Elite Restaurant Group scooped up another brand on October 17, purchasing Noon Mediterranean, formerly known as VERTS, out of bankruptcy. The company, which acquired Slater’s 50/50 two years ago, Daphne’s California Greek in April, and 17-unit Patxi’s Pizza from KarpReilly this past month, said it would rebrand the fledging Mediterranean concept under its Daphne’s banner. ERG stripped “California Greek” from the name after it bought Daphne’s. It also revamped the look and menu, and introduced Daphne’s-branded gyro kits at 90 Costco locations.
“We are looking to turn these units into hybrid stores, where we will keep Noon’s build-you-own bowls,” Elite Restaurant Group president Michael Nakhleh said in a statement. “However, we will enhance the customer’s experience by including Daphne’s signature bowls.”
Noon’s 12 total units are located in Texas, Pennsylvania, and Massachusetts. The deal is expected to close within 60 to 90 days, and includes more than $731,000 in cash and up to $100,000 in post-bankruptcy costs, as well as 2 percent equity in Daphne’s Inc. going to creditors along with rent for assumed locations.
This agreement will expand Daphne’s to 36 units—12 existing stores, 12 converted locations, and two new restaurants scheduled to open in the next 60 days.
After closing, Daphne’s will be debt free, and generate annual revenue of $27 million, according to a bankruptcy filing.
In the rebranding, the stores will stick to Noon’s assembly-line format instead of Daphne’s traditional counter service. About 150 employees in stores and at Noon’s headquarters will remain on the payroll, ERG said.
Noon, which rebranded from VERTS last November, filed for bankruptcy protection in early August. The chain also closed seven restaurants and laid off 89 employees as part of its reorganization, including 10 at its corporate headquarters, according to an initial bankruptcy petition. The petition reported $1–$10 million in assets and $10–$50 million liabilities across 50–99 creditors.
It was a significant fall for a concept that once touted major growth plans. Five years after its 2011 founding in Austin, Texas, the chain—then known as VERTS Mediterranean Grill—was pushing 40 locations and laying the groundwork for explosive expansion. Fresh off a rebrand and culinary upgrade, the founders told QSR in September 2016 they were targeting 250 stores by 2020.
As for what went wrong, Stefan Boyd, who took over as chief executive August 1 after then-CEO Michael Heyne and co-founder Dominik Stein left the company, said Noon made too many changes too quickly, and lost some of the dedicated customer base that helped it scale out the gate. Boyd’s future with the new company is yet to be determined.
The rapid changes included removing popular menu items and some missteps in its real estate. The rebranding wasn’t resonating as executives hoped, either. Noon moved its office to New York City in hopes of a Big Apple push following its first opening. But the closings included both NYC spots and left the company with a restaurant in Boston and Philadelphia, and the rest in Texas.
At the time, Boyd said Noon was looking an investor willing to infuse about $5–$10 million of capital into Noon to carry it through chapter 11.
Elite Restaurant Group has grown Slater’s 50/50 to four additional states outside of its California base since purchase.