Carlson sells Country Kitchen to franchisee

Nation's Restaurant News, August 4, 1997 by Bill Carlino

MINNEAPOLIS -- Diversified restaurant and lodging operator Carlson Hospitality Worldwide ended its 20-year ownership of Country Kitchen, selling the 250-unit family-themed concern to its largest franchisee, Kitchen Investment Group Inc., of Madison, Wis.

Financial terms were not disclosed.

"We felt it made more sense for us to focus on our casual-dining side of the business," said Curtis Nelson, president and chief executive at Carlson Hospitality Worldwide. "We feel there was more opportunity, and we had more expertise in that segment. Carlson Hospitality is largely a business of synergies, and we weren't able to create as much synergy as we would have liked with Country Kitchen. It was a relatively small component of the whole hospitality group, and we can be more efficient by reapplying our strategic and operations focus elsewhere."

The sale leaves Carlson Hospitality Worldwide with the 440-unit Friday's chain and its offshoot concepts--Italianni's, Front Row Sports Grill and Friday's American Bar--Country Inns & Suites, Radisson Hotels Worldwide, Regent International Hotels and Resorts, and Radisson Seven Seas Cruises.

Charles Myers, president of Kitchen Investment Inc., which before the sale operated and subfranchised a total of 57 units, said the initial growth effort under his company's stewardship would target Illinois, Indiana and Michigan. Currently, all of Kitchen Investment's units are located in Illinois and Wisconsin.

"We hope to have a total of 300 units open by the year 2000," said Myers, a Country Kitchen franchisee since 1975. "It's a terrific brand, and there's a tremendous opportunity for growth in the United States and Canada."

In addition to the United States and Canada, Country Kitchen has sites in Indonesia and Puerto Rico.

Myers, however, said he would put international expansion "on the back burner for now." Nelson, meanwhile said Carlson now holds an option to maintain the Country Kitchen brand in the Pacific Rim market.

Country Kitchen, which Carlson acquired in 1977 from a trio of owners, generated roughly $218 million in systemwide sales, according to the Nation's Restaurant News annual Top 200 report. Its per-person check average hovers in the $5-to-$6 range. One of the family dining segment's most enduring chain concepts, the inaugural Country Kitchen opened in Cincinnati in 1939.

The 17 employees at Country Kitchen's Minneapolis headquarters and six field representatives were offered the opportunity to join Kitchen Investment Inc., Myers said. Country Kitchen was scheduled to begin operating out of Madison beginning Aug. 1.

Meanwhile, Country Kitchen president Charles Foster, who joined the chain from T.G.I. Friday's, will rejoin the Dallas-based casual operator in a senior management capacity.

"When you're dealing with the masses, there will always be people attracted to different segments," Myers said. "We feel our pricing keeps us competitive with casual chains if we maintain our menu and marketing strategies."

"When you look at other factors of the sale, Country Kitchen has its strongest presence in the Midwest, while we've centralized most of our [Carlson Hospitality's] restaurant operations in Dallas" Nelson said. "And our headquarters here [Minneapolis] is dedicated primarily to lodging and hotel activities. Kitchen Investment is well penetrated in Midwestern markets and heavily invested in the system. So it's a perfect transition."