Nishant Machado has Romano's Macaroni Grill’s sales pointed in the right direction, and he is confident he can do the same with the brand it just purchased in Sullivan’s Steakhouse.
He is also confident his company can do the same with the next brand it buys.
“Going back to [last summer], our goal was to stabilize and rebuild Mac Grill and do another acquisition. We’ve done that,” said Machado, who as CEO has led Macaroni Grill through bankruptcy and the Sullivan’s deal. “We don’t want to set unrealistic expectations. But we know what we’re capable of doing. Our team is organized, and we believe in what we do.”
Mac Grill was a surprise entrant in the restaurant merger and acquisition party of 2018. The Italian chain was in bankruptcy court last year, after all—and was also a major contributor to the bankruptcy that year of Joe’s Crab Shack owner Ignite Restaurant Group.
Yet Machado said the brand has thrived this year, pared down to 85 company locations and 21 franchises from 230 at its peak.
“We’ve outperformed industry same-store sales by 350 basis points,” he said in an interview with Restaurant Business. “And we’ve had improvement month over month from sales and traffic overall, and we’ve improved margins.”
Machado said the company put systems in place to improve operations. The company focused on hiring the right people and improved training and development. “The guest comes first,” Machado said. “The team comes first. That’s really driven traffic.”
He also said the company has improved on menu innovation and hospitality, which have helped drive traffic. And Mac Grill has “been thoughtful and strategic in building out the off-premise business.”
Takeout orders have been big for casual-dining chains in 2018, and for concepts with menus that travel well, such as Italian, it has been especially big. Machado said that Mac Grill’s special events and catering team has “exceeded budget and blown away the prior year.” He also said the company has been working with third-party delivery services.
The success of the Mac Grill turnaround gave the company confidence to buy Sullivan’s in a $32 million deal in September.
Sullivan’s, which operates 14 locations in 12 states, had struggled under its previous owner, Del Frisco’s Restaurant Group, which unloaded the chain after its own purchase of Barteca Restaurant Group. That includes a 6% decrease in same-store sales in the second quarter.
Machado said that Macaroni Grill had a plan for Sullivan’s before the sale was closed, and he said that the company is able to handle the brand’s integration and its subsequent turnaround. “The Sullivan’s brand has tremendous potential,” Machado said. He sees “significant” growth for the chain in 2019.
He said the company would use the same playbook for Sullivan’s that it used for Mac Grill, but he noted that every turnaround has to be customized based on the brand and the situation. “The Sullivan’s brand has an incredibly loyal customer base and a talented team,” Machado said. “Some components, but not all, will translate.”
Macaroni Grill’s purchase of Sullivan’s came during a year in which several companies sought to collect once-struggling brands in multiconcept groups.
Old Chicago owner Craftworks bought Logan’s Roadhouse. Shari’s Pies quietly bought Coco’s and Carrows. High Bluff Capital bought Quiznos and then Taco Del Mar. Fatburger bought Hurricane Grill & Wings and Yalla Mediterranean, among others. Dick’s Wings bought Tilted Kilt and Fat Patty’s.
Many brands have been put on the market amid weak sales and operational challenges such as rising labor and rent costs. Machado believes there will be more acquisition opportunities in the near future, and he believes the company now has a platform to operate other brands, too.
“It all comes down to the platform that we built, the people, systems and process,” Machado said. “We have an incredible team that makes it possible. It gives us visibility and efficiencies. And we have a playbook. But really it’s a process we can leverage and implement under many different scenarios.”
But he also said that buyers need a keen eye when doing a deal. The brand has to be the right fit.
“We always look at the core attributes of the brand,” Machado said. “Are they differentiated in some way? Do they focus on hospitality? Is there something about the brand we can revive and bring back to life?”