Archived postings from July, 2011...

Did Giordano's Franchisees Conspire To Stop Its Sale?

Posted: Fri, July 29, 2011 at 1:38pm (CDT)

Last month, estranged Giordano's President Apostolou filed documents in his chain's bankruptcy case alleging, among other things, that franchisees were deliberately withholding royalties from the company. The claim was lost in the strangeness of the case, which included numerous bizarre filings from an anti-government activist. But, apparently, there might be something in those claims. ...continue reading.

Here Come The Restaurant IPOs

Posted: Fri, July 29, 2011 at 11:09am (CDT)

Only one restaurant company had gone public in more than four years when Dunkin' Brands filed its registration statement in May, but the industry now seems to be making up for lost time. Ignite Restaurant Group, better known as the owner of the 117-unit Joe's Crab Shack, this morning filed its registration statement to go public. ...continue reading.

Business Travel Gives Upscale Chains A Big Boost

Posted: Fri, July 29, 2011 at 9:39am (CDT)

Businesses may not be hiring like many would like them to, but they're spending in other areas, and that's helping upscale chains continue their resurgence. This morning, Ruth's Chris Steak House reported same-store sales growth of 5.8 percent. Yesterday, Morton's Restaurant Group said its comp sales grew 8.2 percent. ...continue reading.

Franchisors Shouldn't Ignore Financing

Posted: Thu, July 28, 2011 at 2:54pm (CDT)

Franchise systems that want to grow in the current environment ignore financing at their own risk. Despite easing standards, there are more borrowers than there are loans, and according to numerous experts we've spoken with, the loans tend to go to the franchisors that take the extra steps to support their operators. ...continue reading.

PF Chang's Sales Take A Nosedive

Posted: Wed, July 27, 2011 at 3:55pm (CDT)

It's generally a bad sign when a restaurant CEO opens a conference call by promising "direct and honest communication," which usually means bad news. So nobody listening to this morning's P.F. Chang's conference call was surprised when CEO Rick Federico proceeded to unleash a report one observer labeled "disastrous." ...continue reading.

Domino's Proves Last Year Was No Fluke

Posted: Tue, July 26, 2011 at 4:29pm (CDT)

It's amazing what a really good ad campaign can do for a restaurant chain. To wit: Domino's Pizza, which last year overhauled the recipe for its pizza, admitted that its previous version tasted like greasy cardboard, and then backed it with a huge national ad campaign. Sales have been surging ever since. ...continue reading.

Advent International Gets Into Chicken

Posted: Mon, July 25, 2011 at 9:23am (CDT)

The flurry of restaurant acquisitions continued this morning when no fewer than three press releases announced that Advent International, a global private equity firm which has its U.S. headquarters in Boston, has bought the fast-growing North Carolina-based Bojangles Famous Chicken & Biscuits from Falfurrias Capital. ...continue reading.

An Analyst Takes Ruby Tuesday To The Woodshed

Posted: Fri, July 22, 2011 at 10:59am (CDT)

We've long wondered why few people have taken Ruby Tuesday to task for essentially giving up on its core concept. The Tennessee-based casual dining chain is doing nothing to expand on its core concept while searching for a "growth vehicle" in a bunch of startup restaurants. Now, somebody has. ...continue reading.

Could Quiznos Go The Way Of Its Franchisees?

Posted: Thu, July 21, 2011 at 11:43am (CDT)

The Denver-based sub chain Quiznos reportedly informed lenders earlier this month that it will likely default on its debt, after earnings fell below required debt-to-EBITDA ratio of 7 to 1. As we all know, defaults are frequently a prelude to a bankruptcy. So how likely is that in this case? ...continue reading.

Restaurants And The Vanishing Middle

Posted: Wed, July 20, 2011 at 4:46pm (CDT)

For all of the talk about a recovery of the casual dining restaurant sector, it has yet to translate into any kind of a surge in sales. Consider a recent report from American Express Business Insights: overall dining spend increased 1.6 percent in the first quarter of the year. QSR sales grew 5.2 percent. Fine dining sales expanded 4.2 percent. Casual dining? Flat. ...continue reading.

Chipotle Has Cost And Turnover Problems

Posted: Tue, July 19, 2011 at 5:03pm (CDT)

Imagine a restaurant that announced on its quarterly conference call that it has to raise prices 4.5 percent to meet unexpectedly high food cost increases; a highly publicized investment failed after one month; margins were down, and turnover recently spiked because of a federal investigation. You'd think this would be a troubled company. Yet this is Chipotle. ...continue reading.

A Big Investor Sniffs Around MSSR

Posted: Tue, July 19, 2011 at 3:21pm (CDT)

At least one big investor seems to be betting on Tilman Fertitta—or someone else—paying a more than $9.25 a share for McCormick & Schmick's. The Discovery Group, a Chicago investment group with little experience in the restaurant or retail industry, yesterday disclosed that it had increased its holdings in the seafood chain to 6.3 percent. ...continue reading.

How Arby's Might Benefit From Being Sold

Posted: Mon, July 18, 2011 at 2:43pm (CDT)

Wendy's decided to sell Arby's this spring after realizing that it would probably be better off on its own. But, it seems, the bigger beneficiary of the deal could be Arby's. That's because the sandwich chain, bought by Roark Capital earlier this month, will no longer be a public company. ...continue reading.

Dave & Buster's Wants To Play In The Equity Markets

Posted: Fri, July 15, 2011 at 5:43pm (CDT)

That didn't take long. One year its sale to Oak Hill Capital Partners, the Texas-based food and games chain Dave & Buster's is going public. The company filed its registration statement with the Securities and Exchange Commission late this afternoon, proposing to raise $150 million. ...continue reading.

Fertitta Takes Another Step In Effort To Buy McCormick

Posted: Fri, July 15, 2011 at 3:36pm (CDT)

Landry's Chairman and serial restaurant acquirer Tilman Fertitta announced today that his company, Landry's, has pulled its $9.25-per-share offer for McCormick & Schmick's. But before you go and think that this means he's out of the running for the seafood chain, think again. Apparently, it means he's in. ...continue reading.

Novak Blames Franchisees ... And Col. Sanders

Posted: Fri, July 15, 2011 at 10:25am (CDT)

As we noted recently, KFC in its most recent quarter continued to act as if it has two different personalities, one in the U.S. and one everywhere else. According to David Novak, Yum Brands' CEO, the reason for the difference can be blamed on franchisees and Col. Sanders. ...continue reading.

Cracker Barrel, Facing An Activist, Cuts Some Staff

Posted: Fri, July 15, 2011 at 9:37am (CDT)

Cracker Barrel today announced that it plans to cut 60 jobs, mostly at its home office in Lebanon, Tennessee, as part of a "cost reduction and organization streamlining" initiative. Not coincidentally, Cracker Barrel is facing an activist investor, Sardar Biglari. And one of activists' favorite targets is general and administration expenses. ...continue reading.

Benihana's Proxy Fight Continues

Posted: Thu, July 14, 2011 at 3:42pm (CDT)

The family of Benihana's late founder, Rocky Aoki, hasn't had effective control of the chain in years. But when and if the company combines its two classes of stock, it won't even be the largest shareholder for the first time in company history, according to the most recent SEC filing regarding the proposal. Not surprisingly, the Aoki family opposes that idea. Vigorously. ...continue reading.

Yum's China-U.S. Gap Keeps Widening

Posted: Wed, July 13, 2011 at 4:19pm (CDT)

One of these days, Yum! Brands is going to move its corporate headquarters to China. That is, after all, where most of its profit is coming from these days, and its most recent quarter did nothing to change that. Yum's China profit, led by KFC, grew 25 percent in the last quarter. Its other international business grew 11 percent. The U.S.? Its operating profit here fell 28 percent. ...continue reading.

Quiznos Offers A Painful Lesson To Restaurant Franchisors

Posted: Mon, July 11, 2011 at 4:10pm (CDT)

I was hiding in a cabin in the South Dakota woods last week and missed news that the Denver-based sub chain Quiznos was in danger of defaulting on its debt and has hired a restructuring adviser. But the news was hardly a surprise. No restaurant chain can withstand losing 40 percent of its units in two years. ...continue reading.

Dunkin' Values Itself At $2.3 Billion

Posted: Mon, July 11, 2011 at 10:00am (CDT)

Thank God for Dunkin' Brands. These days, restaurant chains are crowding the public market exits, so the chain's upcoming IPO is a welcome relief. Late last week, the company put an initial price on its shares, saying it wants to sell 22,250,000 shares at $16 to $18 apiece, meaning it could raise up to $401 million. ...continue reading.

Ruby Tuesday Gives Up Without A Fight

Posted: Fri, July 01, 2011 at 9:07am (CDT)

Well, that was simple enough. Steven Becker and Matthew Drapkin have been appointed to the board of directors at Ruby Tuesday, not even a month after their private equity firm, Becker Drapkin, in league with another investment firm, Carlson Capital, indicated their interest in pursuing three board seats. ...continue reading.