Private equity and venture capital investment in restaurants across Europe rose sharply in the first half of the year, primarily due to one large deal announced in January.

McWin sro's $434.8 million planned acquisition of a majority stake in Munich-based casual dining company Fr L'Osteria GmbH accounted for the vast majority of the aggregate transaction value for the first half of 2023.

Overall, private equity made $447.5 million worth of investments in European restaurants in the period, up from $198.1 million in the first half of 2022, according to S&P Global Market Intelligence data. The number of deals in the first half fell to 10 from 29 transactions in the first six months of 2022.

Aggregate transaction value plunged to $12.7 million in the second quarter from $135.4 million in the year-ago period. The number of transactions fell to four from 16.

Top restaurant deals

Karamu Ltd.'s $8.5 million investment round was a distant second behind the deal for a majority stake in Fr L'Osteria GmbH. Untitled led the funding round, while Fuel Ventures Ltd., Material Ventures and The Best Nights VC participated.

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Karamu Ltd.

Germany secured the largest amount of private equity investment in the first half of 2023 with $434.8 million, on the back of the L'Osteria deal. The UK and France came next with $9.3 million and $2.2 million, respectively.

Deal activity returning to normal

Mergers and acquisitions within the restaurant industry are expected to revert to historical averages this year, according to a report from risk and financial advisory solutions provider Kroll.

Distressed and special situations deals are expected as the sector has been impacted by prolonged inflation, declining traffic and challenging operating environment.