our customers,” Schober said. “This transition with a private equity group that has strong discipline and a passion for building businesses is good for all involved.”
The investment closed in mid-December after a nearly three-month process. It’s the latest investment in a franchise concept for Riverarch which has previous experience with Authority Brands and Radiance Holdings.
In this case, Wiechkoske said there were two advantages that inspired the investment. The first was Metal Supermarkets’ unique position in that there are no national competitors, and the second was the success of its franchisees.
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“We’re big on the franchisee value proposition,” Wiechkoske said. “Franchisees do well financially there, and they have a good playbook that their owners can utilize. It leads to good results.”
In 2023, average gross sales per store was $2.16 million, according to the FDD.
Schober, meanwhile, said the Metal Supermarkets team was impressed with what Riverarch brought to previous investments.
“They have exposure with a higher level of sophistication in terms of technology, systems and risk management,” Schober said. “I think that comes with running a private equity portfolio. It’s hard to admit that others may know more than you, but I think they’re going to bring a level of guidance and stewardship that still supports things well. They’re focused on growth, but also analyzing the levers that should be pulled to make that happen.”
While the majority owners will change, the brand’s leadership will remain the same, something both sides felt was right.
Stephen Schober is the CEO of Metal Supermarkets.
“We’re not operators,” Wiechkoske said. “The business is still management’s to operate and it’s their culture to steward. We want to be impactful, but entirely at the board level. We’re proud to be in the background.”
“Our management team is staying in place and we’ve installed cooperation and coordination with our franchisees with a customer service focus that is safe,” Schober said. “And now we’ll be able to strengthen those things with some investments in technology and our service portfolio.”
A primary example is a new e-commerce site the brand is developing. Schober said Metal Supermarkets is creating a portal allowing a business with several locations to log in and place orders at multiple brand stores. Along with the digital development, Wiechkoske said the goal is to open more stores and improvement of services.
“A substantial majority of our sales are coupled with some sort of service, such as fabrication of the product,” Wiechkoske said. “In a lot of ways, we’re providing the customer a convenience, selling them more than just a commodity, and we want to support that as well.”
The initial investment to open a Metal Supermarkets is between $340,500 and $592,500.