SCOTTSDALE Ariz. Paul Fleming has teamed up with private-equity investors and the management of 10-unit Z'Tejas Southwestern Grill to buy the upscale-casual chain from concept co-creators Guy Villavaso and Larry Foles. The price was not disclosed.
Fleming, one of the industry's most successful concept developers, is participating in the acquisition through his Paul Fleming Restaurants LLC, whose business plan calls for investing in growth chains and launching new ventures.
The deal marks a step-up in Fleming's involvement with the southwestern chain, which is based here. Founder or co-founder of such brands as P.F. Chang’s China Bistro, Pei Wei Asian Diner, Fleming’s Prime Steakhouse and Blue Coral Seafood and Spirits, Fleming was an original investor in Z’Teja and had retained a small stake.
Fleming is joined in the acquisition by Allan Karp and Chris Reilly, private-equity investors who were formerly with the equity firms Saunders, Karp & Megrue and Apax Partners. Karp and Reilly have been involved in several restaurant investments, including Mimi’s Café, Elephant Bar Restaurants, Café Rio and Ale House.
Z’Tejas had up to 14 units at one point, but four have been sold over the past several years. The new ownership team plans to open a new Z’Tejas in Austin, Texas, this year, the first new unit to open in five years and the third in Austin. The existing restaurants are located primarily in Arizona and Texas, with single units in southern California, Nevada and Washington State.
Ed Bartholemy, president of Phoenix-based Paul Fleming Restaurants, said the partners were impressed with the turnaround of Z’Tejas under chief executive Steven Micheletti, who will remain in that position and also retains equity as part of the deal. “It’s a brand that has had some difficulty but is now performing very well and is growing again,” he said.
The move also marks a first acquisition for Paul Fleming Restaurants, which Bartholemy said is looking for opportunities to invest in small growth companies, in addition to new concept development. Paul Fleming Restaurants is scheduled to launch the new Paul Martin’s American Bistro in the Sacramento, Calif., area later this year.