Restaurant Finance Across America
Archived postings from August, 2010...
Fast Casual Remains An Industry Bright Spot
Posted: Tue, August 31, 2010 at 8:55am (CDT)
A Mintel Foodservice report released this morning shows exactly where the fast-casual sector is getting its business from: casual diners. The report confirms that the sector remains the restaurant industry's bright spot, with estimated sales at $23 billion, which is 30 percent higher than in 2006--phenomenal growth considering the economic environment over that time. Yet the study also found that 26 percent of respondents said they went to a fast casual restaurant for lunch over the past month. That remains a far cry from the 60 percent who said they visited a QSR for lunch, but not much less than the 28 percent who said they went to a casual dining restaurant. The upshot: Fast-casual restaurants are quickly becoming a preferred lunch destination over anything with table service. But most of you knew that already.
PR Newswire (press release), August 31, 2010
Logan's Roadhouse: Not Going Public Anymore
Posted: Mon, August 30, 2010 at 2:41pm (CDT)
When Logan's Roadhouse in June filed a registration statement to begin selling stock, we admitted to a certain amount of skepticism, and for good reason. The 214-unit chain had said it was going public before, back in 2006. That registration was later withdrawn when the company was sold. So we weren't terribly surprised today to find out that Logan's Roadhouse is once again not going public. This time it's being sold to Kelso & Company, a $5.1 billion investment firm that has a relatively limited history of investing in restaurants, but an extensive history buying up other types of companies. By filing the registration statement, then selling, Logan's parent LRI Holdings put itself into position to fetch a better price. And it continued to keep the number of publicly traded restaurant companies dwindling.
Logan's Roadhouse (press release), August 30, 2010
Posted: Fri, August 27, 2010 at 9:37am (CDT)
The NPD Group study released earlier this week, which predicts lower per-capita meal occasions over the next decade, emphasizes the restaurant industry's tough future, even without the recession. And the biggest problem is expected to be at dinner, where restaurant visits have been struggling the most as it is. Customers simply aren't going out after work like they used to, thanks to the aging of the population, growing competition from grocery stores, mounting health concerns and an end to growth in the number of women entering the workforce. So as restaurants consider their long-term planning, they're not just going to have to figure out a way to tell diners how they're better than the next guy, they're going to have to tell diners why they're better than a night at home. We suggest ads showing heaps of dirty dishes. ...continue reading.
Denny's Putting Its Executive Ranks Back Together
Posted: Thu, August 26, 2010 at 4:37pm (CDT)
Denny's interim CEO, Debra Smithart-Oglesby, is proving to be more adept than her predecessor at one thing: hiring. Today, the company announced that it hired Robert Rodriguez as its new chief operating officer. Rodriguez was most recently the president and COO at Pick Up Stix and before that worked for a who's who in the restaurant business. Last month, Smithart-Oglesby hired Frances Allen as the company's chief marketing officer. Both executive positions were made vacant in a one-week period last December. And they were still vacant in June when CEO Nelson Marchioli was forced to resign following a tough proxy battle. Marchioli's handling of his executive team was a big complaint among Denny's franchisees.
Denny's (press release), August 26, 2010
Keeping Food Costs Down
Posted: Thu, August 26, 2010 at 1:40pm (CDT)
The USDA late yesterday revised downward its consumer inflation forecast for food, both at grocery stores and at restaurants. The government now predicts that menu prices at restaurants will increase this year only 1-2 percent, noting that world economic activity "remains below pre-recessionary levels." Restaurants likely have little choice but to keep prices down, given the state of the consumer. Yet the revised forecast comes amid growing signs of some commodity inflation, especially in wheat and coffee, two food staples, in addition to pork and corn. This sets up a potentially troublesome scenario for smaller operators, many of which are already subsisting on thinner margins as it is. But it could always be worse: Grocery store prices are going up even less.
USDA, August 26, 2010
Former Max & Erma's Owner Expresses Some Regret
Posted: Wed, August 25, 2010 at 3:33pm (CDT)
Pittsburgh businessman Gary Reinert Sr. owned the Ohio-based casual-dining chain Max & Erma's for less than two years before it went bankrupt. That short but rather eventful period came to an end this week when the chain was sold to American Blue Ribbon Holdings, the owner of the Village Inn and Bakers Square chains. In an interview with the Pittsburgh Post-Gazette published this morning, Reinert said he lost $25 million on the deal and that he spent so much time on the restaurant chain that he neglected his other businesses. He also admits that he "screwed up" by "buying the restaurants" in the first place, even though friends and his bank advised him not to.
Pittsburgh Post-Gazette, August 25, 2010
Aging Population No Help To Restaurants
Posted: Wed, August 25, 2010 at 8:53am (CDT)
The aging population will affect the U.S. in countless ways, particularly in tax collections, health spending and pension costs. And it won't help the restaurant industry much, either. According to a study released this morning by the NPD Group, restaurant traffic will grow at a rate that is slower than population growth over the next decade -- due almost entirely to the aging of the population. Older people, the study says, don't eat out as much as younger people, which translates into less traffic at the nation's eateries. This also means that chains' growing reliance on breakfast, drinks and snacks will become more common as the industry adjusts to the demographic shift. Mostly, it means that the already competitive restaurant industry won't get any easier when the recession actually does end.
NPD Group, August 25, 2010
Grocers May Have To Post Calories On Menus, Too
Posted: Tue, August 24, 2010 at 2:59pm (CDT)
Because they both sell food, restaurants and grocery stores have always competed, but that competition has become more direct in recent years as grocers have added enhanced delis and cafes. This has apparently not escaped notice at the FDA, which today released its guidance for new menu labeling requirements for public comment. These regulations will cover chains with 20 or more locations with the same name and substantially the same menus. In its guidance, the FDA said that grocery store cafes or food courts could fall under the new rule. It is also asking for comments on what other parts of the grocery store should count, too--such as bakeries or delis, salad bars or pizza bars, many of which have done their share to drain lunch customers away from restaurants. The FDA said it "intends to ensure that establishments that offer comparable food items for immediate consumption are treated comparably."
FDA, August 24, 2010
Is The King Also A Bellwether?
Posted: Tue, August 24, 2010 at 8:48am (CDT)
Last week, the Monitor's publisher, Mary Jo Larson, appeared on Fox Business to talk about McDonald's. She was asked whether it was a bellwether for the entire industry, and answered smartly that it was not. A better bellwether would be McDonald's chief U.S. rival, Burger King. The Miami-based chain relies on young men, who have been hit hardest by the economic downturn and who would seemingly be eager to return to their previous dining habits once their finances stabilize. So how is the King doing? Meh. This morning, Burger King reported comp sales that were down 1.5 percent in the U.S. last quarter. That's better than the 4.5 percent decline last year at this time, but it's still a red number. Just like much of the industry, the King is improving, but it's not all the way back yet.
Jonathan Maze, August 24, 2010
So Much For That Takeover Idea ...
Posted: Mon, August 23, 2010 at 9:20am (CDT)
Earlier this month, Red Robin Gourmet Burgers quietly made it more difficult for an investor to take the chain over. That effort may have kept at least one suitor away -- Sardar Biglari, the chairman of Biglari Holdings, which owns Steak & Shake and Western Sizzlin. Biglari ignited speculation that he was targeting Red Robin when his company said in early July that it had acquired 6 percent of the company's shares for a "passive investment." This morning, less than two weeks after Red Robin swallowed its poison pill, Biglari Holdings in an SEC filing said it no longer owned any Red Robin stock. We don't think Biglari made a lot of money off the deal, if any, as Red Robin is trading at roughly the same level it was when he acquired his shares. We can only speculate then that Biglari has abandoned his plan to own Red Robin and is focused on another target -- Sonic, perhaps?
SEC, August 23, 2010
Restaurant Sales Quietly Improving
Posted: Fri, August 20, 2010 at 3:19pm (CDT)
We've been hit with a steady stream of negative economic news this week, particularly on the job front, but despite fears of a "depression" or a Japan-style "lost decade," restaurants have quietly been picking up steam. William Blair analyst Sharon Zackfia said in a report today that overall restaurant sales trends improved for a 10th straight month in July--led, as you could probably imagine, by fast-casual chains, followed by fine dining. Even QSR, the poorest performing group, has stabilized recently. Restaurants' overall same-store sales gained 0.6 percent in the second quarter. While that's not much, it sure is better than the 4.8-percent decline last year. The Census Bureau, meanwhile, said last week that restaurant sales were up 0.2 percent in July. We still worry about unemployment, and the economy is clearly struggling to emerge from the recession, but at least the public is more willing to spend a few bucks on a night out. ...continue reading.
In The Monitor: Restaurant Strategies Unmasked
Posted: Fri, August 20, 2010 at 9:23am (CDT)
The numbers look really awful: The economy remains in the grip of a severe housing bust and credit contraction, with high unemployment and income stagnation. And now the restaurant business must deal with more deflation--can anyone say the $1.00 double cheeseburger three timesand deleveraging, which favors savings and debt repayment instead of consumption. Not exactly a ringing endorsement for the 70% of GDP consumer economy that the restaurant industry plays a big role in. Now the debate is whether the economy is headed for recession again. A few economists and many Americans think we never really came out of the last one.
If you are operating McDonald's, Panera and Chipotle restaurants during the past couple of years, you might ask what the hubbub is all about. But, for the rest of the poor restaurant souls who aren't invested in those concepts, flat personal income and high unemployment has translated into a choppy same store sales picture and a lots of late night worries over another downturn. Most economists now expect this latest weakness to continue well into 2011 for most of the country, except in Washington, DC where income and employment remains stubbornly high. Imagine that!
Assuming the economy limps along at its present anemic pace, or even retreats slightly from this level, here are the questions restaurant operators should ask of themselves and their financial advisors:
1. Should I invest more at the low point in the economy, and sell later when things improvethe classic "buy low, sell high" strategy? Assuming you have real conviction about your business, and you are doing it with a little equity, why not give it a whirl? It might be better than sitting in cash earning zero.
2. Should I add to my store count at a less expensive unit cost and take advantage of lower prices for real estate and construction--the always popular and accounting-centric "dollar cost averaging" strategy? We like this incremental approach to wealth building.
3. Should I just focus my efforts on building sales in my existing restaurants until things look better---the always smart "stick-to-your-knitting" strategy? This strategy is often considered a stodgy and conservative business practice especially during bull markets and bubbles. Few are good at it for very long because most "deal guy" operators are trigger happy. The stick to your knitting generally works, though.
4. If I am a franchisee of a major restaurant brand, should I create my own concept that I can own, run and franchise--one that is more "on-trend" with consumers than the one I am currently operating and currently paying big royalties on? This is a variation of the Frank Sinatra hit tune "I did it my way" and afflicts multi-unit franchisees approximately every seven years (like the itch). It is known as the "I know I am smart enough to be a franchisor, and doggone it, the other franchisees will line up to build and open my concept" strategy. Guess what? My years of experience says they won't.
6. Should I continue to expand, even if my existing restaurants are experiencing negative same-store sales, in the hopes I can grow out of this mess and make it all up when the economy improves? This one really takes some gumption on the part of the operator and their bankers and that's why it is promoted in east coast business schools and investment banks as the "bet the farm" strategy. The corollary to this strategy is taught in midwestern business schools and is known as the "don't bet the farm" strategy. The latter is probably the better advice.
7. Should I invest in another restaurant concept, perhaps a new franchise that has more growth prospects than the one I currently operate in? This strategy has always been a popular one for many multi-unit franchisees and is often referred to as the "grass always looks to be greener on the other side" theorem. Here is something to remember: The Germans fought a war on multiple fronts, too. How'd that turn out?
8. If I am a franchisor, should I continue to favor franchising as a growth strategy, rather than invest my own capital in building company stores? This is the numero uno strategy promulgated by most activist investors, private equity and hedge fund artists. It is also known as the "even though interest rates are zero, let's treat our capital like it is the proven cure for cancer and never let it get out of our sight, even for a moment, especially to build company stores, and furthermore let it be known that the franchisees take all the risks and the franchisor takes all the rewards" strategy. This strategy will not sell franchises for very long, I can assure you.
9. If I am a franchisor and know that household balance sheets are stressed and franchisee investment dollars may go wanting for a few more years, should I focus my efforts on building company operated restaurants rather than wait for the potential franchisees to deleverage and become liquid again? You would think that more zors would adopt this time-tested "I better take charge of my own destiny" strategy, especially if their unit economics make the restaurant concept worth expanding. Do the restaurant unit economics make it worth expanding?
10. Should I wait out the storm, build up cash and reduce my debts just like the major corporations have been doing across the land? Promoters of this strategy call it the "I don't have a clue of what's going to happen in the future, yet I've always heard that cash is king" strategy? A safe bet, but not very Horatio Alger-like in thinking.
11. If my sales are still soft after three years, should I just keep cutting expenses until I've squeezed every last nickel out of the business and/or the customer dining experience? This strategy is surprisingly popular right now and is known as the "risky business" strategy. Chi-Chi's Mexican Restaurants (rest in peace, 2004) popularized this management theory a few years back. They cut the store level management team down from seven employees per store to one full time manager and a part-time front of the house manager. The result: They almost poisoned half of Pittsburgh. Do the honorable thing before that happens and shut the restaurant down.
12. Or, should I just pack it in, sell everything, move to Mexico, sit on the sidelines for a few years, drink tequila and then go into another business venture that looks promising when the economy turns? This one is tempting right now but I wouldn't recommend it because of all the drug cartel problems in Mexico. Plus, it wouldn't be good for our subscription base. However, we'll call this one the Jet Blue flight attendant strategy, or in other words, the "take this business and shove it" plan. Keep your options open, at least for now.
So many strategies are available to restaurant owners and executives, yet so little time. All of these business management strategies deal with whether to grow and invest or hold and divest, and at what rate. As entrepreneurs and business owners, we want to take charge of the situation, and feel helpless if we aren't doing something. Anything.
"Don't just sit there, do something," is what we've been taught all of our lives.
What do we do? Maybe it's right in front of our eyes. Perhaps we should just follow the lead of McDonald's, Chipotle and Panera, the ones who are making things happen, even in a down economy.
Keep the restaurants looking new, relocate them if necessary.Make the food and marketing fresh and appealing. Focus on the quality of your product, not the margin. Always be selling and promoting. Sales make everything happen.
These strategies are so simple that they would never be discussed on CNBC by Jack Welch, or make the cover of the Wall Street Journal. That's because they're working.
Landry's Roller Coaster Sale Price
Posted: Thu, August 19, 2010 at 2:26pm (CDT)
The proxy statement Landry's filed earlier this week ahead of its October shareholder meeting is not easy reading. But it does provide a painfully detailed look at its negotiations with CEO Tilman Fertitta, who is taking the company private. The 171-page document is difficult to sum here, but it does describe a remarkably challenging negotiation combined with bad timing that delayed the transaction for over two years. Fertitta first offered to take Landry's private at $23 a share. Then he reduced the price to $21, then $17, then $13.50, amid the declining economy and credit markets and damage to restaurants by hurricanes. That transaction was canceled in 2009 over financing issues. The issue was raised again a year ago. The Landry's board played "hardball" and got the per-share price up to $14.50 from $13. Then two investors, Pershing Square Capital and a pension fund, began making noise. Lawsuits were filed. The stock price rose. And ultimately Fertitta agreed to pay $24.50.
Jonathan Maze, August 19, 2010
Restaurants As Job Creators
Posted: Wed, August 18, 2010 at 1:05pm (CDT)
In my years writing about business and government for various publications, I not once heard economic development officials drool over new restaurants as job creators. So a recent release from Red Robin, linked below, got my attention. The chain is opening a new restaurant in Tampa, which will create 100 jobs, and pointed out that it is accepting applications. The release came out the day that McDonald's held a nationwide job fair. Perhaps these are signs of the state of the employment picture, that restaurants now feel confident enough to brag about the jobs they create. But perhaps they should brag no matter what the economy is like. Restaurant jobs are underrated, we feel, and if you don't believe us, just check out the job histories of most of McDonalds' top executives--and many of its now-millionaire franchisees.
Jonathan Maze, August 18, 2010
Agadi Surfaces At Friendly's
Posted: Wed, August 18, 2010 at 11:23am (CDT)
Harsha Agadi, former chief executive at Church's Chicken, has surfaced at another franchise chain. Friendly's Ice Cream, owned by Sun Capital Partners, yesterday named Agadi its chairman and CEO. Agadi replaces Ned Lidvall, who according to a release left to "pursue other interests," an excuse that never fails to pique our inner skeptic. (Other interests? Really? What, is he going take up stamp collecting?) Agadi helped guide Church's growth into a $1 billion company, but was replaced as CEO by Mel Deane six months after the chain was sold to the private equity firm Friedman Fleischer & Lowe.
Friendly's (press release), August 18, 2010
Fidelity Buys Up Another Troubled Brand
Posted: Tue, August 17, 2010 at 3:50pm (CDT)
Fidelity Newport, a subsidiary of Florida-based Fidelity National Financial, is adding another struggling restaurant chain to its lineup. The company apparently won the bid for the bankrupt Ohio-based Max & Erma's chain, according to a filing this morning. Terms were not available, but the bid had to be at least $25.7 million. The casual dining chain went bankrupt last year, less than two years after Pittsburgh developer Gary Reinert bought the company for $10.2 million. Fidelity and Newport Global Advisors last year purchased the bankrupt company that operates the Bakers Square and Village Inn family dining chains.
Business First of Columbus, August 17, 2010
Benihana Reaches A Deal With An Activist
Posted: Tue, August 17, 2010 at 11:27am (CDT)
Benihana, the Florida-based Japanese steakhouse that is up for sale and facing a proxy battle at the same time, reached a deal yesterday with one of its activists, Coliseum Capital Management. Under the agreement, the company will nominate Coliseum co-founder Adam Gray as its Class A director. The existing director is Darwin Dornbush, who had previously been nominated by the company in advance of the shareholder meeting next month. Gray has been seeking a board seat since May. He and Coliseum began buying up company stock last year and emerged as an activist in February before Benihana's plan to issue more stock, a plan that won a shareholder vote that month by a thin margin. Still to be resolved is Benihana's dispute with its largest shareholder, a company controlled by the family of the chain's late founder, Rocky Aoki. The Aoki family has nominated two to the Benihana board.
SEC, August 17, 2010
And Now For Some Good News: The Banks Are Lending
Posted: Mon, August 16, 2010 at 1:49pm (CDT)
The lending market is showing signs of easing, according to the Fed's Senior Loan Officer survey. A "modest net fraction" of respondents said they eased standards for large and mid-sized firms over the past three months. And, for the first time since 2006, lenders eased standards on C&I loans to small firms. That increase came from large banks, whose easing lending standards offset a small tightening by small banks. Nearly all the banks that eased standards said they did so in response to aggressive competition. Half said they eased standards because of an improving, or at least less uncertain, economic outlook. As for demand, that remained unchanged in the July survey from the study the Fed did in April, which found softening demand.
Federal Reserve, August 16, 2010
Red Robin Tries To Protect Itself
Posted: Mon, August 16, 2010 at 9:28am (CDT)
Last week, as it announced its quarterly earnings along with the appointment of a new CEO, Red Robin Gourmet Burgers quietly took a step to protect itself from a takeover. The Colorado-based casual dining chain entered into a rights agreement with American Stock and Transfer Company. It then declared a dividend of one right for each outstanding share of stock. Under the agreement, no shareholder can accumulate more than 15 percent of company shares without approval from Red Robin's board of directors. According to the company, this would "protect stockholders from coercive or otherwise unfair takeover tactics." Red Robin has been the subject of takeover rumors. It recently reached a deal with a pair of activist investors and added one more independent director to its board. And Biglari Holdings has bought up a big stake in Red Robin stock.
SEC, August 16, 2010
Carley To Take Over At Red Robin
Posted: Thu, August 12, 2010 at 3:46pm (CDT)
Red Robin has a new chief executive, and El Pollo Loco is looking for a new one. Red Robin said today that Stephen Carley, El Pollo's CEO, will take over as chief executive in September. Carley will replace Dennis Mullen. He will also be tasked with a tough job, taking over a casual dining chain that specializes in burgers at a time when fast-casual burger chains seem to be all the rage. The chain today said that its second quarter comp sales fell 1.2 percent, and that restaurant-level operating profit fell 7 percent. At the same time, Red Robin is a popular target of takeover rumors. By the way, less than five hours before Red Robin made its announcement, Carley was quoted in a release announcing El Pollo's second quarter sales. He said nothing of taking a new job.
Business Wire (press release), August 12, 2010
The Trouble With Arby's
Posted: Thu, August 12, 2010 at 1:58pm (CDT)
The recession has been bad for a lot of restaurant concepts, but we can imagine fewer that have had a worse time than Arby's. The roast beef chain reported a systemwide same-store sales decline of 7.4 percent in the most recent quarter. Consumers, it appears, don't view Arby's as a good value, despite the chain's efforts to prove otherwise. But Arby's may also be struggling with intense competition in the sandwich category. With a few exceptions, most sandwich chains are growing. With people eating out less, all those new sandwich restaurants have to get customers from someplace. That place, apparently, is Arby's.
Wendy's/Arby's Group (press release), August 12, 2010
A Bit Of Good News Amid The Gloom
Posted: Wed, August 11, 2010 at 3:49pm (CDT)
Dr. Doom, AKA Nouriel Roubini, today said that the risk of a double-dip recession was 40 percent, and that an L-shaped recession or "near-depression" was possible. And his wasn't even the most depressing economic prognostication we heard today. That distinction goes to Robert Shiller, the Yale University professor who put the possibility of a double-dip recession at "50-50." Other economists have likewise revised their forecasts downward, almost entirely due to concerns about job growth, or lack of it, which any restaurant owner can tell you is making life difficult. So we, being optimistic types, will focus on this number: -0.9. That was the percentage decline in worker productivity last quarter, according to the Labor Department, the first decline in more than a year. With workers apparently stretched to their limits, perhaps now companies will be motivated to start hiring again.
MarketWatch, August 10, 2010
When In Doubt, Blame The Analysts
Posted: Tue, August 10, 2010 at 2:18pm (CDT)
Biglari Holdings, the owner of Steak n' Shake and Western Sizzlin, has put off a shareholder vote on August 24. The subject of the vote was a generous pay plan proposed for chairman and company namesake Sardar Biglari that would effectively pay him like a hedge fund manager. In a press release, the company said that "misinformation and mischaracterizations of the proposed agreement by certain analysts and investors have generated uncertainty" that it apparently wants to clear up. This is odd, coming from a company that rarely talks to the media, doesn't hold quarterly conference calls for analysts and offers only sporadic press releases. Perhaps Biglari Holdings might have avoided any "misinformation" about the pay plan had it done anything to "explain the proposal" in the first place.
PR Newswire (press release), August 10, 2010
Red Robin Assuages Its Activists
Posted: Fri, August 06, 2010 at 9:24am (CDT)
Red Robin Gourmet Burgers earlier this week added Glenn Kaufman to its board of directors, giving the company another independent director and increasing its board size to 10. It also apparently quieted down a pair of activist shareholders, Clinton Group and Spotlight Advisors, which each own 7.69 percent of the company's shares. In a filing yesterday, Red Robin said that the appointment of Kaufman was part of an agreement to give the burger chain another independent director. Kaufman is the managing member of the D Cubed Group, an investment firm, and was previously a managing director at American Securities, a private equity group.
SEC, August 6, 2010
Now The CPK Deal Is Apparently Off
Posted: Wed, August 04, 2010 at 4:18pm (CDT)
According to the New York Post, American Securities Capital's deal to buy California Pizza Kitchen, which was described as "close" last week, is now "off." The paper reported that talks between the two broke down, describing prospects for a deal "unlikely." Given private equity's interest in the restaurant industry right now, it seems only a matter of time before the company finds another bidder, assuming that the Post report is true. And indeed, Reuters last week reported that another private equity group, Harvest, is bidding on the chain.
New York Post, August 4, 2010
Is Biglari Targeting Sonic?
Posted: Tue, August 03, 2010 at 1:01pm (CDT)
Biglari Holdings this morning filed a Schedule 13G notice with the SEC that it has acquired 5.9 percent ownership of Sonic stock. The 13G reflects a "passive" investment, meaning that the company's chairman, Sardar Biglari, isn't planning--yet--to make any noise. This is the second 13G that Biglari Holdings has filed this month. The company filed one announcing its 6 percent ownership in Red Robin Gourmet Burgers. It's certainly plausible that Biglari intends these purchases as simple investments in what he sees as undervalued stocks. Yet Biglari's history as an activist has led to rumors that he may be working on a takeover of Red Robin. Whether that's his plan with Sonic remains to be seen. What is clear is that Sonic, which is among the worst-performing chains in the QSR universe, could use the jolt.
SEC, August 3, 2010
Roark Taps Top Execs For Wingstop Board
Posted: Mon, August 02, 2010 at 3:01pm (CDT)
When Roark Capital bought Wingstop earlier this year, the private equity group obviously thought a lot of the wing chain's potential. How much potential? Here's a good indication: Roark recently lured Sid Feltenstein and Jon Luther to the Wingstop board. Feltenstein has been with so many restaurant chains and holding companies that you can rarely pass an Interstate exit without coming across a brand where he once worked. Luther is the chairman of coffee and doughnut giant Dunkin' Brands. Their appointments add a lot of restaurant and franchising muscle to the Wingstop board. "We think the brand is positioned to be a bigger player" in the chicken wing sector, said Geoff Hill, a Roark vice president. ...continue reading.
Reinert Wants His Chain Back
Posted: Mon, August 02, 2010 at 10:19am (CDT)
Gary Reinert Sr. apparently wants his casual dining chain back. The Pittsburgh developer, who bought the Ohio-based Max & Erma's in the spring of 2008 and needed only 18 months to put the company into bankruptcy, is apparently a backer of a $32.7 million bid for the company by New York investment bank Pfife Hudson Group, according to the Columbus Dispatch. That bid is higher than the $24.9 million bid for the company by the private equity-backed Concept Development Partners, a deal Max & Erma's interim management supports. Tough choice. Do you go with the smaller bid backed by private equity groups with considerable restaurant experience, or do you choose the higher bid that includes the guy who led the chain into bankruptcy?
Columbus Dispatch, August 2, 2010