SOURCE: The Walnut Group

November 10, 2006 11:00 ET

The Walnut Group Raises $25 Million to Buy Stir Crazy and for Future Expansion

Mayerson, Gould Combine Prowess of Walnut Private Equity Fund With Entrepreneurial Fire to Acquire, Expand Stir Crazy's Asian Dining Adventure; Chain of Nine Restaurants to Be Expanded Into 50-Unit Category Killer Over Next 3-5 Years; The Walnut Group Assembles Premier Team for Development, Ownership and Management

CHICAGO, IL -- (MARKET WIRE) -- November 10, 2006 -- When Fred Mayerson the customer stepped foot into his first Stir Crazy, he noticed the smiles, the chatter of families, the celebration of eating food and having fun. He felt the buzz, a genuine embrace from his hosts, and the energy of a unique Asian dining experience.

Amidst the flaming, serve-yourself wok adventures, family-friendly prices and exotic decor, Frederic H. Mayerson, Chairman of The Walnut Group, the lifelong entrepreneur also saw something else in the Chicago-based casual dining chain: The Next Big Thing. And Mayerson, his friends, investors, business associates -- including every partner and co-worker at the diversified investment and private equity firm based in downtown Cincinnati, The Walnut Group -- have crafted a $25 million acquisition and national expansion campaign to prove it.

"Everything that I've done before is now a prelude to this," said Mayerson, the new chairman of Stir Crazy Inc. As an owner and developer, Mayerson helped lead the national expansion of Chi Chi's. His business partner and childhood best friend, James Gould, Managing General Partner of The Walnut Group, who was one of the key partners with Maxine Clark in her national expansion of the Build-a-Bear Workshop retail sensation.

"What we found was Stir Crazy has the platform from which we can launch. They have a concept that is a potential category killer that appeals to the masses, and it has a special energy to it," Mayerson said. "They also provide some fundamental values: They give you a big hug when you come in, and you get good food at a great value. That may sound pretty obvious, but in the risky business of restaurants, you don't always get that, which is why a lot of them fail."

"This opportunity represents the best of both worlds: we are partnering with the best in the private equity world, and combining that with the true entrepreneurial spirit and passion that Fred and I were both reared in," said Gould. "With leadership from both the Walnut Private Equity Fund and our entrepreneurial experiences, led by Fred's passion and experience in the restaurant business, we will be developing a category killer, something that's very different, and very special." The Walnut Private Equity Fund is a division of The Walnut Group, owned by Mayerson and Gould.

Mayerson has been looking for the right platform to launch a new restaurant concept for the last five years. Many have been appealing, and some have shown actual potential; only a few captured his serious attention. None has captured the interest of this serial entrepreneur and captain of the private equity world like Stir Crazy has, a choose-your-own adventure in eating in which patrons can create their own combo of rice, noodles, vegetables, herbs, spices, meats and sauces, or order from an expansive menu.

Mayerson's first trip to Stir Crazy was last summer, at the chain's Boca Raton outlet. It also took him back to the early 1980s, to a similarly fun, quirky and unique restaurant he discovered in Minneapolis named Chi Chi's. Once Mayerson and his partners executed their private capital-led expansion of Chi Chi's, they grew a single Mexican concept restaurant into a chain of 200-plus family-friendly and fun-loving eateries.

The game plan: 50 new restaurants over next 3-5 years

That same entrepreneurial fire has lit the way for the acquisition and national expansion of Stir Crazy, which has steadily grown into a half-dozen U.S. markets since its formation in 1995. What started in Chicago and grew to four Windy City eateries has expanded to select sites in Florida (Boca Raton), New York, Cleveland, Detroit and St. Louis.

The expansion plan called for a purchase of the chain, which Mayerson and Walnut bought at the end of October and exponential growth: up to 50 new restaurants over the next three to five years, each representing a new Stir Crazy prototype measuring 6,000 square feet, employing about 50 and cranking out an average $3.5 million in sales. The first will open next year in Pembroke, Fla., at a new lifestyle center to be unveiled by Jeffrey R. Anderson who was one of Mayerson's original partners in Chi Chi's, as well as Rookwood Pavilion and like many of Mayerson's old-time friends and business associates, has joined the Cincinnati native in his latest initiative.

Anderson is one of many familiar names that Mayerson and Gould have selected for the $25 million Stir Crazy explosion, financed with $20 million in private equity and $5 million in bank loans from US Bank. Others include some of their most loyal and longtime business associates such as financial guru and Mayerson's Chi Chi's partner Bob Leshner, accomplished Cincinnati inventor and entrepreneur John Osher, another of Mayerson's childhood friends and original business partners, and Cincinnati insurance and merchant banking leader Mark Hauser, CEO of The Hauser Group.

Mayerson is joined on the Stir Crazy management team by complementary right-hand men and longtime restaurant industry veterans. These experienced restaurateurs have spent decades building restaurant chains such as Burger King, Wolfgang Puck and Olive Garden.

Investors include some of Walnut's partners and friends from around the country, such as St. Louis Rams co-owners Georgia Frontiere and Chip Rosenbloom, and the team's all-pro wide receiver Isaac Bruce. The Stir Crazy Board of Directors is a seven-member board that will include Mayerson, Gould, Strauss, Osher, Cincinnati native Brian Kelley (president and CEO of SIRVA Inc.), Lou Mucci, a former general partner of Pricewaterhousecoopers who worked as a longtime industry executive for the Cheesecake Factory chain, and Mary Lou Fiala, President and chief operating officer of Regency Centers.

The team has selected a virtual all-star team for its development and expansion, featuring the Premier Group of Indianapolis as the real estate site search expert; the Shea Group of Minneapolis for design and branding; the Hay Group of Dallas for executive compensation; Cincinnati firm Keating Muething & Klekamp for legal services, and Grant Thornton for accounting and auditing.

Expansion to start in Florida, grow to East Coast and Midwest

The new leaders of Stir Crazy have charted the chain's proliferation with a base of stores in Florida, then extending northward along the East Coast and into the Midwest. A new Stir Crazy somewhere in the Greater Cincinnati market "makes perfectly logical sense. This is our kind of market," Mayerson said.

"For the last few years, we have made every effort to narrow our interests into our power alley, the things we know about. One of those things clearly is restaurants, which goes back 25 years and covers both casual and fine dining," Mayerson said. Mayerson also created Pinon's, a fine dining restaurant in Aspen, Colo., 19 years ago that is still going strong.

"We have had extraordinary results from both. We see the same geometric success we had with Chi Chi's here. All of the same kind of factors has come into play," Mayerson said. "We have our determination, our talent, and we know it's gonna be a lot of hard work. But we do have this window of opportunity to once again take an amazing success story and turn it into something beyond any of our wildest imaginations."

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