Word that troubled upscale steakhouse chain Morton’s Restaurant Group Inc. (NYSE:MRT) is up for sale spurred shares to soar 12% March 16.
But buying the fabled 33-year-old company that generated US$296.1 million in 2010, has US$500 million of debt on its books and just over US$1 million in cash does not interest The Keg Steakhouse and Bar owner David Aisenstat.
He told Business in Vancouver Thursday that organic growth is so strong at his Vancouver-based restaurant chain that he does not want to make acquisitions. Future store openings include one later this year in the former Hy’s Mansion on Davie Street.
“At the risk of sounding immodest, the Keg brand has never been stronger,” he said.
“We’re pretty happy with our success. From public disclosure and statistics, we know we’re outperforming the market. It’s hard to argue with that.”
Keg restaurants generated nearly $500 million in 2010.
Aisenstat’s good fortune is that 88 of his 104 Keg-branded restaurant locations are in Canada where the economy is stronger than in the U.S.
All but six of Morton’s 77 restaurants are in the U.S. The chain closed its Vancouver location in October 2009.
Troubles at Morton’s, however, stem as much from internal mismanagement as from external factors, according to Aisenstat.
“Morton’s really hasn’t evolved as well as many of their competitors. You go to what was here in Vancouver or in Toronto or even their Chicago headquarters. Pick a city,” Aisenstat said. “Everywhere they are, someone is doing what they do with a better location, a better-looking restaurant and food and service that is equivalent for, generally, a lower price. How long can that go on?”
Raymond James & Associates Inc. analyst Bryan Elliott told media that a potential Morton’s buyer might be interested in the chain because of its “long operating history” and “brand cachet” – but even that falls flat with Aisenstat.
“If you go back 10 years ago, the value of their brand was probably equal to or greater than their assets,” he said. “Now, that’s not the case.”