Del Frisco’s fills a niche in its portfolio by acquiring Barteca Restaurant Group

The $325 million deal will bring the steakhouse-centered company a high-energy vibe and strength in new dayparts.

For a restaurant company known for its steakhouses, Del Frisco’s Restaurant Group is about to get an injection of fun, high energy and value, according to CEO Norman Abdallah.

The company’s upcoming purchase of Barteca Restaurant Group will bring two new brands to the Del Frisco’s fold: Barcelona Wine Bar, a Mediterranean-inspired tapas restaurant with 15 locations, and Bartaco, a more casual 16-unit spot focusing on upscale street food. Those emerging concepts are “highly complementary” to Del Frisco’s current portfolio, Abdallah noted during an earnings call in which the $325 million deal was announced.

Growth at Barteca is fueled not only by food and drink, but by the guest experience, Abdallah later told Restaurant Business. “We have proven we could grow by positioning around experiential brands rather than functional brands. It’s about celebrating life in restaurants.”

A broader appeal

Del Frisco’s profiles its customers using psychographics rather than demographics, and targets its brands to two major archetypes—social scenesters and experienced spenders, Abdallah said. The former group loves small plates, Instagram and on-trend drinks, while the latter enjoys a great wine program, private dining spaces and celebratory meals.

Barteca meets the needs of both consumer types with its diverse dining options. Additionally, greater menu flexibility and lower check averages than Del Frisco’s Double Eagle brand—$22 for Bartaco and $35 for Barcelona—have the potential to increase visits and counteract economic downturns. And the Mediterranean-focused menus not only are on trend with healthier eating, they’re a hedge against spikes in beef prices, said Abdallah.

Moving toward an anytime model

Bartaco positions the company to “get on the lunch train,” said CFO Neil Thomson during the earnings call. “Lunch is a large growing daypart for us … Plus, we're seeing quite a few people in the afternoon with a margarita and a couple of tacos on her laptop using [Bartaco’s] bars and restaurants similar to how they use a Starbucks.” In addition, Barcelona targets another daypart with its strong late-night business.

However, there’s one trending area full-service Del Frisco’s won’t be jumping into anytime soon: delivery. The company remains firmly against it, instead focusing on the guest experience. “I will never deliver,” Abdallah said.  “You have to be in the space to be part of it.”

Looking to grow

Del Frisco’s aims to stick to Barteca’s current growth plans, opening five locations of Bartaco and two more Barcelona restaurants in 2018. Going forward, the company will add two to four Barcelonas and six to nine Bartacos a year, Abdallah said. The concepts’ smaller footprints offer greater flexibility in real estate selection, he added.

As far as the company’s other brands go, Double Eagle will build three to four new restaurants over the next few years, eventually capping the chain at 50 units. Expansion of Del Frisco’s Grille has slowed as the company invests in upgrading its existing locations, Abdallah said. And several potential buyers are eyeing the purchase of Sullivan’s Steakhouse, a move that Del Frisco’s announced in March. Interested parties, all with the goal to grow the brand, are currently conducting due diligence, he said

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