By Bruno De Nicola, Contributing Reporter
RIO DE JANEIRO – The New York based private equity fund Merrill Lynch has announced its plans to radically restyle Brazil’s famous chain Porcão. Brazil’s largest and most traditional retail food operation will undergo an extensive financial review and overhaul. Merrill Lynch bought the company in May 2008 in order to improve its modus operandi with plans to sell the business once its overall value increases.
The world’s most famous Churrascaria (Brazilian steakhouse) was born in 1975 on the Avenida Brasil. Its original name was Riograndense. The current name, Porcão (Big Pig), has a colorful background story. A few weeks after the restaurant’s opening, its sign broke off, leading the eye to the next-door butcher’s sign, which had a huge pig next to its name. People started to refer to the restaurant as Porcão, and the name stuck.
Since 1975, Porcão has undergone quite a significant growth, establishing five restaurants in the Rio de Janeiro area, one in Brasilia and another in Belo Horizonte. Through franchising, the brand was exported to many countries abroad, including the United States. Later on, however, the franchise was dropped due to difficulties in long-distance business management.
Private equity funds such as Merrill Lynch normally start their investment process by picking a theme. They choose for example: energy, fashion or food; and then take over high potential underdeveloped businesses in that specific area. The inefficiently operated companies are put through a full review process until costs are reduced and management and service become more agile.
“Food retail businesses are highly unprofessional in Brazil,” states Porcão’s former CEO, Wilbert Sanchez Montes de Oca, as he points out the details of the review process. As a matter of fact, since May 2008 the restaurant chain has gone through a total restyling: management, supplies, HR, marketing, service processes, all are being remodeled with quality and cost-effectiveness in mind.
“Culture is the hardest thing to change in a company, especially if its a 34 year-old business,” adds former CEO Sanchez, as he explains that the remodeling plan reaches out to include even the quantity of lemons used to make a caipirinha.
Porcão’s customers are loyal and stable, usually wealthy families and people over forty. However, two of the chain’s restaurants are more Gringo oriented, in Zona Sul’s Ipanema and Flamengo. Merrill Lynch’s plans for Porcão include a spread out to reach new targets. “All those who like meat should try Porcão at least once,” concludes Mr Sanchez. Branding and packaging operations are being implemented to allow the restaurants to appeal to a younger clientele as well.
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