Daphne’s to be acquired by Elite Restaurant Group

The parent to the Slater’s 50/50 burger chain is in the process of acquiring the Daphne’s California Greek brand, planning to rework the Mediterranean concept for new growth, officials said Monday.

Mike Nakhleh, president of Los Angeles-based Elite Restaurant Group, said his company took over operations of 23 Daphne’s locations — all in California —about five months ago, though the acquisition is not expected to close for about another month. Terms were not disclosed.

Elite acquired the seven-unit Slater’s 50/50 concept in 2016. The company has launched a franchising program for that brand, and plans to grow, with units in Hermosa Beach, Calif., and Dallas scheduled to open later this year.

Similarly, Nakhleh said the company has plans to franchise the fast-casual Daphne’s, as well as add roughly 10 new corporate locations annually.

The 23 Daphne’s restaurants will be remodeled with a new, more contemporary design that Nakhleh said would “bring it up to 2018. The last time the chain went through a remodel was 2002 or 2003.”

The name will also be simplified as just Daphne’s, dropping the “California Greek.”

In about a month, the Daphne’s locations will also launch a new menu, created with the help of menu consultants Think Culinary, he said.

Nakhleh said Daphne’s will keep its emphasis on Mediterranean, but “we’ll do everything made from scratch in house, all fresh, with a lot of organic items.”

On the menu, for example, will be a whole slow-roasted chicken,  marinated with lemon zest, rosemary and garlic, along with roasted vegetables, garlic-herbed red potatoes, tzatziki, pita and Greek salad for about $23.99, to serve four to six. An organic spring mix salad with grilled chicken, strawberries, walnuts, feta and honey vinaigrette with pita will be $10.99. The average check will be about $14 per person, he said.

The company will also launch a Daphne’s-branded retail line in Costco stores, including a gyro kit and two salad kits.

Daphne’s, which was founded as Daphne’s Greek Café in 1991 by George Katakalidis, has struggled to find its footing in recent years.

The once close-to 80-unit chain filed Chapter 11 bankruptcy in 2010, and was acquired by an investment firm led by Bill Trefethen, who rebranded and changed the name to Daphne’s California Greek. 

It was acquired again by Victory Park Capital Advisors in 2014, and that investment group initially planned to convert the then 49-unit Daphne’s to a concept called Yalla Mediterranean, with a broader menu.

Victory Park Capital, however, in 2017 separated seven converted Yalla locations with plans to grow that brand.

It’s not clear how many Daphne’s units have closed, but it could be close to 20. Nakhleh said all locations in Arizona have closed, for example. Victory Park Capital could not be reached for comment.

Fast-casual Mediterranean is a growing segment with increasing competition. But Nakhleh said Daphne’s is well positioned because it already has a strong following.

“We’re one of the originals, and we’re coming up on our 30-year anniversary,” he said. “We’re really excited to have Daphne’s as part of our portfolio.”

Slater’s, meanwhile, also has a new menu out soon with more healthful items added to the mix of the signature indulgent offerings. The burger concept is known for its 50/50 burger, which includes a mix of ground bacon and ground beef for the patty.

A frozen retail version of the 50/50 burger is now for sale at Sam’s Club, Nakhleh said.

But Slater’s restaurants now also offer burgers made with the plant-based Impossible meat, he noted.

The first of four units planned for Las Vegas is under construction, he said. The next unit to open in Hermosa Beach will also be a smaller 2,700-square-foot format, though still full service.  “We think the unit economics will make a lot more sense,” Nakhleh said.

Elite is also looking to add another fast-casual brand to the portfolio later this year, though Nakhleh said it’s too soon to disclose what that might be.

“Hopefully by the end of this year we’ll have another brand,” he said. 

Conact Lisa Jennings at [email protected] 

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