Frandeli Group buys 22-unit Spaghetti Warehouse chain

Nation's Restaurant News,  July 2, 2007  

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LOS ANGELES -- Frandeli Group LLC, a 50-plus-unit Papa John's franchisee and a venture fund, purchased the 22-unit Spaghetti Warehouse casual-dining chain last month for an undisclosed sum from loan servicing provider AMRESCO Commercial Finance LLC.

Frandeli plans to execute a six- to 12-month turnaround for the brand, according to the fund's chief executive, Doug Pak. Until the Frandeli acquisition, which closed June 19, Spaghetti Warehouse had been operated by Dallas-based Consolidated Restaurant Operations Inc. Consolidated Restaurant will continue to own and operate the El Chico, Silver Fox, Cantina Laredo and other chains.

AMRESCO, a commercial loan servicing provider that typically handles distressed companies, took over ownership of the Spaghetti Warehouse chain in a lending workout arrangement with Consolidated Restaurant in 2001. AMRESCO is based in Idaho and owned by private-equity firm Fortress Investment Group LLC and an affiliate of Goldman Sachs.

The South Korean conglomerate SK Group, which manages more than $60 billion in assets under various industries, funds Frandeli. Pak, a former franchise operations executive in the Denny's and Carrs Jr. systems, said Frandeli is pursuing buyouts in the restaurant industry and wants to acquire at least two more concepts. According to Frandeli's website, investments typically range between $20 million and $100 million.

Frandeli's chief operating officer, Azam Malik, a former president of Piccadilly Restaurants and chief operating officer of Chi-Chi's, will run Spaghetti Warehouse.

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