Irvine-based Claim Jumper Restaurants LLC is on the auction block.
The struggling restaurant chain known for its California Gold Rush theme and enormous food portions appears to have about four bidders vying to buy it.
Among them is founder Craig Nickoloff, according to sources familiar with the situation.
Nickoloff sold a majority stake in the company to Los Angeles-based private equity firm Leonard Green & Partners LP in 2005.
He’s keen to regain control of the company he started in 1977 in Los Alamitos, sources said.
Leonard Green ac-quired a majority of Claim Jumper for an estimated $220 million, which was considered the highest price paid by a private equity firm for a restaurant company.
At the time of the sale, the company attracted bids from eight potential suitors.
The plan was for Leonard Green to drive an expansion outside California with some five to seven restaurant openings a year.
Progress has been slow. Claim Jumper now has about 45 restaurants—up from 35 when it was acquired—with a few beyond the West Coast, including in Wisconsin and Colorado.
According to sources, Nickoloff is looking to revive Claim Jumper after a slump. He declined to comment for this story. Leonard Green didn’t respond to interview requests.
Claim Jumper was the first restaurant company Leonard Green invested in.
The private equity firm had concentrated on retailers including organic grocery retailer Whole Foods Market Inc., flower retailer FTD Group Inc. and Rite-Aid Corp.
Claim Jumper, like other restaurants, has been hard hit by the recession. Sales at Claim Jumpers open at least a year are down from 2008, according to Robert Ott, chief operating officer.
The company had 2008 revenue of $260 million, down 12% from a year earlier. The restaurants employ about 925 local workers.
Claim Jumper faces what sources call “high” long-term debt as a result of the acquisition.
That has Leonard looking to sell the company well below what it bought it for, they said.
The private equity firm began looking at a sale in April after hiring investment banker Piper Jaffray Cos., according to sources.
Leonard Green sent out an offer in June targeting other private equity firms, a source familiar with the process said.
Ott declined to talk specifically about a sale.
“We are evaluating alternatives to explore future growth,” he said.
Regaining Control
Nickoloff and other founding partners are said to have submitted a bid to regain control of the company.
He sold a majority interest in Claim Jumper to help expand nationwide. He holds the title of chairman emeritus but left as chief executive in 2007.
He now runs Nickoloff Cos., an Irvine investment company.
Before the sale, Claim Jumper raised money for new restaurants by forming partnerships with investors and borrowing money.
Boston-based private equity firm Berkshire Partners LLC and another undisclosed company also could bid on Claim Jumper, according to New York-based The Deal LLC, which runs an online news Web site.
Nickoloff could end up running the company even if his offer is rejected, sources said. It is possible another winning bidder could bring in Nickoloff to run the operation, they said.
For now, Claim Jumper’s expansion is stalled.
The company opened two restaurants in 2008. There are no plans for any restaurants this year or next, the company said.
Claim Jumper also licenses its name to New York-based frozen food producer American Pie LLC.
The company has seen business improve in the past month as consumers start eating out more, according to Ott.
“Last year people were dining out less and I think at some point in time, they start to miss it,” he said.
