Dive Brief:

• Romano’s Macaroni Grill CEO Nishant Machado told Restaurant Business that the company is confident it can lead a turnaround for another restaurant concept, months after acquiring Sullivan’s Steakhouse and less than two years after guiding Macaroni Grill through its own significant turnaround. 
• Since contributing to the bankruptcy of parent company Ignite Restaurant Group in 2017, the Italian chain has trimmed its footprint down from 230 to 85 company-owned restaurants and 21 franchises and has outperformed industry same-store sales by 350 basis points, according to Restaurant Business. 
• Macaroni Grill acquired Sullivan’s Steakhouse deal for $32 million from Del Frisco’s Restaurant Group in September. Machado said Sullivan’s — which operates 14 locations — should experience significant growth in 2019 using many of the same approaches used for Macaroni Grill’s turnaround. 

Dive Insight:

After 2017, Macaroni Grill was in need of a major pick-me-up. The chain's sales declined more than 15% and it closed 37 restaurants, according to Nation’s Restaurant News.   

It took some significant operational discipline, but Macaroni Grill has made steady improvement in sales, traffic and margins month over month. Machado credits improved training and development — and a guest-first approach — for driving its turnaround and giving him confidence to consider another acquisition shortly after its Sullivan's acquisition.

Fundamentals are important to incite a turnaround, to be sure, but Macaroni Grill also has focused on menu innovation — revamping its menu in June — and off-premise channels. The latter has emerged as a major focus in casual dining after years of slumping sales and a dismal 2017 across the board that caused the entire segment to retrench for the first time. 

Off-premise sales overall are estimated to account for 37% of total restaurant sales, or $209 billion, this year, according to the 2018 Takeout, Delivery and Catering Study conducted by CHD Expert. That number is expected to jump to nearly 50%  of sales, or over $300 billion, by 2023.  

Catering has been a boon for Macaroni Grill. Takeout should work as well for busy customers. Delivery hasn't taken off quite as expected for Italian chain Olive Garden. CEO Gene Lee said delivery costs have been too high and customer satisfaction levels too low to expand — so it will be interesting to see if it will resonate for competitor Macaroni Grill as it works with third-party aggregates. 

While off-premise success may be a contributor to Macaroni Grill's improvement, that doesn't mean it will work for a fine dining steakhouse that prides itself on unique experiences, like Sullivan's does. Machano seems to recognize this telling Restaurant Business that not all components will translate to Sullivan's.

Still, he's confident his company's playbook will help another turnaround from another acquisition in the future. In a heavy M&A environment in which consolidation is one of the few ways left to grow, there's no reason not to believe him. But some patience is needed to ensure that turnaround is the real deal and not just a year-over-year boost from a challenging 2017.