J. Alexander's in acquisition talks ahead of possible IPO

New owner eyeing complementary upscale brands; O'Charley's upgrades paying off

Less than a year after being snapped up by a Florida-based holding company, the leadership of J. Alexander's could soon be making plans to go public again.

Executives at Fidelity National Financial on Thursday told analysts and investors that their restaurant business is ready to put up much better numbers than the $4 million operating loss from the first quarter. On top of that, they said the recently reconstituted J. Alexander's business — which now includes 10 Stoney River Legendary Steaks locations — is in talks to acquire a number of other upscale dining brands. If successful, those moves would give the organization enough scale to be spun out of Fidelity National before long.

"Adding one or two more brands will put us in position to pursue an IPO," said Fidelity National Chairman Bill Foley on the company's earnings conference call.

Combined, Stoney River and the roughly 30 J. Alexander's restaurants booked about $200 million in revenues last year. Fidelity National formally grouped the two concepts in late February to distinguish their higher-end business from the American Blue Ribbon Holdings holding company that is home to O'Charley's and five other casual dining brands and is based in the 100 Oaks area.

J. Alexander's CEO Lonnie Stout and his team closed three of the company's locations in the first quarter, a move that resulted in most of a $5 million charge that pushed Fidelity National's restaurant holdings into the red for the quarter. (Sales for the first three months of the year totaled $351 million.)

Things also are progressing at American Blue Ribbon and O'Charley's in particular, Foley said on his team's call. An aggressive plan to rebrand O'Charley's restaurants has completed seven full remodels since last fall — at an average cost of $250,000 — that have produced on average a sales boost of 17 percent. By contrast, the exterior-only remodels have generated gains of just 4 percent on average.

"So we're moving full speed into the full remodel program, trying to go state by state," Foley said.

That construction process will take the rest of this year and next to reach the majority of O'Charley's roughly 200 stores, Foley said. Because of that, a move by Fidelity National to cash out of American Blue Ribbon — likely also through an IPO — would come late in 2014 or in 2015. American Blue Ribbon had 2012 sales of $1.2 billion.