Mackinac Partners

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Romano’s Macaroni Grill expands with Sullivan’s Steakhouse acquisition, CEO and Mackinac Partners’ Senior Managing Director Nishant Machado says purchase is ‘aligned with our strategic vision’

September 20, 2018

Romano’s Macaroni Grill, the award winning Italian casual dining chain, agreed to terms with Del Frisco’s Restaurant Group, Inc. (Nasdaq: DFRG) Tuesday to acquire Del Frisco’s Sullivan’s Steakhouse brand in an approximately $32 million deal. The purchase of the 14-unit steakhouse across 12 states is expected to close on or before Sept. 30.

“The acquisition of Sullivan’s Steakhouse is precisely aligned with our strategic plan and vision” said Nishant Machado, President and Chief Executive Officer of Romano’s Macaroni Grill and Senior Managing Director at Mackinac Partners. “We are focused on brands that provide guests with true hospitality and a unique experience, which the Sullivan’s Steakhouse concept and team embodies.”

Since leading Macaroni Grill through the implementation of a detailed turnaround plan that included a restructuring and the establishment of a new operational platform of processes, systems, and human capital – Machado indicated the company was actively looking for acquisition and growth opportunities.

“We have the platform today that we didn’t have a year ago” Machado said on CNBC’s Closing Bell on August 23. When asked about identifying potential acquisition targets, he indicated “we want to be very careful that we inherit a brand that has strong brand equity, doesn’t have a lot of deferred cap-x, and that we can really benefit from the synergies when (adding) them onto our platform.”

Sullivan’s Steakhouse, a concept rooted in the rich tradition of classic steakhouses with hand-cut steaks, fresh seafood, signature cocktails and a dining atmosphere enhanced with local jazz music – has encountered decreased comp sales as multi-concept owner Del Frisco considered strategic alternatives in its portfolio. Sullivan’s Steakhouse will now be joining a re-vitalized brand and a re-energized management team under Machado and Macaroni Grill’s direction.

“Sullivan’s Steakhouse (the brand) complements our existing restaurant portfolio of 85 company-owned Macaroni Grill restaurants in 22 states, plus 23 franchise locations in the U.S. and seven other countries” Machado said. “Under our stewardship, we look forward to taking Sullivan’s Steakhouse to new heights”.

For Del Frisco’s Restaurant Group Inc., the sale proceeds from the divestiture will be used to reduce outstanding indebtedness, the company indicated. Del Frisco also plans to focus on development of its Double Eagle Steakhouse, Barcelona Wine Bar and Bartaco brands. “These include executing our emerging brands integration and expanding our core concepts” Frisco’s CEO Norman Abdallah said in a statement. “We wish our colleagues at Sullivan’s Steakhouse all the best under their new ownership.”

Piper Jaffray has served as exclusive financial advisor to Del Frisco’s and its Board of Directors and Kirkland & Ellis LLP has served as legal advisor in the transaction. Gibson, Dunn & Crutcher LLP served as legal advisor to Mac Acquisition, LLC.