Fast-casual dining franchisee hits rough patch but operates in strong category

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Published: March 21,2014

Tags: Business, Dining, Mazzios, McAllisters, Mississippi

Mazzios_Logo_rgbFiscal turbulence has forced Ridgeland’s Pinnacle Restaurant Corp., operators of several McAllister’s Deli and Mazzio’s Italian Eatery restaurants in metro Jackson, to seek Chapter 11 bankruptcy protection.

Pinnacle has a trio of McAllister’s locations in Pearl, Richland and Bryam and seven Mazzio’s throughout the Jackson area. It also operates a half dozen Mazzio’s in Texas as well as a pair of Ken’s Pizza outlets and an Oliveto Italian Bistro in the Lone Star state.

Pinnacle filed for bankruptcy in Mississippi Southern District Bankruptcy Court on Oct. 31, listing its largest unsecured creditors as Mazzio’s Corp., Tulsa, Okla., $563,735; restaurant food and equipment supplier Sygma, Dublin, Ohio, $96,579; and HORNE LLP, Ridgeland, $24,226.

Other Mississippi companies listed as creditors are Coomes Produce Co., Vicksburg, $5,334; FMS Lighting, Jackson, $5,217; Morgan White Administrators, Jackson, $4,729; JM Properties LLC, Ridgeland, $4,200; and Auto Chlor Systems Inc., Pearl, $3,166.

McAllisters-logo_rgbPinnacle executives, including president Tommy Johnsey, did not return phone calls this week and last week seeking comment on the company’s reorganization plans.

The Chapter 11 filing came in a year n which McAlister’s Deli company-owned stores increased same-store sales 4.8 percent. A 3.7-percent increase in entree sales drove the 2013 store sales increase, the 25-year-old company said in a February press statement.

Total system sales in 2013 were $459 million with an average unit volume of $1.5 million for all traditional stores continuously open and operating during 2013.

Mazzio’s began in 1961 with the Pizza Parlor, later known as Ken’s Pizza, founded by Ken Selby. Today the Mazzio’s Corp., parent to the Mazzio’s and Oliveto concepts, has more than 140 locations in 10 states.

Part-time Ridgeland resident Phil Friedman bought the McAllister’s Deli chain in 1999 during his tenure as president of Panda Express. “I did really well with McAllister’s,” said Friedman, who sold the company in 2005 to a private equity group but stayed on as CEO until 2010, growing the company from 30 to nearly 300 stores over his 11-year tenure.

“Often when franchises get in trouble, it’s not the concept. It’s usually more situational,” he said.

Though Pinnacle has hit a rough patch, it is operating in the right space with its ownership of fast casual restaurants such as McAllister’s and Mazzio’s, Friedman said in an interview last week.

“The general environment is really good for quick casual,” he said. “While the economy is not as strong as we want it to be” and discretionary spending could be stronger, “people are still going out to eat.”

The quick causal is the right way to get their business, he said, because the food is good quality, service is quick and convenient and you won’t go broke paying the bill.

“They want something relevant to their lives,” Friedman said of customers of fast casual. “Quick casual is perfect. It has more variety; it’s a little more upscale with a seating environment but without table service.”

The concept is doing well in Mississippi, the restaurant entrepreneur said.

It fits well for families going to dinner and for individuals, he said. “It’s less cumbersome and less costly.”

The strongest locations are ones with both offices and family residences nearby, according to Friedman.

Meanwhile, Friedman is putting his money where his faith is: Bringing a new fast causal chain to Mississippi.

The chain, Salsarita’s Fresh Cantina, specializes in build-your-own burritos with all fresh ingredients.

He bought the Charlotte, N.C.- based Salsarita’s soon after leaving McAllister’s. The 14-year-old chain has locations in 19 states, with most of its 82 restaurants concentrated in the Southeast.

The first Mississippi store is under construction in Southaven and others are planned for the upstate, Madison and eventually the Mississippi coast, Friedman said.

“I know they are going to do well.”

 

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