LOS ANGELES Frandeli Group LLC, a foodservice-focused venture fund and 50-unit Papa John’s Pizza franchisee based here, is plotting a turnaround for the recently stagnant Spaghetti Warehouse system following Frandeli’s purchase of the 22-restaurant casual-dining chain this month.
Frandeli CEO Doug Pak said the overhaul of Spaghetti Warehouse could take six months to a year to execute.
The seller, AMRESCO Commercial Finance LLC, completed the divestiture June 19 for undisclosed terms.
Until the Frandeli acquisition, The Spaghetti Warehouse had been operated by Consolidated Restaurant Operations Inc. in Dallas, but AMRESCO took over ownership of the chain in 2001 as part of a lending workout arrangement. Consolidated continues to own and operate the El Chico, Silver Fox, Cantina Laredo and other chains.
AMRESCO is based in Idaho and is owned by private-equity firm Fortress Investment Group LLC and an affiliate of Goldman Sachs. Consolidated Restaurant did not comment by press time.
Frandeli is funded by the Korean conglomerate SK Group, which manages more than $60 billion in assets under various industries. Pak, a former franchise operations executive for the Denny’s and Carl’s Jr. chains, said Frandeli is pursuing buyouts exclusively in the restaurant industry, and wants to acquire at least two more brands to fill out its portfolio. According to Frandeli’s website, the size of its investments range between $20 million and $100 million.
The fund’s attraction to Spaghetti Warehouse, which was founded in 1972 and at one point had more than 40 branches, was its “value proposition,” its urban locations and the “underdeveloped” Italian segment, Pak said.
Spaghetti Warehouse has an average per-person check of around $11, and most locations were built in urban, downtown areas during its growth spurt in the 1990s. In 1999, casual-dining giant Landry’s Restaurants Inc. considered purchasing the chain but decided against it.
Frandeli’s chief operating officer, Azam Malik, a former president of Piccadilly Restaurants and chief operating officer of Chi-Chi’s, will oversee the Spaghetti Warehouse brand. The fund said one of its first steps is to introduce a smaller restaurant prototype to reduce real estate costs.