There's trouble among OSI Restaurant Partners royalty as the co-founder of one of its star brands, Bonefish Grill, has sued OSI on the eve of its initial public stock offering.
Among other allegations, Tim Curci accuses the Tampa-based restaurant giant of transferring top Bonefish Grill managers to Outback Steakhouse and other concepts, leaving Bonefish Grill's management cupboard barren.
OSI Restaurant Partners I had a "knowing and concerted effort" to improve its appearance for investors as it headed into its IPO – to Curci's detriment, his lawsuit says. OSI's parent company, Bloomin' Brands, is expected to go public today.
Curci is a well-known local restaurateur who launched Bonefish Grill in St. Petersburg 12 years ago with the late Chris Parker. Bonefish started as an independent seafood house but quickly caught the eye of OSI, which entered into a partnership with Curci and Parker to expand the brand in 2001.
Bonefish since then has been strong performer for all parties and has grown to 158 restaurants.
Today, though, Curci accuses OSI of violating their partnership. He filed a lawsuit last week against OSI, Bonefish Grill and several executives in circuit court in Hillsborough County. Technically, Curci is suing through an entity he controls, Gray Ghost LLC.
One allegation suggests OSI is now competing against Curci instead of working with him.
A decade ago, Curci and Parker had struck a deal with OSI: OSI could either partner with Curci and Parker to open new Bonefish grills through a new entity called Bonefish Grill of Florida LLC; or OSI could open new Bonefish Grills on its own.
However, the deal prohibited OSI from competing against the pair. It couldn't open new Bonefish restaurants on its own if they were in the same market as those owned in part by Curci and Parker.
In his lawsuit, Curci says OSI has done that at least twice recently with new restaurants in Venice and Orlando, which compete against Curci's existing Bonefish Grills in Sarasota and Orlando.
In other allegations, Curci accuses OSI of transferring some top Bonefish Grill executives to other OSI concepts without providing for adequate replacements. For example, Jeff Smith, who now leads the Outback Steakhouse brand, had been a vice president at Bonefish Grill.
Finally, OSI has charged Curci's company an unfair amount for Bonefish Grill marketing expenses without giving him an accounting of expenditures, he claims. Among the charges was a national marketing effort to promote little-known musicians that had little connection to a seafood restaurant.
Those costs included producing and mailing 500,000 music CDs, the lawsuit says.
An attorney for Curci declined comment Tuesday. OSI's chief legal officer, Joe Kadow, said securities regulations prevent the company from commenting in advance of an initial public offering.
OSI Restaurant Partners is the operating entity of Bloomin' Brands, which expects to raise around $300 million in today's public offering. OSI Chief Executive Officer Elizabeth Smith could receive up to $24 million in connection with the IPO, Curci's lawsuit says.