Houlihan's Inks Two Landmark Deals for 34 Locations in California, Arizona and Florida
`Selective' Franchise Operators, Corporate Expansion Bolsters Continued Growth Momentum
Leawood, KS (July 17, 2007) – Fresh off a cash infusion of $68 million to fuel national expansion and newly positioned brand recognition, Houlihan's, the nation's leader in stylish casual dining, announced it has signed two franchise market development agreements with prominent restaurant developers that will expand the 105-unit chain throughout California, Arizona and Florida – to the tune of 34 new locations.
In keeping with its new strategy to open more corporate locations and limit franchise deals to the most seasoned franchise market developers, Houlihan's signed a 22-unit deal with SunPacific Partners, L.P. for California and Arizona expansion, and a 12-unit deal with Northeast Casual Food, LLC for restaurants to open in Florida.
Both deals call for the developers to follow the new "Houlihan's of the 21st Century" design, which successfully debuted with a Chicagoland location in May 2006. Houlihan's has since opened several additional new prototype stores around the country. The prototype restaurants, which feature new architecture, interior design, uniforms, music, menu format, patio-style dining and a spacious, centerpiece "ageless" bar, have each experienced solid, consistent sales figures that are well above system-wide averages. The most recent location modeled after the new prototype opened April 23, 2007 in San Antonio, Texas. The new prototype building is approximately 6,500 square feet and costs approximately $2.2 million to build.
The first deal calls for the SunPacific Partners to open 22 Houlihan's locations in Southern and Central California and Arizona by 2015, with an option to open three additional California locations. The Southern California Houlihan's will open throughout Orange, Riverside and San Bernadino Counties and the Central California locations will stretch from Bakersfield County to Sacramento County.
As part of a recent shift in growth strategy, Houlihan's will limit franchise deals to highly experienced, top tier market developers like SunPacific and Northeast Casual Food, LLC to develop entire markets and build the brand nationally. Simultaneously, Houlihan's will open corporate stores, targeting 10-20 new company-owned locations per year. Currently approximately 30 new corporate Houlihan's locations are in various stages of development in Denver, San Antonio, Pittsburgh, Charlotte, Kansas City, St. Louis, Dallas, Houston, Austin, Chicago, Philadelphia, Indianapolis and Atlanta.
According to Houlihan's CEO Bob Hartnett, building corporate stores in new markets helps Houlihan's set the stage for the success of future franchise expansion by establishing brand awareness and ensuring positive representation of the Houlihan's "personality." That way, when franchises are sold to qualified restaurateurs, consumers have already embraced the Houlihan's experience.
"SunPacific and Northeast Casual Food fulfill the stringent eligibility requirements we have set for franchise development of the Houlihan's brand," Hartnett said. "In addition to being more selective with franchise agreements, we're also focusing on growing our base of corporate-owned stores to ensure that contemporary design and personality elements of our brand are well represented and consistent across markets."
Northeast Casual Food's new agreement calls for 12 locations to open throughout Palm Beach, Broward and Miami Dade counties by 2016. In addition to their Florida development agreement, Northeast Casual Food has an agreement to open 12 new Houlihan's locations in Connecticut, Westchester County and Rhode Island. The franchise currently operates Houlihan's in Glastonbury and Danbury, Connecticut and has a third unit under development in Stamford. "Our Houlihan's restaurants in the Northeast have performed extremely well, so we're thrilled to extend that success into Florida," said Bob Hentschel, president of Northeast Casual Food.
In May 2007, Houlihan's received more than $68 million in additional equity to build the brand. The financial transaction involved $28 million in private equity from Goldner Hawn Johnson & Morrison, a private equity investment firm based in Minneapolis, Minnesota, as well as $40 million from a new senior credit facility provided by Wells Fargo Foothill Restaurant Finance, part of Wells Fargo & Company (NYSE: WFC). Houlihan's system-wide sales are projected to exceed $350 million for 2007.
Established in 1972, Houlihan's is a progressive concept that bridges the gap between fine dining and what people have come to expect from casual dining, priding itself on style and quality appropriate for any occasion, any day of the week. Houlihan's offers guests an inviting atmosphere, eclectic menu and energetic bar environment with creative, diverse drink offerings. Inspired by fare around the globe, Houlihan's crafts dishes made from scratch with assertive flavors, offering a unique culinary experience.
Currently, 92 Houlihan's restaurants operate throughout the country, 61 of which are franchised, and company executives estimate approximately 30 new locations will open in the next two years. Houlihan's is owned by Houlihan's Restaurants, Inc. of Leawood, Kansas, a pioneer in the full-service, casual dining industry that developed and owns several restaurant concepts comprising of approximately 105 locations from coast to coast, including Bristol Seafood Grill and Bar/Devon's Seafood Grill and Bar and J. Gilbert's Wood-Fired Steaks.
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