Restaurant Finance Across America
Archived postings from March, 2011...
A Big KFC Franchisee Is In An Ugly Bankruptcy
Posted: Thu, March 31, 2011 at 4:53pm (CDT)
Kazi Management, the second largest KFC bankruptcy in the country—and the 11th largest restaurant franchisee of any kind, according to our Monitor 200—is embroiled in a bankruptcy that seems to grow in size and complexity by the day, amid a dispute with its biggest lender, GE Capital. ...continue reading.
Report: Dunkin' Brands Considering An IPO
Posted: Thu, March 31, 2011 at 9:20am (CDT)
It seems only a matter of time before Dunkin' Brands dips its toe in the public markets again. Apparently, that time could come as soon as this year. Reuters this morning is reporting that the Massachusetts-based maker of coffee and doughnuts is mulling a $500 million IPO in the second half of 2011. ...continue reading.
Bravo Brio Prices Its Secondary Offering
Posted: Wed, March 30, 2011 at 5:11pm (CDT)
Mere months after becoming the first restaurant company in four years to go public, Bravo Brio Restaurant Group is conducting a secondary offering. Its two big private equity shareholders, Castle Harlan and Bruckmann Rosser Sherrill & Company, are offering more than 4 million shares on the market at 16.25 a share. ...continue reading.
Private Equity Is Just Getting Started
Posted: Wed, March 30, 2011 at 11:04am (CDT)
Private equity groups have been more active on the merger and acquisition front lately after taking much of the winter off. Brentwood Associates bought K-Mac Holdings. Argonne Capital bought some IHOPs from a Utah franchisee. And Sun Capital sold Bruegger's to a French company. That, apparently, is just a start. ...continue reading.
Argonne Capital Buys More IHOPs
Posted: Tue, March 29, 2011 at 11:22am (CDT)
Argonne Capital is making another bet on Julia Stewart. The Atlanta-based private equity group, already the largest IHOP franchisee in the system, today said that its affiliate, Peak Restaurant Group, has bought 40 IHOP units in seven states out west, including California. The group also bought eight Applebee's in Texas. And it's not done making deals. ...continue reading.
Gas And Food Prices Are Wearing People Down
Posted: Tue, March 29, 2011 at 10:06am (CDT)
It's good to take surveys on the economy with a grain of salt, and consumer confidence numbers are no exception. This month's report from The Conference Board, for instance, showed a steep decline in March from February's numbers, which themselves had skyrocketed. All of it is due to downcast expectations. ...continue reading.
Chidsey Quietly Leaving Burger King
Posted: Mon, March 28, 2011 at 5:25pm (CDT)
Typically, when a longtime CEO departs a position, there is a certain level of fanfare associated with the move. Not so with John Chidsey, whose departure from his board seat at Burger King was relegated to a single line tucked deep within an SEC filing submitted last week. Then again, given what else was in that filing, perhaps that's not a surprise. ...continue reading.
Casual Dining Chains Are Developing Again
Posted: Fri, March 25, 2011 at 4:00pm (CDT)
For much of the recession, casual dining chains, notably the bar & grill segment, all but halted development to focus on their operations. Yet, with sales picking up, they seem to be ramping their development efforts again. The clearest indication came from T.G.I. Friday's, which said as much in a release today. ...continue reading.
Who Will Take The Arby's Challenge?
Posted: Fri, March 25, 2011 at 10:09am (CDT)
We don't know who will take Arby's off of Wendy's hands, but we do know this: it will happen relatively quickly, it's more likely to be a franchisee, and whomever buys it will have some work to do. Much of the focus of analysts has been on the aging franchisee base and closing units. But a bigger problem may rest with company restaurants. ...continue reading.
El Pollo Loco Can't Catch A Break
Posted: Thu, March 24, 2011 at 10:41am (CDT)
EPL Intermediate Inc., which operates El Pollo Loco, said this morning that same-store sales at its flame-grilled chicken chain fell 4.3 percent in 2010, which came atop an 8.2 percent decrease in 2009. Revenues fell. So did the company's operating income. But that wasn't the worst news it delivered. ...continue reading.
Daphne's Gets A Name Change
Posted: Wed, March 23, 2011 at 3:46pm (CDT)
"Don't get me started on California," said Bill Trefethen, in the midst of a mini-rant on the state's regulations and its brutal finances. Trefethen may not like California's politics, but that isn't stopping him from banking on the state's reputation to spur growth in his restaurant brand—now known as Daphne's Greek Cafe. ...continue reading.
Could Dunkin' Brands Go Public?
Posted: Wed, March 23, 2011 at 12:30pm (CDT)
Dunkin' Brands held a conference call with analysts this morning, the first perhaps in its history, but one the company said will continue quarterly for the foreseeable future. We see this as further evidence that the company is planning an IPO in the future—why would executives subject themselves to analyst abuse unless that wasn't the plan? But an offering does present some challenges to the doughnut and ice cream franchisor. ...continue reading.
Keeping Early Restaurant Sales
Posted: Tue, March 22, 2011 at 5:13pm (CDT)
A few years ago, we asked a new Sonic franchisee if we could hang out with some servers as it opened in a new market for a story for Franchise Times. We were rebuffed, because the operator was worried about the store's perception—the restaurants were packed. Lines went down the block, and the franchisee knew that those days wouldn't last. ...continue reading.
Morton's Investors May Be Big Losers
Posted: Mon, March 21, 2011 at 4:58pm (CDT)
Castle Harlan Partners took Morton's Restaurant Group public in February 2006 for $17 a share. The company has lost money three of the five years since then. Its sales tanked badly during the recession. Suffice it to say, any of those investors left from the IPO are unlikely to recoup their investment should the chain get sold. ...continue reading.
Franchise Development Surges, But For Financing
Posted: Mon, March 21, 2011 at 1:53pm (CDT)
Franchise development will surge this year. Franchisors are increasing their budgets and bolstering their sales efforts. According to a new report from the franchise information firm Frandata, demand for new franchise units is expected to increase 11 percent in 2011. And total demand for franchises this year will be 25 percent higher than it was in 2009. Now for the bad news: ...continue reading.
Private Equity Targeting Franchisees
Posted: Fri, March 18, 2011 at 11:08am (CDT)
Private equity groups have long been associated with franchisors and their bucketloads of capital-free cash. But they like big franchisees, too. To wit: today's announcement that Brentwood Associates has bought big Taco Bell operator K-Mac Holdings. ...continue reading.
Bruegger's Gets A French Twist
Posted: Fri, March 18, 2011 at 9:22am (CDT)
Bruegger's Enterprises has been sold. This morning, the private equity firm Sun Capital Partners said that it had sold the 300-unit bagel chain to the North American subsidiary of Groupe Le Duff, a French owner of bakeries around the world. Terms of the deal were not disclosed. ...continue reading.
Yup, The Debt Markets Have Heated Up
Posted: Thu, March 17, 2011 at 5:06pm (CDT)
Some people may have a tough time believing it, considering the lending problems that many franchise systems report, but the credit markets have heated up—at least for the big guys. Denny's and DineEquity, for instance, recently repriced their credit facilities only months after issuing them. But perhaps the biggest sign of the market's improvement, at least in the restaurant industry, came this week from CKE Holdings. ...continue reading.
'Frugality Fatigue' Hits Consumers And Helps Restaurants
Posted: Thu, March 17, 2011 at 3:11pm (CDT)
When the recession hit and restaurants were handing out coupons and giving away food and discounting prices and then couponing some more, many observers (including those of us at The Monitor) wondered how restaurants would get off the discounting bandwagon. Now we have our answer: Consumers did it for them. ...continue reading.
Bar & Grill Chains Aren't Dead
Posted: Wed, March 16, 2011 at 3:15pm (CDT)
Casual dining restaurants, especially those ubiquitous bar & grill chains like Applebee's and Chili's, hit a wall when the recession started and have been losing customers ever since. So why, then, do four of the 10 largest big restaurant chains in the country, according to Technomic, look an awful lot like them? ...continue reading.
Hey Buddy, Wanna Buy A Steakhouse?
Posted: Wed, March 16, 2011 at 7:59am (CDT)
Morton's Restaurant Group is for sale. The Chicago-based chain of upscale steakhouses made the infamous "looking for strategic alternatives" statement this morning. The company said that it has hired Jefferies & Company as a financial advisor to look for ways to "enhance shareholder value." ...continue reading.
News Flash! Fast Casual Chains Have Recovered
Posted: Tue, March 15, 2011 at 5:04pm (CDT)
Now that it's March and most companies' 2010 financials have been filed, we can look at the numbers for the past year and make with all certainty the following, ground-breaking statement: fast casual chains have officially recovered from the recession. ...continue reading.
How T.G.I. Friday's Handled The Recession
Posted: Tue, March 15, 2011 at 3:32pm (CDT)
Casual dining restaurants got hit hard during the recession and Minneapolis-based T.G.I. Friday's was no exception, having lost $100 million in total system revenues between 2007 and 2009. Yet, save for a bankruptcy or a closure here and there, the system has largely remained in tact. A recent interview with CEO Nick Shepherd for an upcoming piece in Franchise Times gave us a clue as to why. ...continue reading.
Red Robin Faces A Possible Proxy Fight
Posted: Fri, March 11, 2011 at 1:28pm (CST)
In January, Red Robin managed to assuage one set of activist investors by agreeing to weaken the controversial poison pill provision it approved last year and put the rule up for a shareholder vote this spring. Apparently, that still wasn't enough for the other set of activists, Oak Street Capital Management. ...continue reading.
Another Look At The Franchise Bubble
Posted: Thu, March 10, 2011 at 5:09pm (CST)
During the Franchise Finance Conference on Tuesday, Frandata CEO Darrell Johnson and Edith Wiseman, its vice president of client solutions, presented a graphic, much like the one here, showing the number of franchises created in the past 11 years. Their point: People are still creating franchises. But my thought was different: ...continue reading.
The Closure Balancing Act
Posted: Thu, March 10, 2011 at 11:20am (CST)
The lending market is competitive, and banks are scrutinizing franchisors heavily as they consider loans to franchisees. At Franchise Times' Franchise Finance Conference this week, several lenders said that they look at a system's failure rate when considering a loan. Yet sometimes failure is the best option for some franchisees. ...continue reading.
The Trouble With Imported Franchises
Posted: Wed, March 09, 2011 at 5:53pm (CST)
Several lenders said at the recently concluded Franchise Finance Conference this week that they heavily scrutinize a franchise system when considering a loan to a franchisee. The exception, of course, is a startup system with no history. But there is another exception: ...continue reading.
A New Level Of Franchise Competition
Posted: Tue, March 08, 2011 at 8:10pm (CST)
Franchise systems have long competed for customers and even for franchisees, but now they find themselves competing for something else: lending. At least, that's according to a parade of speakers today at the Franchise Finance Conference in Las Vegas, sponsored by our sister publication, Franchise Times. ...continue reading.
Firing Workers Will Save Chipotle Money
Posted: Fri, March 04, 2011 at 10:17am (CST)
The immigration scrutiny of Chipotle's workers and its firing of 450 employees in Minnesota over falsified forms provided a rare bit of bad news and ugly public relations for a company that can seemingly do no wrong lately. Now, it turns out, this whole episode might prove to be a good thing for the Denver-based chain. ...continue reading.
Look At What's Happened To Wing Prices
Posted: Thu, March 03, 2011 at 12:32pm (CST)
The chicken wing bubble seems to have burst. The price of the once-cheap throw-away part had been surging year after year for the past decade, but is now in the midst of a major collapse, even as just about every other commodity seems to be on the upswing. ...continue reading.
Business Is Improving ... Slowly
Posted: Wed, March 02, 2011 at 4:40pm (CST)
The NPD Group released its quarterly study on restaurant traffic this morning, and the results splash some water on the idea that the restaurants as a whole are flourishing. The study found that overall restaurant traffic was flat for the fourth quarter. It's better than a loss, to be sure, but it shows that the industry's recovery remains slow, much like the overall economy. ...continue reading.
Restaurant Development May Be Surging
Posted: Wed, March 02, 2011 at 2:53pm (CST)
Restaurants are developing again. After a three-year funk, the industry is intensifying expansion plans, amid overall retail development demand that is up 40 percent, according to a study on retailer expansion plans by the real estate advisory firm ChainLinks Retail Advisors.
Jack In The Box Buying Qdobas, Selling Jacks
Posted: Tue, March 01, 2011 at 1:57pm (CST)
Refranchising is all the rage these days, and among the more aggressive players has been California-based Jack in the Box. The company has completely reversed its franchisee-ownership percentage, from 39 percent in 2006 to 61 percent now, with plans to go to 80 percent. Yet it is moving in the opposite direction with its other brand, Qdoba. ...continue reading.
Domino's Is A Microcosm For The Economy
Posted: Tue, March 01, 2011 at 1:01pm (CST)
Domino's executives were an enthusiastic bunch on their quarterly conference call this morning, and for good reason. The company is coming off one of the best years in its history, one in which it saw same-store sales growth of nearly 10 percent, while franchisees' average unit volumes improved for the second year in a row. Too bad investors don't share that enthusiasm. ...continue reading.