Gino's Inc., the fast-food restaurant chain, announced yesterday that it is discussing a merger with the Marriott Corp, which operates the Roy Rogers and Big Boy restaurants.
The proposed merger would create a $2 billion food and lodging empire with a strong position in the Washington-area market. Gino's operates 58 restaurants in the Washington metropolitan area, many of which also hold Kentucky Fried Chicken franchises. The company also owns the Rustler steak house chain, which operates 10 restaurants in the area.
Gino's, founded by former Baltimore Colts star Gino Marchetti, is based in King of Prussia, Pa. Last year it reported net income of $4.4 million on sales of $321 million. Though the company is profitable, its sales have been stagnant for several years, and industry analysts said it is far from the healthiest competitor in the fast-food industry.
The brief announcement by Gino's apparently was issued in response to heavy trading in the company's stock on the New York exchange, where merger rumors have been circulating. Gino's said it has "agreed to reopen discussions" with Marriott, but there is no assurance that any agreement will result from the talks.
Last month, Gino's reported that it was holding talks with a company about acquisition of the chain, but it did not name the company. It later reported that the discussions had ended. Yesterday, Ronald E. Kauffman, Gino's vice president and treasurer, said the earlier talks were also with Marriott, and the new discussions are a resumption of the negotiations.
A Marriott spokesman confirmed that the company "has held preliminary discussions with Gino's regarding the possible acquisition of Gino's by Marriott, but no substantive agreement has been reached." He declined to give further details.
Neither Gino's nor Marriott would say which party initiated the negotiations. Marriott, which is six times the size of Gino's in terms of sales, would clearly be the dominant partner in a merger, but it is not clear what would happen in areas where the two chains compete.
Kauffman said he did not know, for example, whether Gino's would continue to operate under its own name, or, if so, whether it would continue to hold Kentucky Fried Chicken franchises in competition with Roy Rogers' Pappy Parker chicken.
There are 357 Gino's restaurants concentrated on the East Coast and 113 Rustler Steak Houses. The Marriott Corp., which has long since branched out from the old Hot Shoppes chain into a world network of hotels and food service, owns 516 restaurants -- Big Boy, Roy Rogers, Hot Shoppes and others -- and franchises 1,057 more.
In 1980 the company reported net income of $72 million on sales of $1.7 billion.