J. Alexander’s recently rounded the corner on a significant turnaround of its own. The chain, public for nearly six years, indicated in summer 2019 it was seeking strategic alternatives to reboot the business. It retained investment banking firm Piper Sandler to facilitate a review of and said anything from a merger, sale, acquisition, share repurchase program, or strategic investment, was on the table.
The question at hand was if J. Alexander’s was truly big enough to be an efficient standalone company on the stock market. Piper Sandler contacted more than 125 potential buyers, and three emerged. One offered “a premium to the then-current market price,” but that changed once the pandemic dropped in. J. Alexander’s reduced its proposed purchase price multiple times and insisted on conditions relating to performance. For a bit, talks shelved in favor of COVID-response tactics.
But at last, sales lifted 5 percent in April versus 2019—the first time J. Alexander’s reported growth since coronavirus. At J. Alexander’s and Redland Grill, average weekly same-store sales per restaurant in Q1 lifted 3.1 percent year-over-year to $106,600, and at Stoney River Steakhouse and Grill, average weekly same-store sales upped 4 percent year-over-year to $75,300.
If we go back to April 2020, comps at J. Alexander’s/Grill restaurants plunged 81 percent. Stoney River’s fell 78.3 percent. In May, the figures were negative 61.5 and 62 percent, respectively.
By Q2 of last year, average weekly sales were $51,600 at J. Alexander’s/Grill and $35,000 at Stoney River.
J. Alexander’s flipped the dial on digital marketing and email campaigns to drive awareness to off-premises. It added curbside service, invested in online ordering with ChowNow, and began offering family-style meals, as well as butcher shop sales of cook-at-home, hand-cut steaks. The company offered bottles of wines to-go, too, and tested delivery in certain markets.
In response, off-premises-only sales during the week ended May 31, 2020 totaled about 29 percent of total take and were up roughly 35 percent over the week ended March 29, 2020, which was the first full stretch of primarily carryout-only sales.
With dine-in returning, the channel held, mixing 16 percent of total net sales in Q1, or $720,000 in average weekly off-premises business. That’s only $10,000 fewer than what J. Alexander’s saw in Q4 2020.
Mazany says talks of acquiring J. Alexander’s with SPB’s advisers began about four or five months ago. It really got on the company’s radar screen, he says, toward the end of 2020 when “we realized there was some really strong forward momentum in the company.”
“From our performance, we were tracking ahead of our turnaround plan here,” he says. “And I think when we saw that opportunity, and we looked at how this year’s taken off for us, and this has been a great first six months of the year for SPB and all the brands—it really started to heat up at the end of the first quarter.”
Personally, Mazany says he’s been a fan of the J. Alexander’s brand for some time. The company was founded in 1971 as Volunteer Capital Corporation by renowned entrepreneur Jack C. Massey, the principal shareholder, and two Nashville businessmen, Earl Beasley, Jr., and John Neff.
Massey is the same restaurant maven who Colonel Harlan Sanders reportedly once offered $100,000 and half of the company’s profits to run KFC. In 1964, Massey and future Kentucky governor John Y. Brown paid $2 million for the chicken giant. They took it public in seven years, expanding the brand from 600 or so units to more than 3,500 globally. Massey made $45 million when the now Yum! Brands-run business was sold in 1971 to Heublein Inc. There are more than 25,000 KFCs today.