El Torito-Acapulco parent to buy Chevys, eyes stature as No. 1 Mexican dinnerhouse operator
LONG BEACH, CALIF. — Real Mex Restaurants Inc., parent of the El Torito and Acapulco chains of 124 casual-dining restaurants, disclosed a deal to acquire Chevys Inc.’s 106-unit Chevys Fresh Mex and 10-unit Fuzio Universal Pasta chains.
Real Mex, whose Long Beach-based system boasts an annual sales volume exceeding $500 million, said it would become the industry’s No. 1 operator of full-service Mexican restaurants upon closing the deal to buy Chevys out of a Chapter 11 bankruptcy reorganization, begun last October.
Real Mex reportedly would pay $78 million in cash and assume liabilities to buy Emeryville, Calif.-based Chevys, whose principal owner is J.W. Childs Equity Partners. Real Mex said it expected a deal to close by year-end, pending bankruptcy-court approval and other clearances. A lawyer for Chevys was quoted in a published report as saying its largest creditors already had approved the buyout.
The buyer, which operates 67 El Toritos, 39 Acapulcos, six El Torito Grills and several other concepts in California and six other states, said it would continue operating and franchising the acquired restaurants as Chevys and Fuzios. Real Mex president and chief executive Fred Wolfe said his company would field “the widest array of Mexican food options in the United States” after the Chevys purchase. Chevys Fresh Mex last year had estimated sales of $304 million, down from $323.2 million in 2002.
Chevys’ president and chief executive, Ron Maccarone, said the pending transaction “finalizes our reorganization process.”
Chevys’ bankruptcy stemmed from J.W. Childs’ 1999 acquisition of 40 company-operated Rio Bravo units from Applebee’s International and assumption of franchise rights over another 26 Rio Bravo outlets. Subsequent conversions to the Chevys concept, defections by franchisees and closures of underperforming Rio Bravo units continued until the chain closed all its remaining restaurants last year.
Chevys then filed for Chapter 11 bankruptcy to expunge Rio Bravo’s liabilities, just weeks after Consolidated Restaurant Operations of Dallas backed out of a deal to purchase the Chevys and Fuzios chains. Consolidated cited onerous California laws as cost factors in that decision.
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