The deal made headlines: Storied local restaurant group Parasole sold to a local private equity group that promised to keep the integrity of the restaurants in tact.
Manny’s would remain the spot for power steak dinners. Pittsburgh Blue would continue its growth in the upscale suburban market. Sure, we had some laughs at the fact that FS Funds also owned a couple of south suburban Original Pancake Houses. But this was good news.
Less than two weeks after the deal went public, the governor of Minnesota closed all restaurants around the state. It made me wonder what was happening with the deal and whether any smart investor would want to pay big money for the uncertain future of dine-in restaurants.
“The deal is off the table,” Parasole’s longtime marketing head Kip Clayton told me. “At least for now. All of our energy has gone into conserving cash while maintaining insurance for our employees.”
Parasole is owned by seven shareholders (three majority). The founders are in their 80s, with many senior staff members in their 60s. They had really wanted to find a buyer for the entire business, not just someone to buy the steakhouses, and someone else to take Chino Latino, and another buyer for the Good Earth—and then who knows what happens to Salut or Burger Jones?
Parasole applied for and received 13 separate loan packages, one for each restaurant, from the SBA. What’s next? “Restocking hundreds of thousand of dollars in restaurant inventory, implementing additional safeguards, intensive employee training, adding more sanitizing stations, and implementing social distancing of dining tables,” Clayton says.
All the Parasole locations completely closed down instead of doing curbside takeout. One thousand employees furloughed. Painful, but probably the smart move considering the uncertainty over the ownership of the restaurants. Not to mention the reality that most people probably don’t want to do a steak curbside.
But what will life be like on the other side? “We really don’t know what the new abnormal will bring,” Clayton told me. “We intend to stagger our restaurant reopenings so we learn lessons from the initial openings that can be applied to later openings.”