Xperience Restaurant Group has 62 corporate-managed units in its portfolio.
Z Capital-backed Xperience Restaurant Group announced November 26 it has acquired SOL Mexican Cocina and solita Tacos & Margaritas.
XRG, which runs El Torito and Chevys Fresh Mex, now operates 62 corporate units. The company was formed in October 2018 when Z Capital purchased Real Mex out of bankruptcy for $47 million. Randy Sharpe was appointed chief executive officer after clocking time with Macaroni Grill. Other brands include El Torito Grill, Las Brisas, Who Song and Larry’s, Acapulco, and Sinigual.
Terms of the deal were not disclosed. Either was who sold the two brands.
SOL Mexican Cocina was founded 10 years ago in Southern California and has grown to four locations in the upscale markets of Newport Beach, Scottsdale, Playa Vista, and Denver. The brand’s original investors included Mike and Jeff Mastro, the family behind the Mastro’s Steakhouse concepts.
The upscale Mexican chain features a menu from James Beard-nominated cookbook author Deborah Schneider, who is also a co-founder. She scaled the chain with partners Rich Howland and Matt Baumayr.
SOL Mexican Cocina's sister restaurant, solita Tacos & Margaritas, arrived in 2014 and is a more casual take on the larger restaurant. There are two Southern California locations in Huntington Beach and Valencia.
"Our goal from day one has been to optimize our existing brands while simultaneously identifying attractive opportunities for growth," Sharpe said in a statement. "With the rapid transformation of the casual dining sector in recent years, it is more important than ever for brands to provide a unique experience for customers, which has long been a hallmark of both SOL and solita. These brands are a natural fit for our portfolio as we grow the XRG platform, and as the casual dining sector continues to evolve, we look forward to identifying and executing on acquisition opportunities that will further position XRG for long-term growth and success."
Real Mex filed for bankruptcy in August 2018. It already had a plan in place to sell to Z Capital, one of its largest shareholders. Despite rising same-store sales at Chevys Fresh Mex and El Torito, the company fell short on more than $230 million to two groups of lenders the previous spring. Additionally, Real Mex owed about $6.5 million to vendors and had another loan of about $54 million owed to a lender group that included Z Capital affiliates.
The company saw trouble in 2011 when it filed for debt protection. It had about 128 restaurants when it sold to affiliates of Tennebaum Capital Partners and Z Capital in March 2012. The company was searching for buyers for more than a year after contacting over 200 potential bidders.
From 2012 on it retracted underperforming locations to boost profitability.
The company said it struggled to generate traffic amid increased competition in the Mexican segment, including from fast casual and quick service, and battled to keep up with rising minimum wage in California (all but seven of its 68 restaurants were in California at the time of the filing).
James Zenni, president and CEO of Z Capital, said Tuesday’s acquisitions could provide expansion runway in the opposite direction. "The acquisition of SOL and solita enhances the XRG platform, and I look forward to continuing to work closely with Randy and the management team to identify unique, customer-focused concepts and to execute on attractive opportunities for growth."
Added Rahul Sawhney, senior managing director of Z Capital: "The acquisition of SOL and solita is not only a natural progression for XRG's growth objectives, but also enhances the platform further and will likely be followed by additional acquisitions over the near term."