Macaroni Grill charts its next course

With sales improving a year after bankruptcy, the company is looking to add another concept.
Macaroni Grill

Bravo Brio Restaurant Group, the owner of a pair of Italian casual-dining chains, had a surprising bidder before it was sold to the private-equity firm GP Investments last month: Romano's Macaroni Grill.

After all, wasn’t Macaroni Grill in bankruptcy court just a year ago?

Yes it was. But Nishant Machado, the CEO who guided the chain through the bankruptcy process over the past year, believes that Mac Grill is ready for the next step in its evolution: acquiring another concept.

“I think we’re in an environment where you acquire or you get acquired,” Machado said in an interview with Restaurant Business. “We want to be the acquirer.”

It would be quite a step for the Denver-based chain after a decade that was, well, difficult.

Macaroni Grill was one of the hottest restaurant chains in the country in the late 1990s and early part of the 2000s, during the heyday of casual dining. But the Brinker International creation was set to be sold to Golden Gate Capital in 2007 as part of the Chili’s owner’s strategy to operate a more concentrated restaurant company.

At the time, Mac Grill had just more than 200 locations, though that number was down 9%, according to data from Technomic.

In 2013, Ignite Restaurant Group, then-owner of Joe’s Crab Shack, acquired the chain for $55 million. Mac Grill’s sales plunged. Ignite’s efforts to turn the brand around failed, ultimately leading to its own bankruptcy filing last year. It sold the chain for $8 million just 18 months later.

The buyer of Mac Grill, Redrock Partners, struggled, too, generating negative $12 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in the year ended in August. That was just before the company filed for bankruptcy protection in a bid to close 37 locations.

Today, according to Machado, Mac Grill has 85 locations.

Machado believes that a lot of little changes by multiple owners over the years led to the brand’s challenges—in addition, that is, to a generally difficult period for casual-dining chains.

“A lot of what made the brand very special was stripped away,” he says. “It was death by 1,000 cuts. Every ownership group, every different constituency, they had their own ideas for the brand.”

Machado, a turnaround specialist with consulting firm Mackinac Partners, came on board in May of last year.

Over the past year, Machado has been working to get excitement back into the chain while making it profitable. “We spent the first couple of months really digging into what the challenges facing the brand were,” Machado says. That included a study of consumers along with marketing work to determine the brand’s identity.

The company recently overhauled its menu, adding items like pasta Milano, grilled salmon and stuffed mushrooms.

Mac Grill also brought back older items that had been removed from the menu, such as salmon piccata.

In addition to the menu changes, the company made other changes to improve hospitality and service. It brought opera singers and gladiolas into some of its restaurants, as well as the old wine program.

“That’s what our customers remember about Macaroni Grill,” Machado says. “It was one of the factors that differentiated us.”

The company has also built its catering and third-party delivery businesses. Delivery has worked well since it was introduced in February and early March, Machado says.

“I’ve rolled out third-party delivery before, and usually it’s a slow build,” Machado says. “We went from zero orders associated with delivery to six-figure sales from third-party.”

Thus far, the results have been good for the company, according to Machado. Same-store sales have risen the past four months, and June was the chain’s best month.

“There were no gimmicks, no price increases,” Machado says. “It’s really just a function of listening to our guests, understanding their needs, improving hospitality, growing awareness and being strategic.”

The results have also included better profits. The company has added 11 new systems designed to make the business more efficient, including labor scheduling and training. “Mac Grill is in a better position today than it has been in in a long time,” Machado says, “both from a margin standpoint and a sales standpoint.”

The position is so good, he said, that the chain felt confident enough to make a bid for Bravo Brio in May. That company’s board turned down the offer, citing concerns about the chain’s plan to finance the bid.

Machado calls the failed bid “a minor setback.”

He says the company has a platform set now and will look for additional acquisition opportunities. “That’s essential in this space,” he says. “Growth comes in two ways, either organically by opening new restaurants, or through an acquisition. When you have a platform, the best way is through an acquisition.”

And Machado believes the company can get back to its old self.

“We lost a lot of ground, but I don’t see why we can’t,” he says. “The buildings are in great shape. The team is ready for it, and we have a plan in place and a strategy for doing it.”

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