Marie Callender’s Sold for $150 Million
Marie Callender Pie Shops Inc., a chain that began churning out pies as a family business 51 years ago, was sold Monday by its current parent to a New York-based investment firm for $150 million.
The new owner, Castle Harlan Partners III, wants to increase the Orange-based chain’s presence outside California, where 72% of its 166 restaurants are located. Marie Callender’s management team will remain intact, and six of its top executives will become investment partners.
“What we saw was a very well-established concept that has very strong customer loyalty,” said David Pittaway, senior managing director of Castle Harlan. Pittaway also noted that the Marie Callender brand name has become well known through a line of licensed frozen food products made by ConAgra Inc. of Omaha.
Marie Callender’s former majority owner, Saunders, Karp & Megrue announced in September 1998 that it was looking to cash in on its investment. The firm, which acquired controlling interest in Marie Callender for $30 million in 1993, could not be reached for comment Monday.
The sale ends a period of “anxiety” for those who run the chain, said Len Dreyer, Marie Callender’s president and chief executive. He said Monday that he is pleased that the new buyer is an investment firm rather than a restaurant company that could have brought in new management or relocated its headquarters.
“We are all going to stay here doing what we have been doing, with a little more enthusiastic support,” said Dryer, who along with five other executives bought 6% of the chain. “It’s really exciting because we knew our life was getting short with the other [owner]. You have someone else coming in who is real excited about us.”
Saunders, Karp & Megrue operated the chain under the name Wilshire Restaurant Group.
Castle Harlan, which will run the chain under the same name, previously owned Morton’s of Chicago Steakhouses. Its current holdings include Charlie Brown’s, which operates 37 family restaurants in New Jersey and suburban New York, and Luther’s Bar-B-Q, a chain of restaurants based in Houston.
Castle Harlan Partners III is a limited partnership formed by closely held investment firm Castle Harlan.
The investment firm assumes $12 million in debt from existing leases on equipment, such as computers and stoves, Pittaway said.
Irvine-based restaurant consultant Randall Hiatt said the $150-million sales price “is in the higher end of the range for what is being paid for a restaurant company.”
Hiatt, president of Fessel International, said the chain still has a lot going for it.
“They are not so glamorous but have a very strong reputation,” he said. “They are solid and mature and still have that home-cooked reputation that gives a halo over all of their food.”
Marie Callender’s systemwide sales, including franchises, exceeded $300 million last year for the first time. Same-store sales, a key measure of industry performance, are up 6% so far this year, the company said.
The company has 10,000 employees nationwide. It has more than 60 locations in Southern California, 19 of which are in Orange County.
In addition to its California locations, there are a small number of Marie Callender restaurants in Arizona, Colorado, Idaho, Illinois, Nevada, New Mexico, Oklahoma, Texas, Utah and Washington. The chain has 63 franchised units.
The chain traces its roots to 1948, when Marie Callender herself began making pies in a rented Quonset hut in Long Beach. Callender, who was aided by husband Cal and son Don, sometimes baked throughout the night, initially selling her pies wholesale to restaurants.
In 1962, the family opened its first pie shop on Tustin Avenue in Orange. The family soon added soup and sandwiches to the menu. As the chain developed, the menu was expanded.
The family sold its business to Ramada Inns in 1986 for $57 million in cash and 2.5 million shares of Ramada stock. Three years later, Ramada sold the restaurant chain to Wilshire Restaurant Group for $54.4 million.
In 1993, the private investment group of Saunders, Karp & Megrue bought a controlling interest in the chain.
At the time, the chain operated 146 restaurants, but had not opened a new outlet in four years. Since then, Marie Callender has opened 25 restaurants.
Dreyer, who has held the chain’s top post for five years, said the stage is set for more expansion.
“This is a really exciting time in our history,” Dreyer said. "[The new owners] see the real potential for us to go nationwide and perhaps become more involved in franchising than we have in the past.
“One of the things that we have that others don’t is brand awareness in the states that we don’t operate in due to the frozen food entrees.”