| ||||||||||
| ||||||||||
— Analysis —
Besides being Ohio's capital, and home to Ohio State University and the
Motorcycle Hall of Fame, Columbus has quietly grown up into something
of a post-industrial corporate center. Nationwide Life Insurance Co.,
Cardinal Health Inc. and Leslie Wexner's Limited Brands Inc. are based
in and around Columbus. For decades, Columbus was a regional banking
center with Banc One and Huntington Bancshares. Banc One flourished in
Columbus until it merged with First Chicago, then with J.P. Morgan
Chase & Co.
And Columbus, oddly enough, has seen the birth of a number of restaurant chains, beginning with the mother of all fast-food chains, White Castle System Inc., in 1921, through Bob Evans Farms Inc. (1953) and Wendy's International Inc. (1969) and, more recently, Max and Erma's Restaurants Inc., or Damon's Grill. Why Columbus? Adam Birnbaum, a managing partner of New York's Grandwood Capital LLC, says the city has been a "hotbed" for retail and storefront companies since the 19th century (the city was founded in 1812). Industry analysts agree that the high concentration of restaurant chains sets up a self-fulfilling dynamic. "A restaurant company that began and flourished in the Columbus market had a better likelihood of succeeding in other markets where competition might not be as severe," Birnbaum adds. Eric Welsch of Cleveland's KeyBanc Capital Markets Inc., agrees. Besides the obvious restaurant chain history, the city is "culinarily sophisticated" as a test market for restaurants, he says. Many of these chains have been involved in M&A activity in recent months. The most obvious example: April's sale of Wendy's to Nelson Peltz's Triarc Cos. for $2.34 billion. But by no means is it the only one. Perhaps encouraged by the Wendy's deal, Cameron Mitchell Restaurants LLC and Max & Erma's Restaurants went on the block as well. All three chains have headquarters in Columbus. Cameron Mitchell completed its sale of four affiliates (Mitchell's Fish Market, Columbus Fish Market, Cameron's Steakhouse and Mitchell's Steakhouse) in February's to Ruth's Chris Steak House for around $94 million. Four days after the Wendy's deal, Max & Erma's Restaurants agreed to a deal with Pittsburgh's G&R Acquisition Inc., owned by Gary Reinert Sr., for about $10 million. Reinert's firm has been mentioned in talks around another restaurant deal. Damon's International Inc. is exploring strategic alternatives for its Damon's Grill chain. Columbus is also home to Escape Enterprises Ltd., the operator of the Steak Escape, Johnny Buccelli's and Hoggy's brands, as well as Gosh Enterprises Inc., parent of the Charley's Grilled Subs chain. And Bob Evans Farms is still around. Founder Bob Evans began making sausage on his farm and selling it at his 12-seat diner in Gallipolis, Ohio, in 1948. Today the company has a $900 million market cap, owns 579 Bob Evans restaurants and 115 Mimi's Cafes. Evans died last year at 89. Meanwhile, new ideas keep coming. Privately owned Donatos Pizzeria LLC and Bravo! Development Inc. have set up shop in town. Donatos has 175 stores in six states. Bravo owns and operates 60 restaurants under the Bon Vie Bistro, Bravo and Brio Tuscan Grille names. |
|
|
|
|
|
