A dandy takeover skirmish has slipped past almost unnoticed, despite the eleventh-hour victory of a restaurant veteran whose last turn in the spotlight still has observers telling war stories. They paint Bill Foley as a wheeler-dealer with the guile of a car salesman and the won’t-take-no tenacity of an insurance peddler.
Indeed, insurance was how Foley made his first fortune. Then he used the money and a sixth sense for opportunity to become the controlling investor in the parent of Carl’s Jr.—after he was brought in to keep the brand from being wrested away from its iconic founder, Carl Karcher. Karcher kept his job as the brand’s front man but lost financial control to Foley. Yet by all outward appearances, Karcher appeared grateful, not resentful.
Now Foley’s American Blue Ribbon Holdings has emerged as the winning bidder for Max & Erma’s, the Midwestern string of bar-and-grills that slipped into bankruptcy late last year. Blue Ribbon and its investment partners aren’t expected to close on the roughly $28 million purchase until Tuesday, but Foley is already sketching out his plans for the casual chain.
“We’re not in there to do anything crazy,” he told Business First of Columbus, a newspaper serving Max & Erma’s hometown. But Foley indicated that up to 10 of the chain’s 77-or-so restaurants will be shut to stem the chain’s bleeding before it starts growing again.
It’s hardly standard for a restaurant buyer to announce closings before the staffs of the doomed restaurants have been given the bitter news. At the very least, the places usually know their plug will be pulled. Otherwise employees will worry their units are in the crosshairs.
He also disclosed that Max & Erma’s will likely start selling pies from his two other sizeable restaurant chains, Village Inn and Bakers Square.
Foley, an attorney by training, definitely follows his own playbook. Some questioned his reasoning when a company he controls bought Village and Bakers, two of the earliest casualties of the economic downturn. The family dining greybeards hadn’t exactly kicked up their heels for ages. Why would Foley bother to turn around two stalwarts of a segment that’s been shrinking for eons? No one else seemed to want it.
Max & Erma’s, on the other hand, could’ve been a rock star fending off groupies. Two other suitors had declared they’d bagged the brand before Blue Ribbon slipped in with the actual winning bid.
Among them was a consortium that included investors in the Red Mango and Furr’s chains.That shopper, Dallas-based Concept Development Partners, had been identified as the buyer of Max & Erma’s as early as mid-July. But its reported bid of $26.4 million was topped, apparently afterward and with no fanfare, by Foley’s group.
Max & Erma’s, then operating or holding the franchise rights to 107 stores, was sold for about $10.2 million to Pittsburgh restaurateur Gary Reinert in early 2008. It was under his tutelage that the company filed for bankruptcy.
Reinert generated recent headlines by asserting he and Cantor Fitzgerald, the New York financial giant, were teaming up to buy Max & Erma’s for $32 million. But Nation’s Restaurant News reported the offer was never actually tendered to the bankruptcy court.
Reinert had apparently opened his mouth but not his checkbook.