Bloomin' Brands Inks Deal To Sell Roy's To United Ohana, LLC
By Christine Kern, contributing writer
Applebee’s owner takes on Pacific Rim Cuisine with purchase of Roy’s
Bloomin’ Brands, Inc. has entered into a sales agreement with United Ohana, LLC, for the spin-off of its Roy’s Restaurants, according to a press release.
United Ohana, LLC, is a new company formed by CEO of Apple Texas and Apple Houston, Sunil Dharod, who owns and operates 69 Applebee’s Restaurants in Texas.
Terms of the deal were not disclosed, according to the Nation’s Restaurant News, though the deal was set to close in 30-60 days according to the press release.
Bloomin’ Brands announced the plan sale just a month ago, to bring more attention to the brand with new ownership, the Nation’s Restaurant News reported Roy’s is a 28-unit upscale concept, founded in Hawaii in 1988 by Roy Yamaguchi, and is the smallest of the concepts in the Bloomin’ Brands portfolio, which also includes Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill and Fleming's steakhouse. It had often been left out of major planning strategies.
“The brand is a small part of our portfolio,” CEO Elizabeth Smith said during a 3rd quarter earnings call. “It’s not a priority for investment. Roy’s deserves to be in a situation where it can get the time, attention and resources it needs to grow. We’re confident that it can thrive under new ownership.”
“Roy’s is not too much of a surprise that it would do better outside the portfolio,” Smith said.
As the new owner of Roy’s, Dharod will face the challenge of turning the brand around. In the first three quarters of 2014, the chain had just $52.1 million in sales, a drop of 7.4-percent from the same period a year ago. Same-store sales fell 7.7 percent in the third quarter ended Sept. 28, to $15.7 million, from $17 million the previous year.
According to the Nation’s Restaurant News, the beleaguered brand recorded a nearly $7 million loss before income taxes in the third quarter, including a $6 million impairment charge on the sale, and the concept has been losing money even before the impairment charge.
Roy's joined the Bloomin' Brands portfolio in 2000. Roy's has become well-known for its Pacific Rim Cuisine - featuring the freshest local ingredients, European sauces and bold Asian spices with a focus on seafood. There are 29 Roy's locations around the world - 21 in the continental United States, six in Hawaii, one in Japan and one in Guam.