Despite attempts to expand in recent years, Granite City Food & Brewery is on the sales block again.
The restaurant company — long on ambition but short on profits — said Tuesday it has hired Houlihan Lokey Capital, an investment bank, “to assist it in exploring a possible strategic transaction.”
That could mean a sale, merger or other deal involving all or part of the company, Granite City said in a press statement.
Robert Doran, Granite City’s CEO, did not return calls for comment.
Granite City Food & Brewery is a casual dining chain that brews its own beer and has 31 locations in 13 states, including outlets in Maple Grove, Eagan, Roseville and St. Louis Park. It started with a single restaurant in St. Cloud in 1999.
In May 2011, Granite City got a new majority owner — Concept Development Partners — and a fresh round of equity and debt financing. Concept Development is a partnership of Dallas-based private equity firm CIC Partners and a merchant banking firm that has been led by Doran, a former McDonald’s executive.
Doran became Granite City’s CEO after the deal. Concept Developments injected another $15 million in new capital in 2012, bringing the projected total to over $30 million.
The company has opened four new Granite City outlets in the past four years, and four more are scheduled for this year. Granite City also has bought five Cadillac Ranch restaurants, including one at the Mall of America.
But the casual dining restaurant business has seen a rocky recovery from the Great Recession. Wage growth has been weak, leaving people with limited disposal income, said Dennis Lombardi, a restaurant consultant with Ohio-based WD Partners.
“If you have a choice of going out to dinner at a casual dining restaurant or paying for your Internet service, which are you going to pick?”
Granite City has been in the red for several years. The company lost $2.6 million last year, down from $3.5 million in 2013, according to unaudited figures released Tuesday.
Still, while a heavy debt load helped stick the company with a net loss, its operating profits actually rose from $8.1 million in 2013 to $10 million last year. Granite City posted revenue of $136 million in 2014, from $134 million a year earlier.
Granite City voluntarily deregistered its common stock in 2013 to reduce the costs of reporting its financials to regulators. Granite City’s stock is still in the “pink sheets,” a thinly-traded over-the-counter stock market.