SCOTTSDALE, ARIZ. Z’Tejas Southwestern Grill chain has been acquired by Paul Fleming Restaurants LLC in partnership with private-equity investors and members of the chain’s management. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Terms of the deal were not disclosed. Joining in the acquisition of the Scottsdale-based brand with noted concept innovator Fleming are Allan Karp and Chris Reilly, formerly of private-equity firms Saunders, Karp & Megrue and Apax Partners. Karp and Reilly have been involved in several other restaurant investments, including Mimi’s Cafe, Elephant Bar Restaurants, Cafe Rio and Ale House. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Giving up their equity are Z’Tejas co-creators Guy Villavaso and Larry Foles, who founded the Southwestern concept in 1989 with the backing of early investor Fleming, who went on to create such other chain concepts as P.F. Chang’s China Bistro and Fleming’s Prime Steakhouse & Wine Bar. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Fleming also is known as the creative force behind P.F. Chang’s fast-casual sister brand, Pei Wei Asian Diner, and Blue Coral Seafood and Spirits. He developed Blue Coral and Fleming’s Prime Steakhouse in conjunction with OSI Restaurant Partners Inc., the Tampa, Fla.-based parent of the Outback Steakhouse brand. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Villavaso and Foles also developed the three-unit Eddie V’s Edgewater Grille and single-unit Wildfish Seafood Grille concepts, also based in Scottsdale. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
In a bid to reverse setbacks that have included the divestiture of four Z’Tejas locations in recent years, the new ownership team plans to open a new Z’Tejas in Austin, Texas, in late September. It will be the chain’s first new unit in five years and the third for the Austin market. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Z’Tejas’ other branches are primarily in Arizona and Texas, with single units in Southern California, Nevada and Washington. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Ed Bartholemy, president of Paul Fleming Restaurants, said the buyers were impressed with a financial turnaround of Z’Tejas under ongoing chief executive Steven Micheletti, who retains equity as part of the deal. Chief financial officer Matthew Wickesberg, who will remain in that role, also is part of the ownership team. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
“Steven has turned around the brand completely, and it’s poised for growth now,” Bartholemy said. “It’s a brand that has had some difficulty but is now performing very well and is growing again.” —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The acquisition is the first by Fleming’s company. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Micheletti, who was hired by Villavaso and Foles about three years ago, credits Z’Tejas’ new vitality to the chain’s low manager turnover rate, even throughout turbulent times. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
“The average tenure at the managerial level was north of seven years,” he said. “Three of our highest-volume restaurants have general managers that have been with the company 15 years.” —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Micheletti’s first move at the chain’s helm was to “get everyone focused on rejuvenation,” he said, “and that does require everybody rowing in the same direction.” —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Company officials spent about a year working with the consulting firm CorVirtus in what Micheletti described as an internal rebranding effort. The result was a document called “The Journey” that better defined “who we are,” he said. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The chain’s menu, for example, had drifted a bit from its original format, he said, which was to focus on robust, innovative, fresh-from-scratch dishes with “distinctive flavor profiles that you couldn’t find anywhere else.” —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
In addition to its Southwestern influences, Z’Tejas draws menu inspiration from Louisiana to Southern California. Signature dishes include fresh-catfish beignets, for example, as well as grilled-shrimp tostada bites served on fresh guacamole with Navajo bread. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The chain also is known for its Chambord margaritas. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
New dishes are introduced throughout the year as limited-time specials that have the potential to become permanent offerings. This year, for example, Z’Tejas added an iron-skillet mushroom appetizer and grilled asparagus, as well as Jack’s Five-Cheese Macaroni and Chicken. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
With an average per-person ticket of $17.50 at dinner, the chain’s annual sales per average restaurant are about $4 million, Micheletti said. Units average in size from about 6,500 to 7,000 square feet, including patios. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The forthcoming new branch in Austin, a prototype that combines elements of existing units, will seat around 225 inside, including the bar, and another 100 on the patio. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The plan over the next two years is to open about two Z’Tejas units per year, Micheletti said. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
The exit of Villavaso and Foles was the result of a move by their shareholders to pursue new investment strategies. The board, which included Fleming as a member, brought in investment bank Piper Jaffray, which helped set up the deal, along with lender Wells Fargo Foothill. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
With Z’Tejas as its first acquisition, Paul Fleming Restaurants is looking for more opportunities to invest in small growth companies, in addition to new concept development, Bartholemy said. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit
Paul Fleming Restaurants is scheduled to launch its newest concept, Paul Martin’s American Bistro, in the Sacramento, Calif., area later this year. The name of the new concept uses the founder’s first and middle names. —Sparking plans for new growth after five years of stagnation and a shedding of four branches, the now-10-unit