NASHVILLE Tenn. O’Charley’s Inc. said Monday it has inked a deal with Reinhart FoodService LLC to outsource the food and supply distribution for its 116-unit Ninety Nine Restaurants chain.
The deal is the last part of O’Charley’s plan to end in-house production of its food supply in order to become more cost-effective. The company initiated the plan in 2007 when it sold its commissary facility in Nashville, which handled meat processing for its O’Charley’s and Stoney River Legendary Steaks chains. Since closing that commissary, the company said it has saved between $1 million and $1.5 million annually in food-supply costs.
Lawrence Hyatt, chief financial officer for O’Charley’s Inc., said company officials had “reached the conclusion that doing manufacturing and distribution ourselves was not where the restaurant industry was going or a good place for us to have assets tied up.”
O’Charley’s said it expects the agreement with Reinhart to save the company between $200,000 and $400,000 annually.
Reinhart will spend between $6 million and $8 million to purchase all inventory from O'Charley's distribution center in Bellingham, Mass., which the restaurant company said it intends to sell as a result of the deal. Reinhart said it would extend offers to hire the plant’s workers at their current compensation levels.
“The Bellingham center was the last piece we had been operating ourselves,” Hyatt said. “Over the years we’d been in discussions with a number of distribution companies, but concluded that Reinhart, because of its presence in the New England market and reputation for customer service, would be the best partner for the Ninety Nine Restaurant concept.”
Reinhart is based in LaCrosse, Wis., and will provide distribution services for Ninety Nine Restaurants out of its facility in New Bedford, Mass.
Nashville-based O'Charley's Inc. operates or franchises 371 restaurants under the O’Charley’s, Stoney River and Ninety Nine Restaurants brands.
Contact Elissa Elan at [email protected].