A management-led group of investors has acquired a majority interest in Trans/Pacific Restaurants Inc., an Irvine-based company with more than 70 restaurant outlets in California and Hawaii, the company said Wednesday.
The buy-out, which closed Dec. 30 for an undisclosed sum, ends 40 years of ownership by the family of founder Art Salisbury. The seven-member investors' group, led by company President Ronald F. Higgins, will hold an 85% interest in Trans/Pacific. The Salisbury family will retain a 15% interest.
The restaurant group's operations in California and Hawaii include 43 Jolly Roger restaurants and 11 Monterey Bay Canners Fresh Seafood Restaurants. The company also operates 10 Sizzler franchises in Hawaii. Also included in the buy-out are McBride's Restaurant in Torrance and five other restaurant groups in Hawaii.
New York-based Citicorp Industrial Credit Inc. will provide financing for the sale. As part of the transaction, Trans/Pacific will issue to Citicorp warrants to purchase up to 14% of Trans/Pacific's common stock for up to 10 years. Another 15% to 20% of the common stock will be made available to employees under a stock option program.
Higgins, who acquires a controlling interest of 63%, will become chairman, president and chief executive officer. The current chairman, Douglas L. Salisbury, son of the company's founder, will remain on the board of directors and become senior vice president. Salisbury could not be reached for comment.
According to Higgins, the Salisburys agreed to the sale to gain liquidity.
The Jolly Roger family restaurants, 18 of which are in California, have long been the flagship of the company. During a $15-million renovation program in 1985, the company upgraded its older units to appeal to higher-income diners more likely to buy gourmet dinners rather than grabbing a quick burger and malt.
Higgins said the chain has successfully navigated its upscale course. An average dinner check with cocktails is now in the $10 to $10.50 range. The average was about $7.50 before the renovations.
In fiscal 1985, the company operated three fewer units than in the prior year, yet it increased sales by $8.9 million to $76.8 million, Higgins said. In fiscal 1986, ended April 2, combined sales were more than $80 million. The company projects fiscal 1987 sales of $87 million. Higgins declined to reveal net earnings for the company.
In fiscal 1986, the company had a pretax income of $6 million, according to Higgins. For the current fiscal year, he projected that pretax income could fall to $4.5 million because of increased interest and transactional costs associated with the buy-out.
The new company will emphasize growth in its Monterey Canners chain because of its greater profitability, Higgins said. At Monterey Bay Canners restaurants an average check totals about $12 to $14. "But if we find good waterfront locations, we'll certainly build Jolly Rogers, as well," he said.