The brands are storming back from a March bankruptcy.
Where an outsider might have seen a daunting project, Jim Mazany saw opportunity. Despite what’s happened since COVID-19, including a high-profile bankruptcy that got ugly before it got better, it isn’t often a restaurant group with this kind of history and equity comes looking for a CEO.
In early September, SPB Hospitality, fresh off its purchase of Logan’s Roadhouse and Old Chicago out of Chapter 11, tapped Mazany as its next leader. He arrived from a background rooted in turnarounds, having served as COO of Joe’s Crab Shack, CEO of Café Enterprises (parent to Fatz Southern Kitchen chain), and, most recently, COO of TGI Fridays, where he led the purchase and integration of 120 franchises.
During his run at Joe’s Crab Shack, the brand reported seven years of same-store sales gains and lifted average-unit volumes from $2.2 million to $3.2 million.
SPB will aim for a similar flip in performance, only with COVID scenery to consider as well. Mazany is the third CEO to direct Logan’s and Old Chicago this year. In March, Marc Buehler replaced Hazem Ouf after he and CFO Jim Lebs were terminated for paying $7 million in sales tax to state authorities without permission from the company’s board.
Mazany then replaced Buehler, whose departure came without an explanation.
Out of the gate, Mazany carried an optimistic tone. “We will build off the strong foundation of these brands and turn them into the industry leaders they deserve to be,” he said.
Formerly CraftWorks Holdings, Logan’s and Old Chicago declared bankruptcy in early March. The initial outlook was gloomy. CraftWorks said it planned to sell its 261 company-owned stores after shuttering 37 underperforming units, referring to “a devastating collapse in consumer activity and restrictions from state and local authorities on business operations and public gatherings.” The company then furloughed 18,000 employees (it would eventually lay most of them off) and revealed in a filing it was “mothballing” all of its restaurants, candidly noting, “the shutdown could persist for a prolonged period time, if not permanently.”
During Chapter 11 proceedings, CraftWorks’ restaurants operated at zero revenues. SPB’s owner, Fortress Investment Group, was in talks to buy the company for $138 million ahead of the pandemic, but ended up winning a bid for $93 million.
Without it, though, CraftWorks was headed toward Chapter 7, meaning the company would surrender assets and go dark, like Garden Fresh Restaurants did in May. Fortress brought back 194 of the 261 company-owned restaurants.
And then the turnaround began. Mazany says he was attracted to the position for its long-standing chains and their history, as well as SPB’s diverse portfolio, which includes Rock Bottom Restaurant & Brewery, Gordon Biersch Brewery Restaurants, Big River Grille & Brewing Works, ChopHouse & Brewery, A1A Ale Works, Ragtime Tavern Seafood & Grill, Seven Bridges Grille & Brewery, and Sing Sing, a Big-Bang dueling pianos concept.
Logan’s, in particular, is ready to move forward from an intriguing perch. Founded in 1991 in Lexington, Kentucky, it also filed for bankruptcy in August 2016 when it had 234 corporate stores. It ended up shutting down 34 (more would come after renegotiating leases) and knocking its $400 million debt down to roughly $100 million.
Today, there are 138 company and franchised Logan’s—113 of which are corporate units.
Without providing exact figures, Mazany says Logan’s has started to outpace casual-dining competitors in performance. “It’s a segment that only has four major players in it,” he says of the steakhouse category. “I believe that Logan’s, whether the economy is doing really well or the economy heads toward a recession, the Logan’s brand is positioned well with meal offerings.”
Logan’s average check comes in well under category peers. It sits in the $12–$13 range with steak offerings that start around $10. That average check at Outback, for comparison, was $23 last year, with 91 percent of the sales stemming from food and non-alcoholic beverages. Outback just recently unveiled a more value-focused menu. The per-guest average check for Texas Roadhouse in 2019 was $17.57.
And like a lot of restaurateurs, Mazany sees a price war looming as COVID progresses. “I do believe that value will be a big part of the future,” he says. “I think as we go into 2021 I think you will see value more prevalent for the consumer. They’re expecting it.”
Familiarity and trust is also something carrying more weight. Mazany believes the biggest challenge the industry faces today, from a macro perspective, is implementing safety as a top priority alongside operational standards in each restaurant that abide by regulations in every city and town they operate in.
It’s an arena chains have been able to grab share in as they focus less on day-to-day survival and more on long-term angles. The fact Logan’s has operated for close to three decades helps bridge some of the anxiety for guests, Mazany says. The customer base is loyal and embedded.
He says SPB is currently operating all of its restaurant for in-house dining as well as third-party delivery, to-go service, and curbside. Stores started reopening April 24. Also, the compay has found success with a growing family meal box business Logan’s introduced in July with bundles and ready-to-grill kits. One option includes four 6-ounce USDA Choice, mesquite wood-grilled sirloin steaks for $40. Another is 20 chicken tenders for $25.
The take-home portions feature seasoning blends and a variety of steak choices, plus pork chops or baby back ribs. Customers can mix and match.
Mazany says SPB’s restaurants continue to adhere to the “new normal” ticks you see around the sector. Six feet of distance between tables, high-touch specialists to clean throughout the day. They’re also looking into air filtration systems and some other logistical options. “All of the very overt ways,” he says. “If a consumer comes into any of our brands they’ll see we take this commitment very seriously. And we’re going to do it at the highest level we possibly can.”
“I think the most successful restaurant companies at this point, with good management teams, have led from a safety point of view,” Mazany adds.
Off-premises business is up around 200 percent, year-over-year. One of SPB’s long-term goals is to bring delivery in-house and serve it with company employees. “This way we can really control the entire experience the guest has, from a platform where they order it to where the food is cooked to where the food is actually delivered to your home,” he says.
One COVID response Mazany expects to stick as well is QR codes, where a customer can scan a menu and pull it up on their personal device. In some cases, order and pay through the process, too.
For SPB’s craft brewery group, comprised of 44 restaurants across the country, it’s been a harsher road in some ways. The brands are often located in city and tourism-heavy markets that have weathered a stiffer foot-traffic blow. Guest are displaced.
Mazany says SPB is working on a catering program for those brands designed for smaller groups and settings. Yet it’s really going to come back to the in-person experience, which is where those brands make their mark. “I think when you think about a brewery experience it’s a full-sensory experience,” he says. “Walk into one of our restaurants, you can smell the hops, you can smell barley in the air. It has a different kind of experience. And the ability to sample and try some different, unique specialty brews, you really can’t get that when you’re at home from a COVID point of view.”
Already, Mazany says, they’ve seen customers return and embrace what they’ve missed. It’s just going to take time to get occupancy up.
“That’s actually what happened,” he says. “When you see states lift some of their seating capacity restrictions, and you see the COVID cases come down, people have come out.”
“We’re excited about the future of growth that is out there for us,” Mazany continues. “I think we’ve learned a lot through this COVID time. And I think really well-run companies on the other side are going to be positioned for growth and into the future, and I think these are brands that have built up a strong, loyal following and have stood for a lot. They’re iconic brands and I think the guest will be ready to come back to our restaurants when the country is reopened and back to full capacity.
“We’ll be more than ready and happy to serve them and deliver a great experience.”