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Robert Earl takes an interest in Bravo Brio

The Bottom Line: The founder of Planet Hollywood is now an activist investor in the casual dining operator.

The Bottom Line

Bravo Brio Restaurant Group’s newest activist shareholder is no stranger to the restaurant industry.

Robert Earl, the founder of Planet Hollywood and Earl of Sandwich and owner of Buca di Beppo, has filed as an activist shareholder of the Ohio-based owner of a pair of Italian casual-dining chains.

Earl’s PHR Holdings and OCS Consultants have acquired 832,916 shares, or 5.5% of Bravo Brio stock.

Exactly why Earl is interested in Bravo Brio remains to be seen. An SEC filing indicated that Earl’s group is “currently exploring all alternatives with respect to their investment.”

The filing also says that the group met with one stockholder and had one phone conversation with Bravo Brio’s investment bankers, “and may engage in further discussions with the company’s management.”

Reached by phone, Thomas Avallone, Planet Hollywood’s vice chairman, said that “we’re exploring all options,” but that the company “makes investments in restaurants all the time.”

Still, he said this is the first time the company has had to file as an activist investor with a restaurant company. 

The interest from Earl adds a new wrinkle to the ongoing question of Bravo Brio’s future. The company a year ago said it would explore strategic alternatives, which usually means it’s exploring a sale. But the owner of Bravo Cucina Italiana and Brio Tuscan Grille never did get sold.

Another activist, TAC Capital, has been critical of Bravo Brio’s performance and its strategic alternatives process, though that activist in October said it would not engage in a proxy fight.

Bravo Brio stock surged more than 8% on Tuesday.

Earl is well-known in the restaurant business, having founded Planet Hollywood with investments from Arnold Schwarzenegger and Bruce Willis. He once owned an English Premier League soccer team, Everton, and in 2008 bought the casual-dining chain Buca di Beppo. He also has a television series on the Cooking Channel called "Be My Guest."

PHR would make sense as a buyer of Bravo Brio. Planet Hollywood bought Buca di Beppo in 2008 for about $9.7 million.

It could get Bravo Brio at a low valuation, but would have some work to do to reverse long-term sales declines. Same-store sales at the two chains have struggled for years, including a combined 5.7% decline in the quarter ended Sept. 24.

Bravo Brio has been analyzing its restaurant portfolio and closed five locations in the third quarter. It currently operates 112 locations—49 Bravo locations and 63 Brio units.

The company’s stock has steadily fallen over the years to reflect that weakness. Entering trading on Tuesday, it was down more than 40% since it traded at more than $5 a share in March after the strategic alternatives announcement and TAC’s initial interest.

Bravo Brio has a market capitalization of just under $49 million and an enterprise value of $88 million.

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