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Don Pablo's looks to franchise

MADISON Ga. Rita Restaurant Corp., the owner of the 22-year-old Don Pablo's Tex-Mex concept, has launched the casual-dining chain's first franchise program.

Kurt Schnaubelt, Rita Restaurant's chief financial officer and executive vice president of franchise development, said the 40-unit chain is looking to franchise both existing company-owned locations and new outlets around the country. The company currently operates in 15 states.

Schnaubelt described all of the company restaurants available to be franchised as "cashflow-positive." Don Pablo's average unit volume currently is about $2.1 million, although he said the per-unit sales potential is closer to $2.5 million. "There's no reason why we can't get back to that," he said.

Previously owned and operated by Avado Brands, Don Pablo's was purchased out of Chapter 11 bankruptcy earlier this year by Rita Restaurants, which is owned by DDJ Capital Management LLC, a private-equity and debt-financing firm based in Waltham, Mass.

In addition, Rita's owns and operates seven Hops Grillhouse and Brewery outlets, which also had been purchased from Avado. The company's annual sales are about $95 million.

The average Don Pablo's location encompasses about 7,200 square feet of space and seats about 290. It generates an average per-person check of $13.40, and specializes in fajitas, enchiladas, burritos and house-made tortillas and salsa.

Schnaubelt noted that November sales were down about 5.6 percent over the prior year.

He said the company hopes to have 30 franchised locations open by 2012.

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