NASHVILLE, TN (June 16)Multi-concept casual dining company O’Charley’s Inc. has entered into an agreement with Reinhart FoodService (RFS), La Crosse, Wisconsin, to outsource food and supply distribution for Ninety Nine Restaurants. In addition, the company will sell related assets at its distribution facility in Bellingham, Massachusetts, to Reinhart. Expected to close in mid-August, the transactions are intended to reduce O’Charley’s investment in non-restaurant assets and to reduce ongoing expenses.

Initially, RFS will sublease and continue to operate the Bellingham facility for an interim period expected to be less than one year, as it expands its existing distribution facility in New Bedford, Massachusetts. At the end of this interim period, RFS will provide distribution services to Ninety Nine from the expanded New Bedford facility.

Additional details of the transaction include:

  • At closing, Reinhart will purchase substantially all of the company’s assets in Bellingham, including inventories and certain fixed assets, for estimated cash proceeds, net of reductions in accounts payable, of between $6 and $8 million.
  • Reinhart will extend offers to hire the then-current Bellingham employees at the time of closing at their current compensation levels.
  • Other than the expected proceeds from the sale of inventories and fixed assets, O’Charley’s Inc. does not expect this transaction to have an impact on its financial position or results of operations in its 2009 fiscal year.
  • Depending upon its ability to sublease the Bellingham facility, O’Charley’s Inc. expects this transaction to reduce its ongoing cost of food and beverage after the interim period by between $0.2 and $0.4 million per year.

“Since we opened the facility four years ago, our in-house distribution team in Bellingham has done an outstanding job providing warehousing and distribution services to the Ninety Nine Restaurants,” said Jeffrey D. Warne, president and chief executive officer of O’Charley’s Inc. “With their reputation for customer service and as a great place to work, we are confident that Reinhart FoodService will provide great service to our restaurants and great opportunities for our team members. With the changes, the management team at Ninety Nine can now focus exclusively upon managing and improving its great brand, while our company reduces its investment in non-restaurant assets and reduces its ongoing expenses.”

O’Charley’s Inc. operates Ninety Nine Restaurants in 116 locations throughout New England and the Mid-Atlantic states. Additionally, the company operates 245 restaurants under the O’Charley’s brand and 10 Stoney River Legendary Steaks restaurants.

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