Rosa’s, the London-based, Thai cafe concept, has appointed advisors as it considers its funding options to support future growth, MCA has learnt.

The group, which was founded by husband and wife team Alex and Saiphin Moore and began life in 2006 as a market stall on London’s Brick Lane, is understood to have appointed advisors at Grant Thornton to oversee a process, which would lead to the sale of significant stake in the business.

The company, which currently operates 10 Rosa’s sites in London, is thought to be valued at in excess of £25m. It has further openings lined up for later this year in Tower Bridge and Oxford’s Westgate scheme, the latter would mark its regional debut.

MCA understands that Lao’s Café, the Moore’s site in Covent Garden, which launched last year, would continue to operate under a separate business to Rosa’s.

Earlier this summer, the company appointed Gavin Adair, formerly of Wahaca, as its new managing director, ahead of its next stage of development.

Adair was previously finance director of ASK Italian and until most recently commercial and strategy director at Wahaca.

Rosa’s co-founder and current chief executive Alex Moore became group’s executive chairman, whilst his wife and co-founder Saiphin Moore retained her role as F&B director.

Adair’s appointment comes off the back of Rosa’s opening four sites in the last six months, including most recently this month, a new flagship site in Earlham Street, Seven Dials, London.

Comment by MCA editor Mark Wingett

At Rosa’s they have an expression, “structure will set you free”. As co-founder Alex Moore explains: “It’s all about having structure & scalability so that people’s working lives don’t get harder as the business grows bigger.” In a segment of the market – South East Asian – that is set to be a key growth driver in an overall restaurant sector that is increasingly coming under pressure, the Moore’s and their team have put Rosa’s in a position to test that point.

As my colleague Peter Linden recently wrote, it is easy to see the appeal of South East Asian food. Bright and colourful, lighter and healthier yet packed with flavour, the cuisine has a lot going for it. It is a region that the UK casual dining market has begun to embrace as well in recent years. Indeed, dishes and flavours from the cuisine have infiltrated the market, appearing on everything from the menus of well-established national chains to specialised food to go concepts.

MCA’s Operator Data Index shows that the branded South East Asian segment is expected to be worth £260m in 2017, having experienced growth of c24% per year between 2015-2017. And it is not just a London phenomenon either, with 49% of branded outlets in 2016 located outside the M25. Recent analysis from the Index shows that Thai brands are still leading growth in the South East Asian segment. However, whereas Rosa’s rivals, such as Giggling Squid, Thaikhun and Koh Tahi Tapas, have in the main, concentrated on regional expansion, the business has worked hard in developing a central London estate, including the recent opening of flagship site in Seven Dials.

Over the last year, it has also begun to flex its brand and build on its successes in the delivery market. This year it has relaunched its site in Westfield Stratford as Rosa’s Thai Market Kitchen, a new concept focusing on “customisable, market-style dining” and at the same time, opened Saiphin’s Thai Kitchen in London Fields, a concept positioned as a complementary rather than competing brand to Rosa’s, providing the local area with a delivery and takeaway-focused service. Three-quarters of Saiphin’s Thai Kitchen’s trade is through Deliveroo, while 25% comes from walk-ins. Across the whole brand, sales were up 30% since the group introduced delivery.

The business ticks a number, if not all, the boxes that private equity is currently seeking in the sector, apart from one would say a regional opening, but even that is soon to be rectified. Over the last 12-18 months the company has received a number of approaches from private equity but the Moores have always had their eyes on a certain EBITDA run rate figure and be at the right stage for a smooth expansion play to follow. As Alex has previously stated: “Start small and test your business model out thoroughly. Then tweak it and tweak it again. Eventually you’ll get it right, and then you can scale it accordingly.”

The final box in this strategy, which will see the Moores eventually step back from the business to explore other opportunities outside the sector, was ticked earlier this summer with appointment of Gavin Adair as the companies new managing director. His appointment allows Alex Moore to focus on site selection and development, which will be essential to the brand’s continued growth. He also has the experience gained from his time at Wahaca of taking it from a similar size that Rosa’s finds itself now to the 25-plus site mark when he left the Mexican brand.

In a subdued M&A market, there remains pent up private equity interest for the right opportunity. It would be surprising if investment firms such as Bowmark, LDC, Active and Piper did not run the rule over the business, with management buyout the likely route for the company. There remains though the possibility of a trade play. The Casual Dining Group has previously looked at opportunities in the South Asian restaurant segment, running the rule over both Busaba Eathai and the Thai Leisure Group. It is not alone in needing to generate some momentum into its existing business, although it is debatable how much a business the size of Rosa’s would turn the dial in the short-term. Long-term there remains the opportunity for consolidation in the Thai/South Asian restaurant sector, a process you would expect Rosa’s to play a significant role in.

If you look at the leading Japanese/Pan-Asian chain Wagamama, which is expected to reach 128 outlets by December 2017, there is very much a strong case for further growth opportunities in the branded Thai segment.

As Alex Moore has previously told me: “There is a Malcolm Gladwell book where he talks about having 150 people, I think he compares it to a Roman battalion, a number where he proves through case studies where social relationships fall apart after that number. Our goal is to get to that 150-mark in London in terms of people/employees and then we’ll look to expand outside London with another unit of 10 sites/150 people. We want to expand but without losing our soul.” Rosa’s finds itself ready to make that next step, it just need to find the right chariot to take it there.