Archived postings from February, 2012...

The Recession Hammers Independents

Posted: Wed, February 29, 2012 at 3:38pm (CST)

The restaurant business is odd. It's a tough, competitive industry that nevertheless attracts a seemingly endless parade of entrepreneurs who think they can step into a closed business and make it work. But, it seems, the Great Recession of 2008 has changed that. ...continue reading.

The Cupcake Fad Is Apparently Fading

Posted: Wed, February 29, 2012 at 2:06pm (CST)

When the New York-based cupcake chain Crumbs Bake Shop went public in a reverse merger last year, it generated a lot of comparisons with the Krispy Kreme of a few years ago: a chain that could grow rapidly on the strength of a single treat product, in this case, the cupcake, and could suffer once people moved on to something else. That comparison is looking more appropriate all the time. ...continue reading.

Another Big Franchisee Moves Toward A Sale

Posted: Tue, February 28, 2012 at 4:50pm (CST)

Another big KFC operator may end up selling. Wagstaff Management, which operates 74 KFC units in Minnesota, Texas, California and other western states, is negotiating with its franchisor on a deal that would enable the bankrupt franchisee to find a buyer, the operator's attorney said today. ...continue reading.

Domino's And The French Fry Factor

Posted: Tue, February 28, 2012 at 10:04am (CST)

Domino's Pizza's stock performed exceptionally well last year, and the company reported another solid quarter this morning. Despite this, its franchisees haven't added new units. And the company has largely refrained from joining its competitors in providing incentives. Instead, its plan is to develop a French fry. ...continue reading.

Bankrupt KFCs Fetch A Good Price

Posted: Fri, February 24, 2012 at 9:53am (CST)

A KFC franchisee out of Texas was the only bidder for 113 bankrupt KFC restaurants in five Eastern states. Two companies, KFC Realco Two and Star Partner Enterprises, have agreed to pay $56.2 million for the existing restaurants owned by Kazi Foods, which have been bankrupt for the past year. ...continue reading.

What's In A Name? Everything

Posted: Thu, February 23, 2012 at 4:57pm (CST)

You can't judge a book by its cover, but a good cover sure helps book sales. The same is true for restaurants. One of the most important elements that determine whether a restaurant chain will be successful or not is its name. The latest example of this comes courtesy of Pie Five. ...continue reading.

Darden Answers The Weather Question

Posted: Thu, February 23, 2012 at 11:15am (CST)

Just when I convince myself that restaurant executives will do their best to ignore the nice weather in explaining strong sales results, along comes Darden Restaurants, which this morning pre-announced its results for its current quarter. According to Darden, weather had a big impact. ...continue reading.

Can Low Food Costs Hurt A Restaurant Chain?

Posted: Wed, February 22, 2012 at 4:14pm (CST)

We've spent a lot of time on this site, covering the various reasons that Sbarro went bankrupt and had to get sold. It had a lot of debt. It also had high lease costs, which combined with falling sales to doom the chain. But here's one, important element to the story we haven't discussed: its low food costs. ...continue reading.

Harsha Agadi To Become Quiznos' Chairman

Posted: Tue, February 21, 2012 at 2:07pm (CST)

Harsha Agadi's tour of the restaurant industry has landed in Denver. The former CEO at Friendly's has been hired as the new executive chairman at Quiznos, the company announced this afternoon. Greg MacDonald will continue in his role as president and CEO of the troubled sandwich chain. ...continue reading.

Big KFC Franchisee Nears A Sale

Posted: Mon, February 20, 2012 at 4:09pm (CST)

Kazi Foods is about to get a lot smaller. A yet-unnamed bidder has emerged to buy roughly half of the big KFC operator—one of the largest franchisees of any kind in the U.S.—out of bankruptcy. A deal is expected to be presented to the U.S. Bankruptcy Court in Michigan this week. ...continue reading.

Kona Grill Has A People Problem

Posted: Fri, February 17, 2012 at 4:30pm (CST)

If I told you that a restaurant chain had two CEOs "resign" in the past year, along with its chief financial officer, and then its chief operating officer, plus another company director, you'd assume that the chain is struggling and in brutal shape. And you'd be wrong, because this odd story is about Kona Grill. ...continue reading.

How Much Is Weather Helping Restaurants?

Posted: Fri, February 17, 2012 at 9:31am (CST)

A year ago, the family dining concept Bob Evans blamed bad weather in December and January on the company's disappointing quarterly sales results. So when the chain announced a quarterly sales increase earlier this week, we looked to see if the company gave this winter's nice weather the credit it deserves. We were disappointed. ...continue reading.

P.F. Chang's To Take Over True Food

Posted: Thu, February 16, 2012 at 9:05am (CST)

Here's a sentence I didn't quite expect to read when I got up this morning: P.F. Chang's is acquiring another restaurant concept. But that's what's happening. The Arizona-based operator of Asian concepts P.F. Chang's China Bistro and Pei Wei is taking over True Food Kitchen. ...continue reading.

Why This Sandwich Chain Is In A Pickle

Posted: Wed, February 15, 2012 at 5:27pm (CST)

One of the stranger cases of troubled restaurant franchises we've seen involves a Denver-based sandwich chain. And its name isn't Quiznos. Spicy Pickle, the small, publicly traded sandwich concept, defaulted on its loans earlier this month and abruptly closed six of its seven company owned locations. ...continue reading.

Is The Restaurant Buying Boom Over?

Posted: Mon, February 13, 2012 at 10:01am (CST)

The restaurant merger and acquisition market has been so active these past two years that it might be easier listing the restaurants that haven't been bought and sold than it would be to list those that have. Numerous chains, and some big franchisees, changed hands in 2010 and 2011. In 2012, dealmakers might take a break. ...continue reading.

The Big Challenge Facing Quiznos' New Owner

Posted: Fri, February 10, 2012 at 4:10pm (CST)

Shortly after Quiznos finalized its deal ceding control of the chain to Avenue Capital, at least one knowledgeable observer speculated that it may simply delay the inevitable bankruptcy by a couple of years. We'll reserve that judgment for now, but a conversation we had today with a franchisee illustrated the new owner's major challenge: franchisees' food costs. ...continue reading.

CiCi's Spends Big To Expand

Posted: Thu, February 09, 2012 at 11:08am (CST)

Every franchise wants to grow, and CiCi's is no different. Yet the challenging post-recessionary development market has stood in the way. Now, the Texas-based pizza buffet chain is taking a different tact to encourage development: it's becoming a minority investor in franchisees' new stores. ...continue reading.

Cosi Inks A Deal With Its Devil

Posted: Thu, February 09, 2012 at 9:18am (CST)

New Cosi-CEO Carin Stutz is proving she she has more sense than her predecessor. The Illinois-based fast-casual restaurant chain said this morning that it is bringing one-time nemesis Brad Blum aboard as a consultant—a move that ends one of the industry's stranger disputes. ...continue reading.

Uh Oh? SBA Lending Plummets

Posted: Wed, February 08, 2012 at 10:07am (CST)

Loans backed by the Small Business Administration were once considered a financing as last resort, but since the credit crisis it's become a financing of first resort for many franchise restaurants. So perhaps the following piece of information is cause for alarm: the number and volume of SBA loans plunged in the last three months of 2011. ...continue reading.

Investment Funds To Buy Real Mex

Posted: Tue, February 07, 2012 at 11:22am (CST)

A trio of investment funds have pooled their efforts to buy Real Mex Restaurants out of bankruptcy. RM Opco, a company formed by Real Mex debt holders Tennenbaum Capital Partners, JP Morgan Investment Management and Z Capital, won an auction for the California-based Mexican restaurant operator for $49 million in cash. ...continue reading.

Fidelity Adds To Its Restaurant Collection

Posted: Mon, February 06, 2012 at 9:38am (CST)

Bill Foley apparently has a thing for underperforming restaurants with wait staff. The chairman of Fidelity National Financial—which, last we checked, was an insurance company—has been gobbling up family and casual dining chains. The latest: O'Charley's, for which Fidelity is offering $9.85 a share in cash. ...continue reading.

Surprise! Landry's Closes Some Morton's

Posted: Thu, February 02, 2012 at 4:29pm (CST)

One day after its purchase by Landry's was finalized, Morton's The Steakhouse has reportedly closed eight locations around the country, based on various media reports, and fittingly the closings came on Groundhog Day—given that we've heard all of this before. ...continue reading.

Chipotle Has A Slight Miss

Posted: Thu, February 02, 2012 at 10:06am (CST)

Imagine that you owned a restaurant chain that just reported full-year comp sales of 11.2 percent, atop an increase the year before; revenue growth of 23.6 percent, and margins at 26 percent, far higher than any of your competitors. You'd be thrilled. But a restaurant chain did just report those numbers—Chipotle—and investors aren't exactly cheering. ...continue reading.

Both Lenders, Franchisors Predict Growth

Posted: Wed, February 01, 2012 at 2:41pm (CST)

Say what you will about economic uncertainty and the lending climate, but here's a substantive bit of proof that the franchise sector will improve this year: roughly the same percentage of lenders and franchisors said in a recent survey that they're expecting more activity in 2012. ...continue reading.

Do We Need Another Publicly Traded Steak Chain?

Posted: Wed, February 01, 2012 at 11:53am (CST)

Tilman Fertitta today said that he has completed his purchase of 92 percent of Morton's Restaurant Group at $6.90 a share, a deal that will remove the company from the equity markets—which should serve as a warning to the company that seeks to take its place, Del Frisco's Restaurant Group. ...continue reading.