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LOS ANGELES - Just three months after naming former Chrysler Corp. head Lee Iacocca as interim chairman, home-meal-replacement company Koo Koo Roo Inc. agreed to merge with Mexican dinner-house operator Family Restaurants Inc. in a stock swap valued at $160 million.
The new entity - to be called Koo Koo Roo Enterprises Inc. - would fuse FRI's 273-unit Mexican dinner-house portfolio with the 38-unit Koo Koo Roo California Kitchen and the 14-unit Hamburger Hamlet. FRI currently operates the Chi-Chi's, El Torito and Casa Gallardo brands.
Kevin Relyea, chairman, president and chief executive of Irvine, Calif.based Family Restaurants Inc., will assume those same posts at Koo Koo Roo Enterprises Inc. Meanwhile, Iacocca and Koo Koo Roo chief executive A. William Allen will remain members of the board.
Koo Koo Roo has not posted a profit since becoming a publicly traded entity in 1991, despite generating unit volumes in excess of $1.8 million - far above the average in the home-meal-replacement niche, which includes the struggling Boston Market and Kenny Rogers Roasters.
Koo Koo Roo posted losses of $32.8 million for fiscal 1997 vs. a loss of $12.3 million for the prior fiscal year. For its first quarter ended March 31, the chain lost $15.2 million, which included a restructuring charge of $11.8 million.
"We were looking for a quality growth vehicle," Relyea said. "It [Koo Koo Roo] may not have been as profitable as it should have been, but I don't think quality has ever been...