Restaurant Finance Across America
Archived postings from August, 2011...
The Economic Impact Of Bad News
Posted: Wed, August 31, 2011 at 10:21am (CDT)
We sure seem to be worrying ourselves into a recession. The National Restaurant Association provided the latest evidence this morning, when it said that its July Restaurant Performance Index fell to its lowest level in 11 months—even though restaurants' same-store sales and traffic were positive during the month. ...continue reading.
Groupon May Be A Victim Of Its Success
Posted: Tue, August 30, 2011 at 10:29am (CDT)
Groupon may be losing some steam. The Chicago-based company that ignited the daily deal trend, and spawned innumerable competitors, has suffered from a decline in website traffic this summer, according to a pair of reports from companies that track web traffic. Such a decline may not bode well for the service that restaurants love to hate. ...continue reading.
Cosi Faces A Delisting
Posted: Fri, August 26, 2011 at 4:48pm (CDT)
Not all fast-casual concepts are created equal. Consider Cosi, the Illinois-based bakery-cafe chain that competes with the likes of Corner Bakery and Panera Bread. The chain has been trading at such a pathetic level for so long that on Friday it acknowledged that it has received a delisting notice from Nasdaq. ...continue reading.
Restaurant Comps Up Across The Board
Posted: Fri, August 26, 2011 at 4:17pm (CDT)
There is plenty of bad news to go around right now. A hurricane is about to pound the East Coast, which is still reeling from a freak earthquake. Unemployment is still high. So are deficits. And we may be on the precipice of a second recession. But here is the bright side: it doesn't appear to be affecting the restaurant industry. Not broadly, and not yet. ...continue reading.
RFDC Preview: Art Laffer And The Economy
Posted: Fri, August 26, 2011 at 11:05am (CDT)
The last couple of years have provided a painful lesson that not all recessions are created equal. Today, despite a government that has used just about every weapon at its disposal, the economic situation remains perilously close to falling into another recession. Why? Dr. Arthur Laffer, who will speak at the Restaurant Finance & Development Conference in November, has an idea: ...continue reading.
Biglari Is Readying His Big Guns
Posted: Thu, August 25, 2011 at 4:02pm (CDT)
We figured Cracker Barrel was in for a proxy fight, likely one for control of the company, the moment Sardar Biglari revealed his 9.3-percent investment in the Tennessee-based chain. This week's letter to Michael Woodhouse convinced us that we were right. And now we have this to solidify our view: ...continue reading.
Frisch Closes Some Golden Corrals
Posted: Thu, August 25, 2011 at 11:02am (CDT)
Frisch's Restaurants this morning said it has closed six of the 35 Golden Corral restaurants it operates. In the process, the Cincinnati-based franchisee, which also owns the Big Boy family dining chain, provided a glimpse into the struggles of Midwestern economy and, perhaps, of problems facing buffet concepts. ...continue reading.
Yup, Commodity Prices Still Stink
Posted: Wed, August 24, 2011 at 1:43pm (CDT)
Steak chains have had a roller-coaster ride recently. The recession pounded them as customers and businesses cut back on spending. They've come back more robustly than most chains more recently, thanks to the return of those business travelers. But now they face the ominous specter of more increases in beef prices. ...continue reading.
Did Cracker Barrel Offer Biglari Inside Information?
Posted: Wed, August 24, 2011 at 10:05am (CDT)
UPDATED--Sardar Biglari, the activist investor and self-proclaimed "experienced operator," today made his first public criticisms of Tennessee-based Cracker Barrel since he first revealed his investment in the sleepy highway side chain in June. And the most notable accusation is a doozy: that soon-to-be-ex-CEO Michael Woodhouse offered to provide Biglari inside information. ...continue reading.
New Hooters CEO And Breastaurant Competition
Posted: Tue, August 23, 2011 at 11:12am (CDT)
Hooters of America this morning announced that former Coca-Cola executive Terrance Marks will be its new CEO. Fittingly, on the same day, Nations Restaurant News reported that a group led by Marks' predecessor will develop as many as 35 units belonging to Hooters competitor, Twin Peaks. ...continue reading.
Even In Recession, No Break For KFC Operators
Posted: Mon, August 22, 2011 at 11:30am (CDT)
Mid-2009 was a brutal year to be in the restaurant industry. Customers had stopped going out to eat. Sales were plunging. Franchise restaurants were going bankrupt. Facing its own, severe cash flow shortage, 77-unit KFC operator Wagstaff Management approached KFC's vice president for franchising, James McKelvie, seeking "flexibility" on capital improvements. McKelvie turned Wagstaff down. ...continue reading.
Can Grilled Cheese Anchor A Restaurant Chain?
Posted: Fri, August 19, 2011 at 11:47am (CDT)
Will consumers flock to restaurants that serve something so simple it can be made in a college dorm with an iron? We're about to find out, as no fewer than three concepts, each with seemingly substantial backing, are in various stages of planning to unleash themselves onto the world. ...continue reading.
Giordano's Lenders Request Sanctions
Posted: Thu, August 18, 2011 at 2:49pm (CDT)
Fifth Third Bank was none too pleased earlier this month when it found out it was a defendant in a 73-page lawsuit, filed in Cook County, Illinois, by the deposed owner of the bankrupt Giordano's pizza chain—a lawsuit demanding at least $230 million in damages. How displeased? The lender is now asking that John Apostolou, his wife, and their attorney be held in contempt and sanctioned. ...continue reading.
Bank Standards Ease Slowly ... For Big Borrowers
Posted: Wed, August 17, 2011 at 5:20pm (CDT)
Bigger borrowers are still having an easier time with the banker. Amid mounting competition for big loans, lenders are easing standards for large firms in need of financing, according to the latest Senior Loan Officer Opinion Survey from the Federal Reserve. Suffice it to say, standards for small firms aren't changing much, if at all. ...continue reading.
Why Don't More Franchisors Help Pay For Remodels?
Posted: Tue, August 16, 2011 at 9:56am (CDT)
Last year, the McDonald's that I pass every day on my way to and from work was torn down and rebuilt. The whole process took less than three months. When the workers were finished, the new restaurant was one of the nicest fast food places I'd ever seen—clean, modern, with flat-screen televisions and computers. But that's not the interesting part. ...continue reading.
The Fight For Control Continues At Benihana
Posted: Mon, August 15, 2011 at 5:27pm (CDT)
Over the past eight months, Benihana has granted 650,000 shares of Class A stock to top executives, mostly to CEO Richard Stockinger. Now, the company is proposing to grant those shares full voting power in a controversial reclassification proposal. At least one shareholder sees a connection. ...continue reading.
The SBA Is Guaranteeing Bigger Loans
Posted: Mon, August 15, 2011 at 1:55pm (CDT)
In the current, risk-averse lending environment, loans with a federal guarantee are going strong. The U.S. Small Business Administration is on pace this year to exceed the number of loans it guarantees despite the expiration of numerous incentive programs. And the deals the SBA is backing are larger. Much larger. ...continue reading.
Fertitta Keeps Betting On The Restaurant Industry
Posted: Wed, August 10, 2011 at 3:35pm (CDT)
Tilman Fertitta might be my favorite restaurant executive, because if it wasn't for him I might be out of a job for lack of news to report. Fertitta announced this afternoon that he has "joined forces" with the actress Eva Longoria to rescue her bankrupt Las Vegas nightclub, Beso. ...continue reading.
The Decline Of The Independent Restaurateur
Posted: Tue, August 09, 2011 at 4:45pm (CDT)
It's better to be a chain restaurant without wait staff right now. That, at least, is a conclusion of the latest NPD Group ReCount data, released today, which said that the number of U.S. restaurants declined by 2 percent over the past year—most of them full-service, and nearly all of them independents. ...continue reading.
Another Restaurant Chain Is Going Public
Posted: Mon, August 08, 2011 at 10:29am (CDT)
The recent plunge in the stock market apparently isn't stopping one small restaurant chain from testing the public waters. Chuy's Holdings, owners of the 27-unit Texas-based casual Mexican concept Chuy's, filed a registration statement with the Securities and Exchange Commission late last week. It wants to raise $75 million. ...continue reading.
Private Equity Group Buys Fogo de Chão
Posted: Mon, August 08, 2011 at 9:22am (CDT)
Five years after making its first investment in the Brazilian steakhouse chain Fogo de Chão, Latin American private equity firm GP Investments has decided it wants the whole thing. This morning, GP announced that it has acquired the remaining 65 percent of the 23-unit concept that it doesn't own in a deal that values the chain at $95 million. ...continue reading.
Recession Brings Franchisors And Franchisees Together
Posted: Fri, August 05, 2011 at 1:44pm (CDT)
When the economy took its downward slide in 2008, we figured that it would naturally result in more franchise strife. And we weren't alone in that thought, either, as others we spoke with figured that problems between franchisors and their operators would increase as revenues decreased. We were wrong. ...continue reading.
Chuck E. Cheese's Economic Warning Sign
Posted: Thu, August 04, 2011 at 4:51pm (CDT)
We'll admit to being worried about today's stock market decline. All three stock indices are down for the year now amid concerns of a second recession. But for us, the really bad news came from a single paragraph contained in the quarterly financial release from CEC Entertainment, owner of the venerable Chuck E. Cheese's. ...continue reading.
Will Economic Worries Slow Restaurant Development?
Posted: Thu, August 04, 2011 at 10:24am (CDT)
Restaurant development is on the upswing this year following two years that were tepid at best. Growing credit availability, reduced prices for retail space and for acquisitions, and improving sales has restaurateurs building and buying again. But, perhaps, we might have to make that past tense. ...continue reading.
Dunkin's Stock Loses Some Steam
Posted: Wed, August 03, 2011 at 11:59am (CDT)
When Dunkin' Brands went public last week and its stock price, following a carefully scripted IPO, shot up nearly 50 percent on its first day, the Massachusetts-based franchisor set some high expectations for itself heading into today's second quarter financial release. Based on the numbers, it didn't meet them. ...continue reading.
Krystal Puts Itself On The Market
Posted: Wed, August 03, 2011 at 9:24am (CDT)
Krystal, the Tennessee-based burger chain and one of the oldest restaurant chains in the U.S., is on the block. The Southern version of White Castle said this morning that it is exploring a possible sale and has employed Piper Jaffray to assist in the process. ...continue reading.
Should Yum Keep Its Free Pass On Poor U.S. Results?
Posted: Tue, August 02, 2011 at 9:27am (CDT)
Investors have long ignored Yum! Brands' weak U.S. numbers and for a seemingly good reason: its international business, mostly in China, has gone gangbusters. But those days could be gone. Late yesterday, Goldman Sachs analyst Michael Kelter reiterated his Sell rating on Yum's stock and lowered the company's estimates based on its poor performance in developed markets. ...continue reading.
Wendy's And Its Biggest Franchisee Differ Over Toasters
Posted: Mon, August 01, 2011 at 11:25am (CDT)
Two months before its big, national rollout of a premium burger line, "Dave's Hot 'n Juicy Cheeseburgers," Wendy's International finds itself in something of a pickle. WendPartners, its biggest franchisee, is apparently balking at the new product, a dispute that has now landed in court. ...continue reading.
Woodhouse Steps Down As Cracker Barrel CEO
Posted: Mon, August 01, 2011 at 9:03am (CDT)
Life seemed fine for Michael Woodhouse and Cracker Barrel back in March when the Tennessee-based roadside family dining chain gave Woodhouse, its CEO, a new contract with a $1.1 million salary. But then the activist investor Sardar Biglari started sniffing around and suddenly Cracker Barrel seems to be fighting for its life. ...continue reading.