What a difference two years make.
Cicis was down to 300 locations, half of its 2009 peak, when Sunil Dharod’s family firm SSCP Management and Anand Gala’s Gala Capital bought the 38-year-old pizza buffet-and-games brand out of bankruptcy court in March 2021, assuming $83 million of Cicis debt and converting it to equity.
“We are doing well,” said Cicis President Jeff Hetsel when reached this January. “We’ve really bounced back from COVID. It was a little dark there for a while, but we were able to put together a great team and a great plan and found a great partner. We’re starting to get some traction.”
He praises majority shareholder SSCP for their operations chops. “That’s really who I deal with is Sunil and the team at SSCP, always being available for quick decisions and literally no interference,” he said. “Being debt free and being able to make very quick decisions, million-dollar decisions through texts, that’s a dream for any president.”
Chris Dharod, the ‘C’ in SSCP Management (the other letters are for his father Sunil, mother Sharmila and sister Puja), returns the compliment. “We have such great operators for each of our four businesses,” Dharod says, “Our best brand is Cicis. We have a phenomenal team,” noting Hetsel’s status as a franchisee along with being president is a big benefit.
“We’re focused on adjusting the pizza recipe. Back to what it once was, so it’s much better,” Dharod said about Cicis, in an interview at the Restaurant Finance & Development Conference in Las Vegas last November. “We ran our first TV ad a month ago,” in October 2022.
“When I was a little kid, we used to go there all the time. We knew it had a place.”
Bigger game rooms boost sales
Hetsel said Cicis still has about 295 stores, around the same number as two years ago, with 15 corporate stores, up from five, and 280 franchised. “So we’re not asset-light. We’re investing right along with franchisees. We’re real bullish on buying great businesses.”
They’ve also started on two international deals, one in Mexico and the other in India.
Same-stores sales grew by 31 percent in 2022 vs. 2021, “and then 2022 vs. 2019 we were 10.4 percent positive,” he said. “I attribute a lot of that to our franchisees and our marketing team.”
The biggest difference? “The doubling down on the games part of it has been a game changer for us. It’s really driven the franchisees to invest in games and remodel, and the returns have been great. We remodeled 40 stores last year,” he said.
Traditional Cicis stores had 400-square-foot game rooms. “We’ve had stores that add 1-, 2-, 3,000 square feet onto the game room. No more tokens, it’s card readers. And the returns have been phenomenal,” he said.
“It costs anywhere from $100,000 to $300,000” to build the game rooms. “I just put $180,000 worth of games into my store in Fort Worth, and my game revenue doubled. It’s been unbelievable,” he said.
“I wish personally I had done it sooner. Anything I ask the franchisees to do or invest in, I do the exact same thing right alongside them. I do the exact same thing in all of the corporate stores.”
Hetsel was named president in October 2019, right before COVID. “I feel like I was uniquely suited to do it. Growing up in operations, being the chief development officer for the company, and being a franchisee, it gave me a perspective that someone who parachuted into the brand didn’t have,” he said.
Hetsel led Cicis through its crisis, when it filed for bankruptcy protection in January 2021 and was purchased by SSCP and Gala in March. He cited a number of factors leading to the Chapter 11. “We had $83 million in bank debt, owed to four banks, and as the volumes of the stores dropped in the pandemic, and we lost 100 stores in the pandemic, during that time the company wasn’t worth $83 million,” he said at the time.
“So we got rid of a big office, test kitchen and all that, and it was a chance for us to emerge a real lean, mean, fighting machine. We had a lot of real estate out there. At one time we guaranteed a lot of leases for franchisees. We were able to clean that all up.” Read more about Cicis emergence from Chapter 11 and its new owners here.
Now is much better than then. “31 years with Cicis, and I think this is the most fun I’ve ever had,” Hetsel said when reached in January.
An eclectic portfolio
Dharod says SSCP Management’s Applebee’s stores—they own about 80, its website says—are up in sales. “We really like Applebee’s. We’d like to buy more. This is the best leadership team in 14 years: nimble, close to the consumers.”
SSCP also owns four Roy’s restaurants, the fine-dining brand it bought in 2015. “We’re up about 20 percent in sales. We’d like to build more Roy’s.” It also owns and operates 43 Sonic Drive-Ins.
Asked about his eclectic portfolio, Dharod says, “We’re unique in that we’ll look at a lot of things,” although he noted “deal flow is slow” at the end of last year. “I will brag, because we have a debt-to-EBIDTA” or cash flow “ratio under 0.5, where our peers are 4. Cash to debt ratio is 6 to 1,” he said.
“We’re not the biggest, but I think we’re the healthiest restaurant company. We’re family-owned so we don’t have to get levered up to give our investors a return.”
Dharod grew up working in his family’s restaurants, then went to college and worked in banking for a time before returning. “This is my dream job. I love the restaurant business. I love the career paths that we create. For example, at Applebee’s, we have 12 area directors. Eight of them started as hourly team workers.”