NEW YORK (AP) -- Shares of Ignite Restaurant Group Inc. fell Thursday after the company said it was buying Romano's Macaroni Grill for $55 million in cash from private equity firm Golden Gate Capital.
The company, which owns Joe's Crab Shack and more than a dozen Brick House Tavern and Taps, had announced late Wednesday that it would buy the Italian casual dining chain, which competes with chains such as Olive Garden and Maggiano's.
Ignite Restaurant Group, based in Houston, said it would work to improve the chain's performance as it had with Joe's Crab Shack. Romano's Macaroni Grill, founded in 1988, has 186 locations and franchises five more. Last year, it generated about $385 million in sales.
KeyBanc Capital Markets analyst Christopher O'Cull kept his "Hold" rating on Ignite Restaurant Group, noting that sales volume at Macaroni Grills has been falling over the past six years. He noted that despite the turnaround plans, the casual dining segment for Italian food is extremely competitive and that Macaroni Grill will need to overcome poor service, inconsistent marketing and a discounting strategy that has confused customers in recent years.
As part of its plans Ignite said it said it might close up to three Macaroni Grills this year.
Ignite expects the deal to close in the second quarter and incur costs of about $8 million in related costs. Its shares were down $1.50, or 10 percent, at $13.14.