Grill Concepts Wants Hamburger Hamlet
The Brentwood-based operator of the Daily Grill restaurants disclosed Tuesday that it expects to acquire most or all of the 19 remaining Hamburger Hamlet restaurants in a transaction valued at more than $10 million.
Grill Concepts Inc. said the transaction is part of a Bankruptcy Court plan filed by Hamburger Hamlet Inc., which has been in Chapter 11 reorganization. If all 19 of the restaurants are acquired, Hamburger Hamlet would no longer exist as an independent chain.
Such a deal would be the latest in an ongoing consolidation in the Southern California restaurant industry, as weaker chains get swallowed or are forced to restructure.
The Sherman Oaks-based company has already closed 12 restaurants since filing for Chapter 11 protection in December. Of the remaining restaurants, four are in the Washington, D.C. area, one is in Chicago and 14 are in Southern California.
The proposed acquisition of the restaurants must still be approved by a bankruptcy judge and the boards of directors of both companies, said Robert Spivak, president and chief executive of Grill Concepts. Spivak said the proposed deal has already received the support of Hamburger Hamlet’s secured creditors--those who have rights to the chain’s assets if debts are not paid. He said the company would decide how many of the restaurants it would keep after reviewing the chain’s financial records.
Spivak said Grill Concepts would continue to operate the restaurants as Hamburger Hamlets if the deal is approved. He said he hoped to retain Hamlet management but added that Daily Grill’s system of management and restaurant service would be established at the Hamlet chain.
“Hamburger Hamlet is a Southern California icon and we believe we’re capable of restoring it to the status of its glory days,” Spivak said.
Established in 1950, when the first Hamburger Hamlet opened on Sunset Boulevard, the casual dining chain had enjoyed great popularity through the 1980s. In recent years, it lost sales during the recession. Analysts say it also lost some customers when it failed to update its menu and improve service. Other analysts say that the company expanded too rapidly and did not always make the best site selections for its outlets.
Hamburger Hamlet was also hurt by increased competition from more contemporary chains such as the Cheesecake Factory and the Daily Grill.
The Grill in Beverly Hills opened in 1984. Grill Concepts Inc., which was founded in 1988, currently operates The Grill and six Daily Grill restaurants in Southern California. The company had revenues of $20 million and earnings of about $65,000 in 1995.
“We looked at a lot of different proposals and felt it would be in the best interest of the company to have a strong partner,” said Shawn Holder, Hamburger Hamlet’s president and chief executive.
