Mark Mednansky speaks with Nation‚Äôs Restaurant News about the future of the casual-dining operator, which made its Wall Street debut Friday
Del Frisco's Restaurant Group Inc. made its market debut Friday, but investors’ appetite for the steakhouse chain was subdued.
Del Frisco’s stock opened down about 1.9 percent, at $12.75 a share, from an initial IPO pricing of $13. Southlake, Texas-based Del Frisco’s, trading as DFRG, had originally forecast a range of $14 to $16, and it also reduced the volume of shares offered to 5.8 million from the 7 million planned.
The $75 million IPO still pleased Mark Mednansky, chief executive of the company, which operates 32 restaurants across the Del Frisco’s Double Eagle Steak House, Sullivan’s Steakhouse and Del Frisco’s Grille brands. The company had made plans to go public in 2007, but that was withdrawn.
For the quarter ended March 20, Del Frisco's reported profit of $5 million, up from $2.7 million in the prior year period. Revenue was up 24 percent from the 2011 quarter, at $53.7 million.
Mednansky spoke with Nation’s Restaurant midday Friday after the IPO about the company’s future.
Your stock opened Friday lower than expected. How do you see the company moving forward?
I’ve been with public companies in my past. The one thing I learned is you don’t focus on the stock for any given day or week. If you want to be successful as a public company, you look long term and you deliver quarter after quarter to your shareholders, to your employees, and your guests.
How does it feel to finally have the IPO off the ground?
Our employees are very excited. We now have more money to grow. It gives us more visibility to all the guests and business guests.
How many units of each brand do you have open?
We have nine Del Frisco’s [Double Eagle], 19 Sullivan’s and as of last week four Del Frisco’s Grilles.
Where did the fourth Grille open?
Washington, D.C., right on Pennsylvania Avenue, between 12th and 13th, just right down the street from the White House. We like good sites.
What do you see for growth now that you have public shareholders?
One of the exciting attributes for this company now, as a public company, is the fact that we still have the majority of the growth before us. Other public companies that have gone out in our space had some of the great sites already taken for their one concept. We have three distinct, dynamic concepts that we can grow. And we have such wide open running room to grow.
Where will that be?
We just opened the Grille in D.C., but we don’t have a Sullivan’s or Del Frisco’s in D.C. yet. We’re building a big Del Frisco’s in Chicago that will open by the end of the year. We’re not in Miami. We’re not in San Francisco. We’re not in L.A. We’re not in San Diego. We’re not in Pittsburgh [Pa.], Nashville [Tenn.], Kansas City [Mo.], Minneapolis [Minn.], New Orleans [La.], San Antonio. We know all these cities, from our data, that we have great visibility with our guests. And developers are knocking on the doors. That’s helped by going public too.
What’s your growth plan?
We’re saying three to five units per year. I think we’re going to come out of the gates at the high end of that target. We’re opening four this year. We opened two Grilles already, and we’re opening another in Atlanta in October. And we’ll open that Del Frisco’s Double Eagle at the end of the year in Chicago. For ’13 and ’14, probably three Grilles, one Del Frisco’s and one Sullivan’s. We really want to get this Grille concept up to par with the other brands on sales.
What size spaces are you seeking for the Grille?
Our average box is about 7,500 square feet. And we love rooftop bars.
In 2011, your average blended unit volume was about $6.7 million. How do you see that trending through 2012?
We’re up 6.7 percent blended [sales] in Q1. We were up 4 percent in Q2, which was rolling over double-digit gains in the quarter last year. We’re confident in saying 3- to 4-percent increases in same-store sales in the next few years.