Archived postings from September, 2011...

Struggling Papa John's Franchisee Goes Bankrupt

Posted: Thu, September 29, 2011 at 4:36pm (CDT)

A big Papa John's franchisee went bankrupt this week, and it is pointing the blame squarely at its franchisor. Essential Pizza, which operates 72 Papa John's in Minnesota and Colorado, went bankrupt this week after its secured creditor, GE Capital, appointed a receiver who quickly froze the company's funds. ...continue reading.

Darden's Has A Worrisome Quarter

Posted: Wed, September 28, 2011 at 3:56pm (CDT)

Florida-based Darden Restaurants is often considered a benchmark company for casual dining. While the country's largest operator of full-service restaurants typically outperforms its competition, its performance is often used to gauge the performance of the entire category. If that's the case, then perhaps Applebee's, Chili's, et al, should be worried. ...continue reading.

Brad Blum Wants To Lead Cosi

Posted: Tue, September 27, 2011 at 11:46am (CDT)

UPDATED—Former CEO Brad Blum launched his public fight with the Illinois bakery chain Cosi today—a fight we said would be coming last week—in a press release filled with phrases emphasized with bold lettering, capital letters or both. And he asked for nothing less than the CEO job and a wholesale change to the company's board. ...continue reading.

Multibranding Didn't Work For Yum! Brands

Posted: Fri, September 23, 2011 at 4:38pm (CDT)

When Yum! Brands announced that it had reached a deal to sell Long John Silvers and A&W Restaurants to franchisees yesterday, it ended a nine-year period that wasn't exactly the chains' golden age. Yum's ownership of the two concepts was marked mostly by missteps, failures and lawsuits. ...continue reading.

Cracker Barrel Proxy Erupts Into A Fight For Control

Posted: Fri, September 23, 2011 at 9:48am (CDT)

UPDATED: Cracker Barrel today swallowed a poison pill in its effort to fend off Biglari Holdings and accused the company and its chairman, Sardar Biglari, of trying to take over control of the company—a charge Biglari later denied. ...continue reading.

Dickey's Shows That It Is Still A Good Time To Develop

Posted: Thu, September 22, 2011 at 5:04pm (CDT)

Since the credit crunch shut off the debt spigot, many franchise systems have worked aggressively to help their franchisees find financing. But Dickey's Barbecue Pit has been working to help its franchisees avoid it. The Dallas-based chain helps operators lower development costs so much that many franchisees don't even need bank debt. ...continue reading.

Franchisees Take A&W, Long John Silvers Off Yum's Hands

Posted: Thu, September 22, 2011 at 3:04pm (CDT)

Yum! Brands said this afternoon that it has sold its two minor-league brands, Long John Silvers and A&W, and the buyers were, not surprisingly, franchisees of the brands. A consortium of operators bought the 1,100-unit Long John Silvers, while a franchisee "with substantial interests in A&W restaurants" bought that brand. ...continue reading.

Wendy's Tries Fending Off Better Burger Chains

Posted: Wed, September 21, 2011 at 5:03pm (CDT)

Can crinkled pickles rescue a burger chain? Wendy's is betting on it, but we have our doubts. The Ohio-based burger chain this week introduced its long-awaited improvement to its burger line in what may be the clearest example yet of a big QSR trying to fend off the fast-growing better burger market. ...continue reading.

Could A Big KFC Franchisee Hit The Market?

Posted: Tue, September 20, 2011 at 10:53am (CDT)

A lot of KFC restaurants could hit the market in the coming months. Kazi Foods, KFC's second largest franchisee, is exploring a possible sale of many of its restaurants if it can't come to an agreement with its franchisor and lender on a bankruptcy deal. ...continue reading.

Diners Reduced Restaurant Visits Last Quarter

Posted: Mon, September 19, 2011 at 2:19pm (CDT)

It's increasingly looking like restaurants' recovery from the recession may have been a temporary bump. On Monday, the NPD Group said that restaurant traffic decreased in the second quarter—before the economy began noticeably weakening in the summer. ...continue reading.

Former Burger King CEO Poking Around At Cosi

Posted: Fri, September 16, 2011 at 4:25pm (CDT)

Brad Blum, former CEO at Burger King and Macaroni Grill, apparently has plans for Cosi, the struggling Illinois bakery-cafe concept in danger of losing its Nasdaq listing. Blum this week disclosed that he owns 6.75-percent of the chain through Blum Growth Fund, and that he plans to recommend changes to the company's board and its senior management. ...continue reading.

Lower Demand + Higher Food Costs = Bad News For Restaurants

Posted: Fri, September 16, 2011 at 1:52pm (CDT)

In 2008, many restaurants had to deal with the double-whammy of rising costs and falling sales at the same time. As we enter 2012, that specter is raising its ugly head again. Food costs are expected to continue to increase, and the sales momentum the industry has had this year seems to be waning. ...continue reading.

Souper Salad, Grandy's Go Bankrupt

Posted: Thu, September 15, 2011 at 2:47pm (CDT)

These haven't been salad days for the restaurant industry, just ask the owners of the Souper Salad and Grandy's chains. SSI Group Holding Corp., filed for bankruptcy protection on Wednesday, citing cash flow problems and the economy's overall weakness. It recently closed a third of its company-owned Souper Salad locations and put both concepts up for sale. ...continue reading.

Activist Investors Like Tennessee

Posted: Thu, September 15, 2011 at 9:06am (CDT)

What is it about Tennessee? Recently, Fidelity National Financial filed documents with the SEC indicating activist intent with an 8.4-percent investment in Tennessee-based O'Charley's—making it the third Volunteer State restaurant burdened with an activist investor, joining Cracker Barrel and Ruby Tuesday. ...continue reading.

Assessing Biglari's Track Record

Posted: Tue, September 13, 2011 at 1:56pm (CDT)

As we've been warning for weeks now, the activist investor Sardar Biglari has launched his public campaign to get a board seat at the Tennessee-based roadside chain Cracker Barrel, complete with the website enhancecrackerbarrel.com. This fight will likely include numerous references to Biglari's track record at Biglari Holdings. But that track record may not be all that it's cut out to be. ...continue reading.

Benihana Loses A Shareholder Vote

Posted: Mon, September 12, 2011 at 4:48pm (CDT)

Benihana said today that it lost a proxy fight, when shareholders at a special meeting rejected the company's plan to eliminate its dual-class share structure, a proposal hotly contested by the family of its late founder. But that won't stop the company from pushing ahead with a second vote—but this one will be armed with more votes in the Benihana's favor. ...continue reading.

Investors Make An Economic Prediction

Posted: Fri, September 09, 2011 at 5:11pm (CDT)

Stocks fell more than 300 points again today, continuing a long string of uncertainty that has hammered many a 401(k) plan. But restaurants have taken a particularly hard hit. According to Bloomberg, this is as clear a sign as any that investors believe we're headed for a recession. We don't necessarily agree. ...continue reading.

Sbarro Could Change Hands Soon

Posted: Fri, September 09, 2011 at 11:37am (CDT)

It appears that someone will buy Sbarro by the end of the month. The bankrupt, mall-based pizza chain has been negotiating hard with creditors for months since late April, when an unnamed foreign investor came in with a bid to buy the concept. This week, a court paved the way for the company to auction itself to the highest bidder. ...continue reading.

Would You Buy This Sandwich Chain?

Posted: Tue, September 06, 2011 at 5:20pm (CDT)

Could Quiznos be sold? That certainly would be one way out of the company's debt mess, and indeed multiple sources have told us that some private equity groups have been kicking the tires on the Denver-based chain, only to back off out of concern about steep declines in sales and unit count. ...continue reading.

Dunkin' Brands Gets A Sell Rating

Posted: Tue, September 06, 2011 at 9:21am (CDT)

Michael Kelter is rapidly becoming one of our favorite restaurant analysts, mostly because he is unafraid to put a "Sell" rating on a stock. And the latest is particularly remarkable: Dunkin' Brands, whose IPO last month was underwritten by none other than Kelter's employer, Goldman Sachs. ...continue reading.

Biglari Starts His Proxy Fight

Posted: Thu, September 01, 2011 at 5:04pm (CDT)

(UPDATED) The restaurant-turned-hedge fund Biglari Holdings said today it plans to nominate its chairman and namesake, Sardar Biglari, to the Cracker Barrel board of directors, officially kicking off a proxy fight that should come as a surprise to absolutely nobody. The only thing surprising is that Biglari's sidekick, Phil Cooley, is not coming along for this ride. ...continue reading.

It's McDonald's World, We All Just Live In It

Posted: Thu, September 01, 2011 at 3:17pm (CDT)

We're finishing up the Top 200 franchise systems for Franchise Times and I'm probably not breaking earth-shattering news by reporting that the top spot will be occupied by a certain Illinois-based burger giant. McDonald's is in the top spot every year, after all. But that might make its recent performance even more remarkable. ...continue reading.

Roland Smith And Wendy's Middling Track Record

Posted: Thu, September 01, 2011 at 11:58am (CDT)

Wendy's today announced the resignation of CEO Roland Smith. The reason, according to the company's statement, is that Smith didn't want to move from Atlanta to Dublin, Ohio, where Wendy's headquarters was returning after a three-year absence. We can sympathize with Smith's reasoning, but the No. 3 burger chain didn't exactly flourish under his leadership, either. ...continue reading.