Restaurant Finance Across America
Archived postings from April, 2011...
Restaurants Perform Price Balancing Act
Posted: Fri, April 29, 2011 at 4:07pm (CDT)
A number of stories recently have focused a lot of attention on restaurant menu prices, as restaurants nervously warn customers about price hikes and news reporters push the issue. But the reality is that, after two years of little or no restaurant inflation, the price increases are probably overdue. ...continue reading.
Midwest Burger Kings Fetch A Good Price
Posted: Fri, April 29, 2011 at 10:49am (CDT)
Franchisees are not shying away from Burger King, at least judging from the response from bidders for 74 units belonging to the bankrupt Duke & King Acquisition that were auctioned off early this week. The bidders, including two of the Miami chain's largest operators, agreed to pay nearly $12 million in cash. ...continue reading.
This Sheep Isn't Little But The Pot Is Hot
Posted: Wed, April 27, 2011 at 4:49pm (CDT)
Yum! Brands earlier this week said it wanted to buy a Chinese restaurant chain called Little Sheep. But, it seems, this chain isn't so little, at least by Chinese standards. It is the biggest casual dining concept in China and the fourth largest chain there. In other words: Yum buying Little Sheep would be like McDonald's buying Starbucks in the U.S. ...continue reading.
Casual Dining Sales Are Still Stabilizing
Posted: Wed, April 27, 2011 at 10:08am (CDT)
We've been waiting to hear some disappointing news about casual dining sales since Ruby Tuesday issued its ominous warning about gas prices resulting in soft bar & grill results earlier this month. But that has yet to materialize. Knapp Track's March numbers were up 1.9 percent, and a couple of Ruby Tuesday's casual dining rivals were positive. ...continue reading.
The McCormick Proxy Fight Is In Full Swing
Posted: Tue, April 26, 2011 at 4:48pm (CDT)
In January 2008, Tilman Fertitta offered to pay $23.50 per share for the stock in Landry's Restaurants that he didn't already own. In the following months, that offer would shrink—time and again—as the economy and the restaurant industry struggled. Not surprisingly, the McCormick & Schmick's board has latched onto that purchase as it fends off Fertitta's hostile takeover. ...continue reading.
Is Pollo Campero Having Some Problems?
Posted: Tue, April 26, 2011 at 11:44am (CDT)
Guatemala-based Pollo Campero, the largest chicken chain in Latin America, opened in the U.S. to great fanfare nine years ago, with stories of lines out the door as Hispanic consumers sought a taste of home—the first L.A. location hit $1 million in 22 days, according to reports. Those days, allegedly, are over. ...continue reading.
Yum! Brands Wants A Hot Pot
Posted: Tue, April 26, 2011 at 9:55am (CDT)
Apparently, Yum! Brands isn't big enough in China. The Kentucky-based company, whose activities are increasingly focused on China, has made what it described as a "preliminary offer" for Little Sheep Group Limited, an Inner Mongolia-based company that operates Little Sheep Hot Pot. ...continue reading.
Fatburger Units Go To Franchisees
Posted: Mon, April 25, 2011 at 2:45pm (CDT)
Twenty-five bankrupt Fatburger restaurants were sold for $7.35 million at an auction late last week to several different buyers. The winning bidders are new to the brand, having outbid both existing Fatburger operators and owners of other concepts seeking to convert the restaurants. This is good news for Fatburger. ...continue reading.
Angelo Gordon Buys Firebirds Wood Fired Grill
Posted: Mon, April 25, 2011 at 12:09pm (CDT)
The private equity firm Angelo Gordon said today that it has acquired the North Carolina-based upscale casual dining chain Firebirds Wood Fired Grill. The 18-unit chain, started a decade ago by Dennis Thompson, the founder of Lone Star Steakhouse, hopes to use the equity infusion to propel its growth. ...continue reading.
Did Taco Bell Hurt Itself?
Posted: Fri, April 22, 2011 at 11:04am (CDT)
Taco Bell had a good start to the year in January. The best performing U.S. concept in Yum! Brands' stable saw same-store sales incease 4 percent in the first period of its first quarter—not bad for a chain in healthy shape. But then, in late January, an Alabama law firm sued the company and claimed that a huge portion of the beef in Taco Bell Tacos was not beef. ...continue reading.
Could Some Bankrupt BKs Get Golden Arches?
Posted: Thu, April 21, 2011 at 3:35pm (CDT)
As we noted previously, the auction of 87 Burger King restaurants in the Midwest has drawn some big bidders. Two of the Miami chain’s three biggest operators are among stalking horses. But all of those companies pale in comparison to one, big, potential bidder quietly observing the proceedings: McDonald’s. ...continue reading.
Small Talk And $137 Million Takeover Offers
Posted: Thu, April 21, 2011 at 2:24pm (CDT)
When Tilman Fertitta made his formal bid for McCormick & Schmick's in early April, he complained, as he had in some interviews, that the company's board did not respond to his efforts to negotiate a deal. What were those efforts? Two text messages, an email, and a phone call from the Landry's CEO's representatives. ...continue reading.
McCormick Board Rejects Landry's Offer
Posted: Wed, April 20, 2011 at 4:55pm (CDT)
McCormick & Schmick's said today that its board has "unanimously rejected" a $9.25-per-share offer from Landry's Restaurants to purchase the Oregon-based seafood chain, saying the offer "undervalues the company's current business and future prospects." In the process, the company left little doubt what it thinks of Landry's CEO Tilman Fertitta. ...continue reading.
Another KFC Operator Is Having Problems
Posted: Wed, April 20, 2011 at 11:49am (CDT)
Morgan's Foods, a mid-sized, publicly traded KFC franchisee based in Ohio, is having some problems remodeling its restaurants, and KFC is having none of it. The operator said earlier this month that it has closed eight restaurants since mid-March and is closing four more. That's a big chunk of the franchisee's operations. ...continue reading.
McDonald's Hammers The Happy Meal Lawsuit
Posted: Tue, April 19, 2011 at 1:42pm (CDT)
McDonald's submitted a response to the California lawsuit seeking to keep it from offering toys in Happy Meals and, not surprisingly, the legal filing lays the responsibility for purchasing such meals at the feet of the parent who is the primary plaintiff in the suit, Monet Parham. The chain wants the lawsuit dismissed. ...continue reading.
Taco Bell Meat Lawsuit Goes Away, Controversy Doesn't
Posted: Tue, April 19, 2011 at 11:38am (CDT)
This much we know about the Taco Bell beef lawsuit: It has been dismissed. A notice of voluntary dismissal from the plaintiff, Amanda Obney, was filed with a U.S. District Court in California yesterday, and both Taco Bell and the law firm handling the suit, Beasley Allen, have said as much. But that's where the agreement ends. ...continue reading.
Burger King's Debt Gets A Lower Grade
Posted: Tue, April 19, 2011 at 10:52am (CDT)
Burger King may have dismissed one bit of bad news yesterday with its settlement of the franchisee lawsuit of the infamous $1 Double Cheeseburger—a settlement widely praised by both sides. Yet its main problem—weak sales—still persists, so much so that Fitch Ratings downgraded the QSR's debt yesterday and gave it a negative outlook. ...continue reading.
Biglari Doesn't Get His Insurance Company
Posted: Mon, April 18, 2011 at 2:22pm (CDT)
Sardar Biglari will have to look elsewhere if he's going to add an insurer to his company's holdings. Fremont Michigan InsuraCorp, a small Michigan insurance company that the CEO of Steak N Shake owner Biglari Holdings has been targeting since 2009, announced today that it will be sold to Auto Club Insurance Association. But don't feel too sorry for Biglari. ...continue reading.
Fertitta Lobs Shots At McCormick's Board
Posted: Fri, April 15, 2011 at 5:01pm (CDT)
Tilman Fertitta, the CEO of Landry's Restaurants, officially launched a proxy fight today in his bid to buy the upscale seafood chain McCormick & Schmick's. Fertitta urged shareholders in a letter to withhold their votes from McCormick's upcoming annual meeting until the board negotiates with Landry's over the $9.25-per-share offer it made this month. ...continue reading.
A Restaurant Stock Surges
Posted: Thu, April 14, 2011 at 2:33pm (CDT)
It was a good day to be a McDonald's franchisee in Latin America. Specifically, it was a good week to be Arcos Dorados Holdings, the Golden Arches' largest operator, which went public today and surged on its first day of trading after a week of heavy demand. But investors who stick with the stock could wind up disappointed. ...continue reading.
Bidding Small For Burger King
Posted: Wed, April 13, 2011 at 4:33pm (CDT)
Want to buy some Burger Kings for pocket change? On Thursday, a U.S. Bankruptcy Court in Minnesota will consider stalking horse bids for 87 restaurants owned by the bankrupt Burger King franchisee Duke & King Acquisition Corp. Among the bids to be considered: $1, plus the assumption of liabilities, for five units in Wisconsin. ...continue reading.
Charlie Brown's Gets Sold
Posted: Mon, April 11, 2011 at 12:09pm (CDT)
A U.S. Bankruptcy Court in New York formally approved the acquisition of Charlie Brown's Steakhouse by the private equity group Praesidian Capital for $9.5 million. The 9-year-old firm then quickly announced that it brought in a pair of restaurant veterans as co-investors in the 20-unit New Jersey chain. ...continue reading.
Is Ruby Tuesday The Canary In A Coal Mine?
Posted: Thu, April 07, 2011 at 3:31pm (CDT)
Ruby Tuesday said yesterday that its same-store sales declined 1.2 percent, the first subzero performance in a year, and then said its comp sales would not meet expectations this year. Either Ruby Tuesday's comeback has hit a snag, or the bar & grill segment as a whole is in trouble. ...continue reading.
Landry's Bid for MSSR Getting Contentious
Posted: Thu, April 07, 2011 at 9:36am (CDT)
Landry's bid for McCormick & Schmick's only became public three days ago, and wasn't made official until this morning, but already there is some animosity in the deal, hinting that Tilman Fertitta's takeover effort could get hostile. In a release this morning, the Landry's CEO complained that he has yet to hear from McCormick management about his offer. ...continue reading.
Gas Prices Aren't Going Down
Posted: Wed, April 06, 2011 at 11:11am (CDT)
(UPDATED) The national average for a price of unleaded gas hit $3.70 a gallon today, according to AAA. That's up by nearly $1 a gallon over last year's prices, and it seems only a matter of time before the price of unleaded threatens the record, $4.114, especially if people travel like they normally do this summer. Will restaurants feel the pain? ...continue reading.
Red Robin Ends Another Investor Fight
Posted: Tue, April 05, 2011 at 3:58pm (CDT)
David Makula got his seat on a restaurant board. Makula is the managing director at Oak Street Capital Management, a Chicago-based investment firm that has been making noise trying to win seats on restaurant company boards, including Denny's last year. On Tuesday, he succeeded, when Red Robin said it planned to appoint Makula to its board of directors. ...continue reading.
Commodities Are A Big Worry
Posted: Mon, April 04, 2011 at 3:08pm (CDT)
Here's how tough it is for a restaurant chain to raise prices: Late last week, Krispy Kreme said during its quarterly conference call that it planned to increase prices 5 percent this year to offset higher commodity costs. Investors quickly took the doughnut chain to the woodshed, pounding its stock by 20 percent on Friday. Yet Krispy Kreme is hardly alone in wanting to raise prices. ...continue reading.
Sbarro Had Little Margin For Error
Posted: Mon, April 04, 2011 at 12:12pm (CDT)
"Sbarro is a strong company with an unsustainable balance sheet." Thus begins Nicholas McGrane's description of the events leading to the bankruptcy of the company of which he is CEO, Sbarro. And, indeed, the New York-based pizza chain is a classic casualty of the leveraged buyout bubble. ...continue reading.
Another Upscale Chain Could Get Sold
Posted: Mon, April 04, 2011 at 10:05am (CDT)
(UPDATED) Tilman Fertitta made official his desire to take over McCormick & Schmick's this morning by making an offer to buy the chain at $9.25 per share, a 30-percent premium off of Friday's closing price, in an all-cash deal worth about $123 million. The offer makes McCormick the second upscale chain to be subject to a possible sale. ...continue reading.
Morton's Is Serious About A Sale
Posted: Fri, April 01, 2011 at 4:47pm (CDT)
Two weeks ago, Morton's Restaurant Group said it was exploring "strategic alternatives" for the company, including a possible sale. While such announcements usually mean, "buy us," that doesn't always happen, as evidenced by California Pizza Kitchen last year. But Morton's apparently means business. ...continue reading.
A Lot Of Interest, Not All For Fatburger
Posted: Fri, April 01, 2011 at 12:03pm (CDT)
There seems to be plenty of interest in 26 Fatburger restaurants in California and Nevada that are being auctioned off as part of a bankruptcy proceding. Nine different stalking horse bidders have been selected for the restaurants. But not all those bidders are interested in Fatburger. ...continue reading.