Bartaco and Barcelona Wine Bar will be run by L Catterton.

Del Frisco’s Restaurant Group’s $650 million sale to L Catterton closed Wednesday. But it wasn’t the only deal at hand. In conjunction with the acquisition’s completion, L Catterton announced it entered into a definitive agreement to sell Del Frisco’s Double Eagle Steakhouse and Del Frisco’s Grille to Landry’s, Inc. for an undisclosed consideration.

That leaves L Catterton with bartaco and Barcelona Wine Bar, which will operate as two separate businesses with distinct strategies and leadership under the firm’s ownership, the company said.

Wednesday’s news took Del Frisco’s private.

“We are confident that the separation of the business and the sale of the steak concepts to Landry’s creates the best opportunity to unlock value in all of the company’s restaurant brands,” said Andrew Taub, managing Partner at L Catterton, in a statement. “With more than 500 restaurants across the world, including a number of successful steak restaurants, Landry’s leadership in hospitality and dining is widely established, making them an ideal owner of Del Frisco’s steak business.”

“We look forward to leveraging L Catterton’s deep restaurant experience and operational capabilities to help bartaco and Barcelona Wine Bar reach their full potential,” he added. “We are confident that running as separate businesses, these highly experiential and unique restaurant concepts will be best positioned for growth and expansion.”

L Catterton, which holds restaurant investments in Noodles & Company, Uncle Julio’s, Hopdoddy, Chopt, Anthony’s Coal Fired Pizza, and others, agreed to buy Del Frisco’s in June. The price was $267.3 million but included debt. As of March 26, Del Frisco’s had $336.1 million in debt.

Previous investments for L Catterton also include Bloomin’ Brands, Cheddar’s Scratch Kitchen, and P.F. Chang’s.

Landry’s is one of the biggest operators in the space. Billionaire Tilman Fertitta’s company has been no stranger to acquisitions, either.

Landry’s won the bankruptcy court action in July 2017 to assume ownership of Joe’s Crab Shack and Brick House Tavern + Tap. According to bankruptcy filings, Fertitta’s company offered $57 million.

Fertitta picked up Morton’s Restaurants for about $116.6 million in 2011. The previous November, he agreed to acquire McCormick & Schmick’s in a $131.6 million deal. Landry’s bought California-based Claim Jumper out of bankruptcy with a $76.6 million bid in 2010 and then purchased Bubba Gump two weeks later in early November for an undisclosed amount.

That previous April, Landry’s bought the Oceanaire Seafood Room out of bankruptcy for $23.6 million. A month later, Fertitta acquired Landry’s outright in a deal valued at $1.4 billion, ending a nearly two-year-long bid for the restaurant company, which he already had a 55 percent stake in.

More recently, Fertitta’s Landcadia Holdings picked up delivery service Waitr in 2018 for $308 million and won the right to acquire Restaurants Unlimited for $37 million out of bankruptcy. He’s also the owner of the Houston Rockets NBA franchise.

“We have been following Del Frisco’s for many years and tried once previously to acquire the company in 2012 before it went public. It is a storied high end steakhouse brand with roots set in Texas and iconic locations throughout the country,” Fertitta said in a statement Wednesday. “The Del Frisco’s Double Eagle located in midtown Manhattan is one of the highest grossing volume restaurants in the country and a New York City staple, while its sister brand, the Del Frisco’s Grille delights its customers at Rockefeller Center.The Boston Seaport Del Frisco’s Double Eagle is a Boston mainstay and is one of Boston’s most successful restaurants. The City of Brotherly Love also sports a tremendously popular Del Frisco’s Double Eagle in historic downtown Philadelphia. Not to be outdone, the Lone Star State is home to four Del Frisco’s Double Eagles, including both Dallas and Houston.”

“Both the Double Eagle and the Grille are known for their high energy atmosphere, quality food and expansive wine selections,” he added. “Del Frisco’s is a perfect complement to our existing high end steakhouse portfolio, which includes such notable concepts as Mastro’s, Morton’s, Vic and Anthony’s, Strip House, and Brenner’s.” 

Del Frisco’s Double Eagle had average-unit volumes of $13.6 million in 2018 on average checks of $125.

Del Frisco’s stockholders received $8 per share, representing a 22 percent premium to the closing price on December 19, 2019—the last day trading prior to the company’s announcement it was exploring strategic alternatives. It was also a premium of about 21 percent to Del Frisco’s 30-day volume weighted average price ended on June 21.

L Catterton said then it would split Del Frisco’s operations upon close, running bartaco and Barcelona on their own separate from Del Frisco’s Grille and Del Frisco’s Double Eagle Steakhouse. The goal being to “nurture the unique attributes of the brand.”

A possible sale was not mentioned at the time.

Barcelona and bartaco were billed as Del Frisco’s growth concepts when the company acquired them for $325 million last June. Del Frisco’s estimated market potential for bartaco between 200–300 domestic restaurants and 50–100 for Barcelona.

Del Frisco’s operated 16 Double Eagle Steakhouses, 24 Del Frisco’s Grilles, 17 Barcelona Wine Bars, and 21 Bartacos across 17 states and Washington, D.C. headed into the L Catterton deal.

In this past quarter—Q1 of 2019—here’s how results broke down by brand, year-over-year:

  • Double Eagle: Same-store sales of negative 0.4 percent; customer counts of negative 1.5 percent; average check of 1.1 percent.
  • Del Frisco’s Grille: Same-store sales of 0.2 percent; customer counts of negative 6.9 percent; average check of 7.1 percent.
  • Barcelona: Same-store sales of 3.7 percent; customer counts of 3.6 percent; average check of 0.1 percent.
  • Bartaco: Same-store sales of 6.7 percent; customer counts of 5.5 percent; average check of 1.2 percent.
  • Del Frisco’s posted an adjusted net loss of $3.4 million in the quarter and revenue of $120.4 million.

When Del Frisco’s first announced it was exploring strategic alternatives, it came following a letter from activist investor Engaged Capital LLC, which at the time owned just under 10 percent of the company’s shares, urging Del Frisco’s to sell some of its concepts or the entire company. Engaged labeled bartaco as a brand with the potential to be a “blockbuster concept.”

Chain Restaurants, Feature, Finance, Del Frisco's Restaurant Group