Romano’s Macaroni Grill’s forthcoming CEO John F. Gilbert III foresees a strong future for the brand, particularly in its fast-casual platform, Gilbert said Wednesday.
Ignite Restaurant Group Inc., the Houston-based parent of Macaroni Grill, said Tuesday it had agreed to sell the brand to Phoenix-based Redrock Partners LLC, a shell company led by Gilbert, president of the brand for the past year and a former Ignite board member, and his partners, Dean Riesen and Dick Monfort.
The parties expect the deal, valued at about $8 million in cash before transaction-related costs, to close within 30 days. Ignite executives are expected to discuss the deal with analysts Thursday after the company’s fourth-quarter earnings release.
Gilbert told Nation’s Restaurant News Wednesday that he expects the fast-casual Romano’s Kitchen Counter, or RKC, platform, introduced at lunch in October, to continue to build traffic and sales for the concept.
With closures and Ignite’s conversions of real estate to its Joe’s Crab Shack and Brick House Tavern + Tap brands over the past year, Macaroni Grill now has 146 locations in 33 states, and annualized revenue of about $300 million. The company has 25 franchised locations in eight other countries.
The RKC platform, which was extended to dinner earlier this month, is in place at 136 domestic units. Gilbert sees opportunities there.
“It’s always going to come back to the quality of the food, which has never wavered,” Gilbert said. “We’re pretty darned good at Italian food. The hospitality culture has always been part of what this business about at the restaurant level. Those are two core equities.”
Redrock was intent on building upon that, he said.
“This RKC platform was the catalyst for us being interested in investing in this business,” he continued. “It’s a source of growth in our existing units and ultimately could be a source of growth in new units. That’s growth clearly in the fast-casual space.”
The three partners in the new Redrock holding company had all served on the board of Minneapolis-based Famous Dave’s of America Inc. before Gilbert became CEO in 2012.
In the new company, Riesen will serve as chairman and Monfort will continue as an investor. Riesen earlier had served as chief financial officer at Carlson Holdings Inc., then parent to the TGI Fridays brand. Monfort served as president of Monfort Meats and led a division of ConAgra Foods Inc. He also owns the Hyatt Regency-Palm Desert and a majority interest in the Colorado Rockies Major League Baseball team.
“We believe that Romano’s Kitchen Counter is the beginning of a new chapter in the Macaroni Grill story,” Riesen said in a statement Wednesday. “It was this growth opportunity, combined with the existing business foundation, that led me to put together the investment group to acquire Macaroni Grill.”
Gilbert said a turnaround relies on the brand’s scratch-made, cooked-to-order food, which the RKC platform delivers in fewer than seven minutes at lunch and in fewer than nine minutes at dinner.
“If you take the hospitality and food cultures and sort of bend them to support a new, proportional service model — where the service is proportional to the customers’ needs, from grab-and-go to a full-night-out, full-service celebration — it’s a terrific point of difference,” Gilbert said. “We’ve also got great distribution. A lot of our real estate is great locations. We’re excited about that.”
Most of the Macaroni Grill units have been “extremely adaptable to this proportional service model,” Gilbert added. They range from 6,500 square feet to 8,000 square feet.
“The investment premise rests on the combination of new and old, with the new being traffic growth — which we’re seeing tremendous success with — and then translating into sales growth, which we can layer on top of our core business,” he said.
Gilbert cautioned that a brand turnaround would take time.
“Ignite was seeing the improvement in traffic,” he said. “I think the biggest challenge was being a publicly held company. It’s tough to satisfy the Street with the pace we were on. On the private side, there’s a lot more patience. You don’t have to disclose things every quarter, so you can do the things you need to do without having to show everything to everybody all the time.”
The planned purchase was “a lifelong dream,” Gilbert said. “I started washing dishes in a yacht club when I was 12 and 13 years old. I’ve always wanted to own a restaurant business.”
Gilbert worked in marketing positions at KFC, TGI Fridays, Dunkin’ Donuts and consumer goods before joining Ignite.
“I bring consumer insight solutions,” he said. “I bring a unique ability of figuring out what makes sense for consumers.”
Gilbert said he foresaw expanding off-premise sales and new food offerings for the brand.
Romano’s Macaroni Grill was founded in 1988 by Phil Romano. Redrock Partners said it plans to keep Macaroni Grill’s headquarters in Houston.
Contact Ron Ruggless at [email protected]
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