Interview: Nick Valenti

Last year, Restaurant Associates’ CEO Nick Valenti acquired the company’s East Coast restaurants and West Coast Patina Group operations from parent Compass Group. The rechristened Patina Restaurant Group--a 2007 Ivy Award winner for The Sea Grill restaurant in New York City—this week announced a final deal to acquire publicly traded Smith & Wollensky Restaurant Group. Valenti spoke with Executive Editor Scott Hume about this and other opportunities.

By scott hume, Executive Managing Editor -- Restaurants & Institutions, 5/7/2007

Last year, Restaurant Associates’ CEO Nick Valenti acquired the company’s East Coast restaurants and West Coast Patina Group operations from parent Compass Group. The rechristened Patina Restaurant Group--a 2007 Ivy Award winner for The Sea Grill restaurant in New York City—this week announced a final deal to acquire publicly traded Smith & Wollensky Restaurant Group. Valenti spoke with Executive Managing Editor Scott Hume about this and other opportunities.

You and Patina Restaurant Group have wasted little time in charting your own course since the separation from Compass Group.

Yes. The Smith & Wollensky merger deal was modified and signed last night [Sunday, May 6]. It’s a public company so it ain’t over until it’s over, but we’ve signed a new merger agreement and we’re very excited.

We think it’s unquestionably one of the premier restaurant brands in the United States and for us, strategically, it’s a terrific fit, having been in the steakhouse business for a long time and having owned Charlie Brown’s Steak House for many years until Restaurant Associates sold it [in 1997]. It’s not often you can get hold of one of the country’s premier brands, so we’re thrilled.

Was this an opportunity particular to Smith & Wollensky or were you actively looking for opportunities that could get Patina Restaurant Group into the national steakhouse scene?

No, it was particular to this brand. I’ve known [Smith & Wollensky CEO] Alan Stillman for 20 years, and when the opportunity came up, he and I worked very diligently to get this done. As part of the deal we are selling back to Alan the New York City Smith & Wollensky and he will maintain management of the [original] location, which has a dozen or so different investors and was not part of the deal.

So this gives Patina Restaurant Group a truly national presence in addition to what you already have on the two coasts.

Absolutely. This makes us a national entity. There are units in some very strong markets—Las Vegas, Chicago Miami-Philadelphia, Boston and others—so it’s a terrific way for us to get into these markets. And with just eight locations, that leaves a lot of markets open to us. Our first order of business will be to get the growth heated up again.

Completing this deal will take a lot of your attention. Will adding Smith & Wollensky preclude growth in other areas in the meantime?

Since we acquired ourselves from Compass Group about a year ago, we took the first six months to shore some things up and get people in place. Any time you split a company you may think you can just cut it in half but there’s maintenance to be done. We needed to fill some positions, and we’ve done that. Recently, we’ve turned our attention back to growth. And Smith & Wollensky is part of that.

You have signed a few recent deals in other areas as well, I know.

Yes. Ten day or so ago, we announced a deal with Walt Disney World in Orlando [to create a restaurant in EPCOT’s Italian Pavilion replacing Alfredo the Original of Rome]. That existing operation does about $19 million annually, so that’s a very big move for us right there.

In addition to that, we’ve signed to develop an icon restaurant at [New York City’s] Lincoln Center. It’s being designed by Diller Scofidio & Renfro [which also designed Patina Restaurant Group’s Brasserie restaurant in New York City], and that will open in 2009.

That extends our experience in developing restaurants at museums and performing arts centers, which we’ve been doing for about 30 years now. We’re a leader in that segment.

Are there still opportunities in upscale-venue foodservice?

There are. We sort of invented the notion that you can have premium-quality dining experiences in unusual locations such as sporting events, museums, and performing-arts centers and now the rest of the world has discovered that. Hardly a day goes by that you don’t hear that a great restaurant is being put in this museum or that center. I’m not referring just to this country; it’s taking place all around the world

And will you pursue them globally?

We’re not focused on that at the moment. We have had offers, but we see that as being a couple of years away for us. We think there are opportunities to pursue in the States.

We recently opened Cafe Rouge in the Orange County Performing Arts Center [in Costa Mesa, Calif.] and it received three stars from the Los Angeles Times, which is extraordinary. That’s what we’re interested in: it’s not just putting in a restaurant; it has to be something special. It needs to be done by a true restaurant company; it’s hard for a foodservice company to do that sort of thing.

Will you remain focused on premium-level operations?

Yes. All the years with Restaurant Associates, that was our niche. And if anything now, we’re looking at the super-premium niche. We’re not to be the biggest but we do regard ourselves as the best at what we do. Our clients appreciate the quality we bring to the table.

One additional piece of business: we signed to provide foodservice at Tanglewood [summer home of the Boston Symphony Orchestra] in Lenox, Mass. That’s catering, a cafe, a picnic box program we’re developing. That starts in a month and we’re excited about that, too.

Beyond Smith & Wollensky, how much attention to standalone restaurants?

A lot. One of the projects we’re working on now is redoing the restaurant that has been known for 20 years as Maple Drive in Beverly Hills. We’re creating a new fish house. Joachim Splichal [founder of Patina Group] has been working on that and we expect it to open toward the end of this year. We will continue to do destination restaurants as the opportunities come available.

Are those opportunities location-driven or concept-driven?

It’s a combination. It’s the core of our business and what we’re known for and certainly not a segment we intend to abandon.

Are you at all worried about over-extending the company?

Yes. I think one of the things we’re keeping an eye is just that: not extending ourselves. We’re picking up some excellent management teams through Smith & Wollensky. As I say, we had taken our time for several months while we looked at our organization and strengthened a few areas, so we feel prepared to do what we’ve signed on to do. But we’ll look carefully at future opportunities.

Five years down the road, how do you expect Patina Restaurant Group’s profile will look?

I would expect it to be similar. I think we would be a leader and one of the few occupiers of the super-premium segment. I think our company would look 50:50. Fifty percent restaurants and 50% premium foodservice. And I think in five years Smith & Wollensky will have gone from eight units to double that, probably 16 to 20 stores total.

We should be able to do. Of course it’s not the number you open, it’s the quality. These are not the kind of restaurants you have 400 of. We’ll do these one at a time.