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Il Fornaio, WinCup, Target and Lydia's

Columnist: Bill Meagher
August, 2011 Issue

Bill Meagher
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Il Fornaio, a chain of Italian restaurants that gained momentum and focus in a place where formula businesses are largely tolerated but not embraced, is now partners with Roark Capital Group, thanks to an equity infusion.

Roark, an Atlanta private equity firm, specializes in buying out franchises and food-based businesses. If you’ve ever been in an airport and couldn’t decide between a cinnamon-covered dough bomb from Cinnabon, a mustard-drenched pretzel from Aunt Anne’s Pretzels or flaming chicken from Wingstop, then you know Roark.

Who says airport food isn’t delightful?

Roark’s portfolio ranges beyond where folks tote luggage. Its $1.5 billion in holdings includes FastSigns, Atkins Nutritional and Money Mailer.

Terms of the deal were not revealed.

Il Fornaio began in Barlassina, Italy, in 1972 as a baking school and, three years later, the company opened its first retail bakery in Milan. In 1981, Williams-Sonoma brought the concept to the United States, offering a variety of breads, rolls and pastries. But the San Francisco company wasn’t keen on holding Il Fornaio, selling it off just two years later. In 1987, Sausalito resident Larry Mindel purchased it and opened the first Il Fornaio Cucina Italiana, a combination restaurant and bakery, in the Corte Madera Town Center. In 1997, the company went public with an IPO at $11 per share. But four years later, Bruckmann, Rosser, Sherrill & Co. took the company private with an assist from management. Bruckmann is another private equity player whose holdings include Ruth’s Chris Steak Houses as well as McCormick & Schmick.

Today, Mindel remains on Il Fornaio’s board of directors and the chain has grown to include 21 eateries, the vast majority of which are in California. The operation includes two wholesale bakeries, one each in Northern and Southern California.

The Roark acquisition also includes Corner Bakery Cafes, a 119-location chain of causal restaurants. The company line is that the operation of the restaurants will not change and that the equity partner and infusion of cash is there to fuel company growth.

WinCup property to get filled up

Just one exit north, off Highway 101 at Lucky Drive, is the foam cup producing facility famous with locals for sending steam over the freeway. But WinCup announced plans earlier this year to shut down the plant and ship more than 100 jobs to Arizona.

Property owner Jim Helfrich has sold the almost five-acre property to MacFarlane Partners, a San Francisco-based developer that plans on building 180 apartments and 5,000 square feet of retail space at a cost of $68 million, with 18 apartments set aside for below-market housing. The project hasn’t yet been submitted to the town of Corte Madera.

MacFarlane is hoping the project will be a winner, as it’s coming off a tough split with the California Public Employees Retirement System. For years, MacFarlane was a successful investment adviser for CalPERS, aiding the pension fund on investments in residential housing and urban transit-oriented development. But a $970 million investment in Southern California in 2007 ended up with the project in Chapter 11 bankruptcy protection. Eventually, the pension fund wrote off the entire investment and parted ways with MacFarlane.

The firm, led by Victor MacFarlane, has specialized in developing projects in urban areas incorporating transit elements. On a slightly different note, MacFarlane is a partner in the DC United pro soccer club.

The Corte Madera project is an investment by the $211 million MacFarlane Urban Real Estate Fund III, making this perhaps the first time Marin County has been considered urban.

Target challengers turn in signatures

The tale of Target in East San Rafael is still unfolding, despite the fact the city council voted in April to approve the 137,000-square-foot, big box retailer on Shoreline Parkway. Critics of the Minneapolis retailer gathered 3,343 signatures in hopes of placing a referendum on the ballot to let voters decide the store’s fate. As of this writing in mid-June, county officials are still in the process of verifying the names, but Target opponents only need 2,144 legal signatures to qualify it for the November ballot.

A group called Keep It Local also filed a lawsuit against the project, claiming the environmental documents the city relied upon in approving the project won't stand up to a legal challenge.

Cal-Pox, the company that owns the land on which the store could be built, hasn’t yet finalized the sale of the property to Target, and an election and court case could certainly jeopardize the deal.

Critics have said the store creates low-paying jobs and that traffic near the store will become jammed. A community impact report commissioned by the city shows that the average worker will make just $18,000 annually. The average retail job in San Rafael pays $19,600.

Supporters point to the added jobs as well as growth in the city tax base. The same study showed that net sales tax generated by the store will be $44.5 million and another $646,000 in additional taxes and fees.

To garner favor with residents and critics, Target has agreed to create a construction apprentice program and donate $25,000 per year for 10 years to the San Rafael Public Library.

Do you know the way to Petaluma?

Lydia’s, which has called Fairfax home for 15 years, is moving most of its operation to Petaluma. The company is leasing an 8,000-square-foot space in an industrial park in the northern portion of town. Lydia’s has three divisions: Lydia’s Lovin’ Foods, Lydia’s Organic and Lydia’s Kitchen.

The company produces dehydrated foods as well as vegetarian, vegan, gluten-free, cooked and raw items. The space will include a production area as well as a café and an educational facility known as the Sunflower Center. The center will include massage and a catering/event business.

The company has 75 employees in Fairfax, but most of the operation will relocate to Petaluma. Lydia’s hopes to be in the new space this month or next.
Bill Meagher is a contributing editor at NorthBay biz. He’s hopeful that Corte Madera will hold out for 20 percent affordable at WinCup and that the next time a big box retailer comes calling in San Rafael, the donation/grease/bribe is more than $25,000 a year to buy books. You can reach him at



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