& Pizza – The Next Ruby Tuesday?
Ruby Tuesday Founder Reportedly Chairs &Pizza Board of Directors
by Larry Janezich
Sandy Beall, founder of Ruby Tuesday and its CEO for 40 years, has reportedly become the Chair of the Board of the incipient fast-casual pizza chain, &Pizza. &Pizza seems to be downplaying the relationship with this industry powerhouse in the wake of the departure of co-founder Steve Salis from his role as CEO of the company.
On March 3, Nation’s Restaurant News listed Beall – who stepped down as Ruby Tuesday’s CEO in 2012 – as one of the board members of Ima Pizza, LLC, &Pizza’s parent company. (http://bit.ly/1dkrbAe)
This followed &Pizza’s February 18 announcement that it had received $10 million in additional investment funding. Carriage Hill, a company that helps shareholders of “privately held middle market companies” recapitalize, possibly alluded to the source of the investment in a note regarding a growth capital transaction it handled for &Pizza which read, in part, as follows: “The private investor is a high net-worth family office that invests in consumer brands and emerging fast casual restaurant concepts throughout the US.” (http://bit.ly/1HT4oUp)
Months later, on May 19, Rick Aristotle Munarriz wrote on the financial planning website Daily Finance: “Some of the [fast casual pizza] chains that don’t have affiliations with public companies are also well connected … &pizza has Ruby Tuesday’s (RT) founder as its chairman of the board.” (http://aol.it/1F0tKgP)
On Friday, May 29, Andrew Metcalf of Bethesda Magazine reported that &Pizza co-founder Steve Salis was stepping down as CEO. In that piece, Salis said that the company plans to hire a new CEO, but that &Pizza’s co-founder Michael Lastoria would remain as the company’s president.
This sequence of events mirrors that of start-ups on the way to buyout, and suggests that &Pizza might be destined for far greater expansion as a franchise.
Metcalf quoted Salis using some of this terminology explicitly: “I thought the business was at the right point for us to bring in a blue chip, top-notch CEO to run the company.” However, five days later, on Tuesday, June 2, Metalf’s Friday post was updated with additional information from &Pizza’s public relations spokesperson Barbara Martin, who told Bethesda Magazine: “Michael and Steve founded a company and Steve’s moved on.” Metcalf continued, “Martin said Lastoria is currently also serving as the CEO. She countered what Salis said, saying that Lastoria is the CEO and the company is not currently looking for a new leader.” (http://bit.ly/1LOz1Ou)
Martin is a principal at the high-powered DC public relations firm, BrandLinkDC, profiled in the NYT in 2010 here: ( http://nyti.ms/1KMl2Il)
In its official pronouncements, &Pizza seems to be emphasizing its local leadership. Last Thursday, June 4, representatives of &Pizza appeared before the ANC6B alcohol licensing committee to support &Pizza’s application for a liquor license for the Barracks Row &Pizza location, at 405 8th Street, SE, scheduled to open in early August. When an attendee asked, “Where’s Steve?,” &Pizza’s legal representative Debbie Kaplan told the room that Salis had stepped down as CEO and Lastoria was the new CEO but that any agreements with respect to the operation of &Pizza on Barracks Row would be endorsed by Lastoria.
Until now, Salis has been the public face of &Pizza. Salis first appeared before ANC6B in September, 2011 (http://bit.ly/1cChfBt), as a New York City entrepreneur who wanted to bring his vision for joining the fast casual dining experience to Barracks Row. He had hoped to open his flagship restaurant on 8th Street, but retreated to H Street, NE, when delays in getting an exemption from the ban on fast food restaurants on 8th Street took longer than expected.
After opening several restaurants in the area, Salis and returned to his goal of having an &Pizza outlet on 8th Street and has been persistent in pursuing that goal since last March of last year (http://bit.ly/1iT6UPB). After twice rejecting Salis’ request for a fast food exception, ANC6B finally endorsed the application after an agreement on how the restaurant would be operated was reached with the neighbors (http://bit.ly/WJQiUA). At last Thursday night’s meeting, the committee agreed to recommend approval of the license application to the full ANC, on the condition that the license include the language previously negotiated between Salis and the neighbors regarding trash disposal, rodent control, noise mitigation and odor mitigation.
CHC asked Kaplan about the restructuring. She said it was done to “address the different needs of the company.” Asked what role Salis had after the restructuring, Kaplan replied, “Steve remains a significant investor.”
According to the Nation’s Restaurant News article, a board of directors with decades of experience in national and international retail and franchising has been assembled. In addition to Beall, members of the Board are listed and described at the end of this piece.
Salis had never made any secret about his desire to establish a restaurant chain. Few expected him to be able to do so this quickly. Now with the new infusion of capital and a board of directors with decades of experience in national and international retail and franchising, it appears that &Pizza is on the brink of becoming a national – if not international – chain.
Should that come to pass, &Pizza will be the fifth chain food outlet in the 400 block of 8th – a block that already supports Starbucks, Popeye’s, Chipotle, 7-11, Subway, and Baskin Robbins. Potbelly is reportedly interested in opening a venue on the block and DC development company Streetsense is looking for a tenant for the former location of Craze Burger.
While the operating agreement attached to the liquor license provides some reassurance to neighbors, they are justifiably concerned about the general rule that chain restaurant outlets do not make good neighbors. If and when problems arise, it is nearly impossible to bring pressure to bear against a distant corporate office that has little concern for quality of life in a community.
& Pizza’s Board of Directors, according to Nation’s Restaurant News:
Joe Farina, former partner at Fireman Capital Partners (private equity firm that invests in the consumer sector), former president of Genuity (a $2 Billion internet infrastructure company), former president of Lynch Interactive (a telecom holding company) and former corporation officer and president of various divisions of Verizon (lead Verizon expansion into Europe and Asia).
Edward Albertian, CEO of City Sports, Inc. (sporting goods retailer operating 27 stores over seven east coast states), former CEO of TNT Vacations (an vacation operator serving the New England market), former CEO of C&S Wholesale Grocers (largest wholesale grocery supply company in the US), former CEO at Star Markets (online food shopping), and current Board member of Streamline.com Inc., (international payment processing).
John Barton, operating partner with the investment firm LNK Partners (private equity investing in consumer/retail), former Executive Vice President of Real Estate for Staples (most recently managed Staples’ emerging markets of South America, China, Taiwan and India), and current member of the Board of Fitness Connection and an advisor to Au Bon Pain, current “Doman Expert” for Highland Consumer Partners (investment in growth-oriented consumer-facing businesses – including City Sports see Edward Albertian above) focusing on international operations, profit and loan management, franchising, and retail real estate development.