Boathouse deal lets McCormick & Schmick's grow

Nation's Restaurant News,  June 9, 2008  by Steve Coomes

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Right before the economy began to turn sour, Portland, Ore.-based McCormick & Schmick's Seafood Restaurants Inc. acquired The Boathouse brand, based in Canada, for $14.3 million. The deal, which closed in March 2007 and was completed in cash, netted McCormick & Schmick's the well-established, six-unit, seafood-centered concept as a growth vehicle. Today, including The Boathouse, McCormick & Schmick's boasts 80 restaurants. The company's cofounder, Doug Schmick, elaborated on the deal, the integration over the past year and future plans.

Why buy The Boathouse instead of growing McCormick & Schmick's in Canada?

We saw it as a very easy way to enter another country under established leadership and ... an existing operating team. The opportunity came up at a very good price. We were aware that they were looking to sell, and they were aware we were looking to buy.

Why did you leave current management in place?

Oftentimes in acquisitions people aren't concerned enough about the importance of the corporate culture. You have to respect the way good operators have run their company, adapted to their marketplace and evolved their culture.

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When another upscale chain, Ruth's Chris Steak House, purchased Mitchell's Fish Market last year, its leadership fielded questions from shareholders or analysts who wanted the focus to remain on Ruth's. Did you have a similar experience?

There was probably as little controversy as you could imagine, and probably because [the acquisition] made sense. [The Boathouse] had a similar core competency, a good corporate culture and established management and was offered at the right price. That combination is pretty hard to beat.

McCormick & Schmick's has a lot of room left in its $150 million line of credit. Any chance another acquisition might be in the works?

There's always that chance. That's one of the positives about not being leveraged in this kind of environment where you do have some headwind to pursue those opportunities. So you never know. If the right opportunity were to come along, we'd certainly look at it.

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