Waterloo secures $26 million in financing, will open first Vancouver location in 2007
Waterloo Restaurant Ventures, a Vancouver-based franchisee of Romano’s Macaroni Grill, has received more than $26 million in financing for future expansion, including its first restaurant location in Vancouver.
Waterloo operates three Romano’s restaurants in the Portland area and single locations in the Seattle and Boise, Idaho, markets. The recently acquired financing allowed the company to purchase four existing Romano’s restaurants in the San Francisco area from franchise parent company Brinker International Inc. Plans call for nearly 30 Romano’s Macaroni Grills from San Francisco to Seattle, said Waterloo President and CEO Barry McGowan. The company expects to open four locations in the next 12 months and up to 10 locations in the next 24 months.
Waterloo was formed in Vancouver in 2003 when McGowan inked a franchise agreement with Brinker to operate branches of the casual-dining Italian chain Romano’s in Washington, Oregon and Idaho.
Waterloo has eight employees at its Mill Plain Boulevard headquarters. McGowan expects that will grow to 12 to 15 employees in the near future. He was attracted to Vancouver for its strong growth, proximity to the airport and business friendly atmosphere.
"Vancouver is an easy place to set up an office and do business," he said.
McGowan is a former Brinker employee, and prior to forming Waterloo oversaw Brinker’s franchise groups in the United Kingdom.
In addition to Romano’s, Dallas, Texas-based Brinker also operates Chili’s, On The Border Mexican Grill and Cantina, Maggiano’s Little Italy, Cozymel’s Coastal Grill, Corner Bakery Café, Big Bowl Asian Kitchen and Rockfish Seafood Grill chains. It has more than 1,300 restaurants in 49 states and 22 countries.
Waterloo began with a Boise location and followed with a downtown Portland restaurant and a location in the Alderwood Mall near Seattle. Waterloo now has restaurants in Hillsboro and Bridgeport Village in Oregon. Within the next year, Waterloo will add a Romano’s in the Clackamas Town Center and its first Vancouver location in Columbia Tech Center’s Columbia Crossing development. It continues to scout locations in all of its markets.
"In Portland we have moved fast," said McGowan. "We caught the development wave."
Despite its aggressive growth, McGowan said Waterloo is patient about finding the right sites.
Deborah Ewing, vice president with Eric Fuller and Associates, said Columbia Crossing’s retail mix, the lunch crowd from the growing, business base there and the areas educated, high income demographic make it an ideal location for a casual dining restaurant such as Romano’s.
"The Fishers Landing area is absolutely a home-run, prime location for Romano’s Macaroni Grill," she said.
Chili’s is the only other restaurant Brinker operates in the Northwest. McGowan said the Northwest is slow to attract national chains because of development and regulatory hurdles, particularly high land and labor costs.
"There are not many national brands because of those economic barriers to the market," he said.
Ewing agrees, noting that it is not just the national chains that face higher costs of doing business here.
"They all face the same challenges," she said.
Development fees and labor are fixed costs, said Ewing, and can make it hard for restaurants to pencil out.
McGowan, however, faced similar challenges in the UK. Additionally, controlled development creates a stable retail environment.
"Development constraints can make it hard to get in," he said. "But when you get in you know you won’t go away."
McGowan said his experience as a proven operator with Brinker allowed him to take some risks other franchisees may not have been allowed. Waterloo veered from Brinker’s traditional model and redesigned the kitchen to create efficiencies and create a larger dining area.
"I had to have the leeway to make the business model work here," said McGowan.
With about 125 employees per restaurant, Waterloo has just under 1,000 employees with the recent acquisition of the Bay Area restaurants.
McGowan said Waterloo’s annual revenue will reach $50 million by the end of 2007, a significant increase from $3 million in 2003.
Romano’s competition includes other Italian restaurants combining fine-dining fare with a casual atmosphere, such as the Olive Garden, which has six Portland area locations, including one in Vancouver.
Waterloo expects to stay with the Romano’s concept but continue to add more territory.