Chanticleer Holdings Inc., an investment company that has been growing the Hooters brand overseas, has been building a multiconcept restaurant business in the U.S. poised for both domestic and international growth.
The Charlotte, N.C.-based public company recently announced plans to acquire its first two domestic locations of Hooters, both in the Pacific Northwest, with the goal of opening more in the region as a franchisee.
Chanticleer, which holds a minority stake in Hooters’ parent Hooters of America LLC, also holds the international franchising rights to grow the casual-dining brand in South Africa, Hungary, the United Kingdom and Brazil, and is a joint venture operator in Australia. The company owns and operates eight locations in those countries, with two more under construction and another signed lease in Australia.
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In recent months, however, Chanticleer began moving into new territory: the fast-casual segment.
In December, Chanticleer closed on a $560,000 deal to acquire a 56-percent controlling stake in the fast-casual chain Just Fresh, also based in Charlotte, which has five locations.
Earlier in 2013, the company also acquired the five-unit fast-casual burger concept American Roadside Burgers, also based in Charlotte, in a $3.6 million deal.
And, in a deal that has yet to close, Chanticleer has agreed to acquire all outstanding shares of Dallas Spoon LLC and Dallas Spoon Beverage LLC, the companies that operate the single-unit Spoon Bar & Kitchen in Dallas, created by celebrity chef John Tesar with financial services firm CapRock Services.
Tesar is developing a fast-casual variation on the high-end seafood concept that Chanticleer plans to grow, along with CapRock.
Mike Pruitt, Chanticleer’s chair and chief executive, said he has no intention of doing anything that would compete with Hooters, a brand with which he has a personal history and he sits on Hooters of America’s board. Pruitt was a friend of the late Robert Brooks, who first grew the Hooters brand.
However, Pruitt said he sees a lot of potential in the fast-casual space, and Chanticleer may not be done with its aggressive move into the segment.
“To me, the more interesting space is fast casual,” said Pruitt. “There’s opportunity in the fast-casual space and certainly we’ll look and explore if there are opportunities that make sense.”
Chanticleer’s restaurant investment spree began in 2012 with a secondary offering that raised $11.2 million to expand the Hooters brand internationally. Since then, the company has gone to the public market three more times to raise cash.
Though Chanticleer has yet to make a profit since the 2012 offering, Pruitt said the company is expected to reach that point this year once the company’s unit count for Hooters hits 12 to 15 units.
Just Fresh, American Roadside Burgers prepare to franchise
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Meanwhile, Pruitt is gearing up to grow both Just Fresh and American Roadside Burgers as franchise brands.
Pruitt said he is working with Tom Lewison, the former chief operating officer of Charlotte-based Bojangles', who serves on American Roadside Burgers' board. Lewison will also join Chanticleer’s board.
Chanticleer intends to open a few more company-owned locations — probably in the Carolinas — to fine-tune the concept before franchising is launched.
Known for its premium burgers, wings, macaroni and cheese, and desserts like “lugnuts” — warm donuts with powdered sugar — American Roadside Burgers offers the appeal of “nostalgia,” said Pruitt. “It’s a throwback in terms of look and feel. Great burgers, great fries, great milkshakes, like when I was a kid.”
Just Fresh is a more health-focused concept, founded in 1993, with a menu of salads, wraps and sandwiches and a heavy catering emphasis. Pruitt said he had been looking around the country at other health-focused concepts with the goal of entering the category. When the owner of Just Fresh approached Chanticleer to propose a sale, Pruitt said it was an opportunity he felt he couldn’t pass up.
“It was the right place at the right time and the right price to enter the category,” he said. Chanticleer has also acquired the concept’s franchising arm and is preparing to begin marketing the brand both to U.S. operators and franchise partners overseas.
On the acquisition of Spoon Bar, Pruitt said he was as surprised as anyone that he found himself making a deal on such a high-end, chef-driven concept, but Tesar shares Pruitt’s interest in the fast-casual space. The new fast-casual version of Spoon is scheduled to open in Dallas later this year.
“It was worth me taking some risks to back a few of these new prototype concepts he has for fast-casual seafood, that would be truly unique,” he said.
“I’m more of a finance guy, more of a capital allocator,” he added. “But it’s comforting to know there’s a guy getting up every day to focus on making the food better. Tesar’s done it all, and he’s really good at it.”
This story has been revised to reflect the following correction:
Correction: Jan. 9, 2014 Due to an editing error, an earlier version of this story incorrectly stated that Chanticleer Holdings Inc. was once the largest Hooters franchise operator and a former owner of Hooters of America LLC. Chanticleer is currently a minority stakeholder in Hooters of America.
The earlier version also incorrectly stated that the company had already acquired two domestic Hooters locations, but the deal has not closed yet.
Contact Lisa Jennings at [email protected].
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