An auction is under way for the owner of the Tootsies restaurant chain, Urban Dining, which announced yesterday that it had received several takeover offers from rival restaurant groups and private-equity firms.
The 30-strong American diner chain, which put itself up for sale in November, is understood to have received offers from more than 10 bidders and will whittle them down to a "small number" for in-depth discussions. BDO Stoy Hayward has been appointed to advise Urban on the sale.
Its shares have recovered after hitting an all-time low of 34p in November and rose half a penny to 39p yesterday, giving the company a market value of £22.5m. The company floated on the Alternative Investment Market in May 2004 at 57.5p.
Faced with tough trading, Urban was forced to abandon its strategy of buying up rival restaurant brands and parted with its chief executive John Metcalf in November. Glen Tomlinson was appointed executive chairman to lead a strategic review of the business.
In a trading update yesterday, the firm said strong like-for-like sales growth of 7.2 per cent at its shopping-centre outlets was cancelled out by a 6.5 per cent drop at its other older sites in the five weeks to 1 January. That means its overall like-for-like performance showed no growth from a year ago. Trading at the six new restaurants that opened in September and October was described as "encouraging".
Urban bought Tootsies for £31m in November 2004 and had been looking to add two other established restaurant brands to the business. The company was set up three years ago by Mr Metcalf and Mr Tomlinson, who both hailed from Pizza Express, and Tim Woodcock, Urban's finance director. It was designed as an investment vehicle for buying distressed restaurant groups. Only last spring it announced ambitious expansion plans for Tootsies, with the aim of having 100 by 2010.
Other restaurant groups have struggled to make headway in the casual dining market and Yates, backed by the private-equity firm GI Partners, was sold last year to Laurel, owned by the property entrepreneur Robert Tchenguiz.
Contrary to media reports, the managing director of Tootsies, Andrew Bonnell, who also sits on Urban's board, is not bidding for the company, according to insiders.