Archived postings from June, 2011...

Apparently, Bad Restaurants Can Get Good Sales

Posted: Thu, June 30, 2011 at 3:24pm (CDT)

We'll admit it: we got a kick out of the fast-food survey that Consumer Reports published today, mostly because at first glance, we would come to the conclusion that restaurant chains don't really have to do a good job to have strong sales. That's the only conclusion to draw when looking at McDonald's performance, which was the worst among burger chains. ...continue reading.

Restaurants Hit A Speed Bump With Everybody Else

Posted: Thu, June 30, 2011 at 2:06pm (CDT)

As news on the economy turned worse over the past few weeks, the restaurant industry could turn to some positive numbers and index results showing continued strength for a bit of comfort. Not anymore. The National Restaurant Association's Restaurant Performance Index today showed a contraction in May, meaning eateries hit an economic speed bump like everyone else. ...continue reading.

Sales Are Up, But Don't Ditch The Discounting Plan

Posted: Wed, June 29, 2011 at 11:56am (CDT)

Another survey has confirmed what a lot of people already know, that the restaurant industry is rebounding from the recession, even if it has a long way to go to return to its past glory. In a survey released this morning, the advisory firm Alix Partners found a big increase in the number of consumers eating out every week. ...continue reading.

Giordano's Bankruptcy Keeps Getting Stranger

Posted: Tue, June 28, 2011 at 5:17pm (CDT)

On May 11, a day before a federal bankruptcy court in Illinois was to appoint a trustee to take control of his pizza chain, Giordano's President John Apostolou filed a "notice of termination" seeking to terminate the bankruptcy case in part by declaring that "all contracts ... are canceled for lack of valuable consideration." And then the case got weird. ...continue reading.

Mrs. Winners Pushes Lee's Into Bankruptcy

Posted: Tue, June 28, 2011 at 10:56am (CDT)

Lee's Famous Recipe couldn't escape the bankruptcy bug that had infected sister company, Mrs. Winners Chicken & Biscuits. The 150-unit Lee's, a chicken chain based in Florida, filed for federal debt protection late last week as it began facing a growing number of lawsuits and judgments from creditors in the Mrs. Winners case. ...continue reading.

Did KFC Retaliate Against A Big Franchisee?

Posted: Thu, June 23, 2011 at 11:19am (CDT)

When KFC Corporation filed a lawsuit in late April seeking to terminate the agreements of 10 stores owned by John R. Neal, one of its biggest operators, the immediate speculation was that the system was getting back at Neal over his leadership in franchisees' successful lawsuit to secure more control over advertising. Late yesterday, Neal's attorneys filed court documents alleging exactly that. ...continue reading.

Sonic Improves, But Once Lofty Margins Still Lag

Posted: Wed, June 22, 2011 at 5:01pm (CDT)

Sonic Drive-Ins today reported a strong, fiscal third quarter. Same-store sales, which last year had fallen 6 percent, grew 3.9 percent in the quarter. And the company's profits would have been up, too, had it not been for a refinancing-related charge. Yet Sonic executives said that their restaurants may never bring the margins they once had before the recession hit. ...continue reading.

Predictions Of Doom Haven't Come True Yet

Posted: Tue, June 21, 2011 at 11:46am (CDT)

Restaurants are facing certain doom this summer. Just this week, RBC Analyst Larry Miller said in a note that a consumer survey this month found consumers plan to cut restaurant spending this month. This came on top of a prediction of falling summer sales by Kurt Salmon Associates. That doom, however, has yet to come to pass. ...continue reading.

The Great Shrinking Sub Shop

Posted: Mon, June 20, 2011 at 4:00pm (CDT)

Want a challenge? Try figuring out how many restaurants Quiznos has in the U.S. Some counts say 5,000. Others 4,000. Still others we've seen claim it has 3,000 restaurants. All would be overestimates. By the end of last year, the Denver-based sub chain had 2,772 domestic units, according to various franchise documents. Just two years earlier, it had 4,525. ...continue reading.

Becker Drapkin Makes It Official

Posted: Fri, June 17, 2011 at 2:36pm (CDT)

Becker Drapkin Management is making a bet that some new blood on the Ruby Tuesday board can boost the chain's share value. The investment firm, along with the hedge fund Carlson Capital, made official its activist intent with the Tennessee-based chain with an SEC filing today. ...continue reading.

KFC's Second Largest Franchisee Is A Lot Smaller

Posted: Fri, June 17, 2011 at 10:04am (CDT)

When we released our Monitor 200 list of the largest restaurant franchisees, Kazi Management was No. 20. It's a good bet that it won't be that high next year. KFC's second largest franchisee, which went bankrupt in February, recently asked a court for permission to sell 32 of its units, all closed, while acknowledging the possibility that it may have to sell more. ...continue reading.

Former McAlister's CEO Acquires Salsarita's

Posted: Thu, June 16, 2011 at 3:37pm (CDT)

Phil Friedman finally got his chain. The Monitor has learned that an investment group led by the former CEO of McAlister's Deli closed on its purchase of Salsarita's Fresh Cantina, an 85-unit fast-casual Mexican chain based in North Carolina whose auction drew some surprisingly big hitters in the restaurant industry. ...continue reading.

Roark's Aronson: 'We're Not Done'

Posted: Wed, June 15, 2011 at 2:14pm (CDT)

There is no truth to the rumor that Roark Capital Group is buying every franchised restaurant chain out there, it just seems that way sometimes, especially after its dual purchases of Corner Bakery/Il Fornaio and Arby's this week. "There are a lot of people here who haven't slept in a while," said Neal Aronson, Roark's managing partner. But here's what's really scary: ...continue reading.

Soul Daddy Loses For Winning

Posted: Wed, June 15, 2011 at 1:23pm (CDT)

That didn't take long. Soul Daddy said this week that it has closed two of its three locations just one month after opening, proving that not even the attention of a national reality television program and the support of some of the supposedly brightest minds in the restaurant business can guarantee a restaurant's success. ...continue reading.

Perkins & Marie Callender's Sell Off A Big Asset

Posted: Tue, June 14, 2011 at 4:30pm (CDT)

Hidden amid the ream of bankruptcy documents that Perkins & Marie Callender’s filed yesterday was this little nugget: that the company sold the Marie Callender’s trademark. Today, ConAgra Foods confirmed that it indeed acquired the name it has been using on grocery store shelves for years.

Will Biglari Take Over Cracker Barrel?

Posted: Tue, June 14, 2011 at 9:43am (CDT)

Cracker Barrel should be preparing itself for a fight. Late Monday, the activist investor Sardar Biglari, a noted takeover artist and chairman of Biglari Holdings, disclosed a 9.7 percent investment in the Tennessee-based chain with the SEC, and he did so through a Schedule 13D, revealing activist intent.  ...continue reading.

Roark Capital Goes On A Buying Binge

Posted: Mon, June 13, 2011 at 8:23am (CDT)

Roark Capital Group this morning announced that it has purchased the Il Fornaio Corporation, which owns the Il Fornaio and Corner Bakery chains. But that deal has been known for weeks. This one hasn't: The Atlanta-based private equity group is also buying a majority stake in the Arby's chain. ...continue reading.

Lawsuits Aplenty Opposing The CPK Deal

Posted: Fri, June 10, 2011 at 3:16pm (CDT)

Law firms that specialize in shareholder lawsuits have apparently found some fertile ground in the proposed California Pizza Kitchen deal. No fewer than five lawsuits, three in California and two in Delaware, have been filed in protest of the $470 million that Golden Gate Capital is proposing to pay for the chain, which the lawsuits say is too little. ...continue reading.

Sizzler Executives Buy Their Own Company

Posted: Fri, June 10, 2011 at 12:13pm (CDT)

Kerry Kramp wasn't satisfied with just being the top dog at Sizzler USA. He wanted the whole thing. This week, he got his wish, as he led a management buyout of the chain's U.S. operations from its Australian-based parent company, Pacific Equity Partners. Terms of the deal were not disclosed.  ...continue reading.

Sardar Biglari Swats Some Flies

Posted: Thu, June 09, 2011 at 10:46am (CDT)

Sardar Biglari is no giant killer. The activist investor, who turned the burger chain Steak 'N Shake into a Buffett-style investment vehicle, continues to work at building his company by aiming small. He recently won a key victory to gain seats on the board of a small beauty products company. And now he's targeting a new insurance company. ...continue reading.

A Lack Of Credit, Or A Lack Of Demand?

Posted: Wed, June 08, 2011 at 4:09pm (CDT)

For much of the recession, we kept hearing two different excuses for the lack of movement in the credit markets. Many said it was lenders' credit tightness that kept them from making loans. But the banks routinely told us that they were willing to make loans, the businesses just weren't willing to borrow. A pair of recent studies have done nothing to end this debate. ...continue reading.

Benihana And The Widow Of Its Founder Are At War

Posted: Wed, June 08, 2011 at 11:10am (CDT)

The Benihana lawsuits just keep coming. In the latest in the ongoing saga of the Florida-based chain and the estranged family of its late founder, Rocky Aoki, Keiko Aoki, Aoki's widow, has sued Benihana in a federal court in Delaware late last week, charging the chain with defamation. ...continue reading.

Buehler Leaves Kona To 'Pursue Other Interests'

Posted: Tue, June 07, 2011 at 10:35am (CDT)

Another restaurant CEO is losing his job. Late yesterday, Arizona-based casual dining chain Kona Grill said that its chief executive, Marc Buehler has left the company, as the press release said, "to pursue other interests." That doesn't sound like a voluntary departure to us, especially as the release's headline focused on his successor. ...continue reading.

Price Hike On The Menu At Dickey's

Posted: Mon, June 06, 2011 at 3:00pm (CDT)

It's not every day that restaurants go out of their way to publicize a price increase. Some publicly traded chains may issue warnings, but for the most part such hikes are done with stealth and strategy. So we took notice when Dickey's Barbecue, a 147-unit quick-service chain out of Dallas, issued a press release saying it's raising prices by 10 percent. ...continue reading.

Don Schroeder Will Be A Highly Paid Consultant

Posted: Mon, June 06, 2011 at 9:09am (CDT)

In a press release early this morning, Canadian doughnut and coffee chain Tim Hortons said it has reached an agreement with its former CEO, Don Schroeder, who was fired last month, for some reason. The release noted that Schroeder will be a "consultant" who will help guide the company's coffee partnership for the next two years. It didn't say how much he'll get paid to do this. But we will: ...continue reading.

Ruby Tuesday Gets Itself A Proxy Fight

Posted: Fri, June 03, 2011 at 4:42pm (CDT)

Ruby Tuesday has a proxy fight on its hands. The Tennessee-based chain of bar & grill restaurants—and, increasingly, operator of side concepts—said this afternoon that the Texas-based activist investor Becker Drapkin Management, working with the hedge fund Carlson Capital, has said it plans to nominate three people to the chain's board at its next annual meeting. ...continue reading.

Tilman Fertitta Is Feeling Confident

Posted: Fri, June 03, 2011 at 2:25pm (CDT)

Tilman Fertitta has been relatively quiet on his attempt to take over McCormick & Schmick's, but the matter came up yesterday at an event held by the Houston Chronicle. Suffice it to say, the Landry's CEO is feeling confident. "When it's all over," he said, according to the Chronicle's account, "I'll end up with it, because that's just the way it is." ...continue reading.

Groupon Considers Deal Term Changes Risky

Posted: Thu, June 02, 2011 at 3:53pm (CDT)

Groupon, the website that started the entire daily deal or group buying phenomenon, filed for its long-awaited IPO today. We won't write about the $750 million offering in this post—for that, you can go here, or here, or here—but we would make a few notes on some of the risks that the Chicago-based company listed in its filing. ...continue reading.

A Bad Spring For Restaurant Sales

Posted: Thu, June 02, 2011 at 2:32pm (CDT)

On Tuesday, the National Restaurant Association said that its Restaurant Performance Index in May stood above 100, reflecting a continued period of industry growth. On Wednesday, three reports indicated that this growth could be threatened in the coming months. ...continue reading.

Are Restaurants Abandoning Daily Deals?

Posted: Wed, June 01, 2011 at 4:38pm (CDT)

As we noted last week, restaurants' resistance to the daily deal site phenomenon seems to be growing. But we were still surprised to see that the percentage of deals on such sites that are for bars or restaurants has dropped by nearly 23 percent in the last year and a quarter. Does that mean restaurants are slowly abandoning the marketing strategy? ...continue reading.

BK's Latest Reimaging Plan Has Some Key Advantages

Posted: Wed, June 01, 2011 at 3:41pm (CDT)

We'll admit it: Our first reaction when the Miami Herald first reported Burger King's latest reimaging and menu revitalization plan was, "Again?" By our count, this is the Miami-based chain's third go-round with a reimage in recent years, and it's tried broadening its menu appeal, too. But this plan has one key difference from previous efforts: ...continue reading.

Apple American Group Keeps Getting Bigger

Posted: Wed, June 01, 2011 at 9:40am (CDT)

Greg Flynn, the CEO of big Applebee's franchisee Apple American Group, was evasive when we asked him a few weeks ago whether he had any deals cooking, so perhaps we shouldn't have been surprised late yesterday when his company reached a deal to buy even more units from its franchisor--in this case, 66 restaurants in New England. ...continue reading.