Struggling casual-dining operator Bravo Brio Restaurant Group Inc. is working with investment bankers to explore strategic alternatives to increase shareholder value, the company said Thursday.
Such moves frequently lead to a sale, but at least suggest the company is open to significant moves in a bid to generate value.
Bravo Brio wants to inform shareholders of the results of its effort by December, when it holds its annual meeting, the company said.
In addition, Bravo Brio has started discussions with TAC Capital LLC, an activist investor that owns 15 percent of company shares and recently nominated three people to Bravo Brio’s board.
The operator said it has offered TAC two seats on its board of directors, but TAC rejected the offer.
The effort comes amid a long struggle for the Columbus, Ohio-based owner of the Bravo Cucina Italiana and Brio Tuscan Grille brands. The chains have a total of 116 locations.
Bravo Brio's stock price has fallen by more than two-thirds since April 2015, and has been on a steady downward march since nearing $25 a share in 2011, a year after its initial public offering.
The biggest problem has been same-store sales, which have fallen each year since 2013. Same-store sales for the two brands fell a cumulative 10.3 percent from 2013 through 2015, and have fallen 2.8 percent, 7.1 percent and 5.3 percent in the first three quarters of 2016, respectively.
That has taken a toll on profits, which have declined from $16.1 million in 2012 to $4.6 million in 2015.
Bravo Brio named Brian O’Malley CEO in December 2015. The company has worked to shrink the size of its restaurants, thereby reducing labor. It also introduced new menus and has been working to reimage restaurants.
Bravo Brio’s stock is up nearly 10 percent in Thursday morning trading on news that the company is exploring strategic alternatives.
The company would seemingly be ripe for a potential acquisition. Bravo Brio trades at an enterprise value of just more than 4 times cash flow. By comparison, Golden Gate Capital is paying more than 8 times cash flow for another Ohio-based operator, Bob Evans Restaurants.
Bravo Brio’s assets include $162.5 million in property and equipment, far above its market capitalization of $66.3 million.
Contact Jonathan Maze at [email protected]
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