Archived postings from April, 2012...

How Schlotzsky's Solved The Reimage Problem

Posted: Fri, April 27, 2012 at 1:48pm (CDT)

An awful lot of old restaurants are out there, and old restaurants have a problem: they're old. Customers don't like eating in restaurants that look and feel aged. But franchisees don't like spending money on a remodel after years of depressed sales. And franchisors franchise to get away from that sort of spending. Enter the sandwich chain Schlotzsky's, which may have a solution: ...continue reading.

Low Prices Lead To A Franchisee Buying Boom

Posted: Wed, April 25, 2012 at 4:18pm (CDT)

Are we in the midst of a franchisee acquisition boom? It sure seems like it. Nearly half of all mergers and acquisitions last year involved franchisees, according to the latest Merger and Acquisition Census from the Chicago-based investment banking firm J.H. Chapman, as operators found both financing and deals plentiful—and prices relatively low. ...continue reading.

Arcos Dorados And The Struggles Of Being A Public Franchisee

Posted: Tue, April 24, 2012 at 11:21am (CDT)

One year ago, Arcos Dorados Holdings, McDonald's giant Latin American franchisee, went public to some stunning results. Its price was initially valued at $13 to $15 a share. It went public at $17 a share to heavy demand, finally opening on April 14, 2011 at $21 a share. Suffice it to say, its stock hasn't quite lived up to those expectations. ...continue reading.

Knapp Track Takes A Tumble

Posted: Tue, April 24, 2012 at 9:32am (CDT)

Business was looking good for the restaurant industry entering 2012, particularly for casual dining concepts. They'd been on a slow recovery for more than a year, but nice weather and employment growth accelerated that improvement. But the industry has apparently hit a brick wall in March, according to the latest Knapp Track. ...continue reading.

Casual Dining Takes A Turn South

Posted: Mon, April 23, 2012 at 11:08am (CDT)

Traffic at Dallas-based casual dining chain Chili's grew 3.4 percent in January. In February it grew 1.1 percent. In March, it was up 0.5 percent. That's what the industry refers to as a "slowdown," and in this case it might be an indication that casual dining chains are losing customers again. ...continue reading.

Now Biglari Wants Four Cracker Barrel Seats

Posted: Thu, April 19, 2012 at 9:11am (CDT)

As we've been predicting for weeks now, Sardar Biglari has restarted his campaign for seats on the Cracker Barrel board. And this time he means business. In a letter to shareholders this morning, the chairman of Biglari Holdings said he wants four seats on the Tennessee-based chain's board—one of which is currently occupied by Michael Woodhouse. ...continue reading.

Yum! Brands Puts It All Together

Posted: Wed, April 18, 2012 at 4:49pm (CDT)

For the past few years, Yum Brands' quarterly reports have read like episodes of Scooby Doo: they've been utterly predictable. Sales in China would explode. They'd be OK in other international countries, and the U.S.—typically relegated to the end of the report—would struggle. But this afternoon, the Kentucky-based franchisor provided us with an actual surprise when it lifted the mask off its first-quarter report. ...continue reading.

Another Executive Change At Panera Bread

Posted: Wed, April 18, 2012 at 10:58am (CDT)

Panera Bread's late on Tuesday announced that its chief operating officer, John Maguire, has stepped down so he could become the next CEO of Friendly's Ice Cream, the Massachusetts-based chain that only recently emerged from bankruptcy. This is only notable because it's the third major, C-level change at St. Louis-based Panera in recent weeks. ...continue reading.

Franchise Lending Is On The Upswing

Posted: Tue, April 17, 2012 at 10:59am (CDT)

Franchise lending ground to a halt with the credit crunch in late 2008 and has been coming back painfully slow ever since. But it's definitely coming back. The latest evidence comes from the online lending site BoeFly, which today released its first Franchise Lending Index, along with the International Franchise Association, showing a steady increase in lending over the past year. ...continue reading.

Good Times Restaurants Wants Another Concept

Posted: Fri, April 13, 2012 at 11:02am (CDT)

Today we check in with Good Times Restaurants, the small burger and custard chain out of Golden, Colorado, which earlier this week released this interesting tidbit: it has hired Heathcote Capital as a financial advisor. Heathcote's job, apparently, will be to analyze potential strategic acquisitions. ...continue reading.

Would Burger King Be Better Off With Fewer Stores?

Posted: Thu, April 12, 2012 at 3:00pm (CDT)

Burger King's average unit volumes are $1.25 million, 17 percent less than those of Wendy's, 57 percent less than those of McDonald's. In the coming edition of The Monitor, we discuss how these volumes create considerable challenges for Bill Ackman's newest toy. Here's something we didn't get to: it might be better off if many of its restaurants simply shut down. ...continue reading.

QSRs About To Overtake Full-Service Restaurants

Posted: Tue, April 10, 2012 at 2:19pm (CDT)

Are Americans rejecting wait staff? It sure seems that way. Quick-service restaurants, which have been steadily gaining market share on their full-service restaurant cousins for several decades, finally look poised to take the market share lead this year, at least according to information in GE Capital's annual Chain Restaurant Industry Review. ...continue reading.

Here Comes The Cracker Barrel-Biglari Fight, Part Two

Posted: Tue, April 10, 2012 at 9:08am (CDT)

When Cracker Barrel shareholders overwhelmingly voted against the board candidacy of activist investor Sardar Biglari in December, some analysts thought he would sell off and go away. Instead, he has bought up even more stock, and now the Tennessee-based chain's board has swallowed a poison pill, reigniting its fight with the chairman of Biglari Holdings. ...continue reading.

Outback's Parent Bets Against Independents

Posted: Mon, April 09, 2012 at 3:13pm (CDT)

As we've said several times on this blog, the recession hasn't been kind to the independent restaurant. Independents have lost 2 billion in traffic since 2008, and thousands of total restaurants. And at least one chain restaurant operator doesn't think it'll get any easier for them, in large part because of health care reform. ...continue reading.

Ruby Tuesday Decides To Buy Lime Fresh

Posted: Wed, April 04, 2012 at 4:35pm (CDT)

That experiment didn't last long. Ruby Tuesday, the Tennessee-based casual dining chain, decided to buy Florida-based fast-casual Mexican chain Lime Fresh Mexican Grill after all—ending the company's short-lived tenure as a franchisee of the up-and-coming concept. ...continue reading.

Bill Ackman Still Has A Thing For McDonald's

Posted: Wed, April 04, 2012 at 2:49pm (CDT)

At times during his 90-minute conference call this morning on his investment in Burger King, the activist investor Bill Ackman sounded more like a jilted lover who just got a new girlfriend, but who can't quite let go of his old flame. We're speaking of McDonald's, the Illinois-based burger chain on which Ackman spent two years agitating. ...continue reading.

Burger King Stakes Its Future On Joint Ventures

Posted: Wed, April 04, 2012 at 11:24am (CDT)

Now Burger King's deal with Carrols Restaurant Group makes sense. Late yesterday, the Miami-based burger chain announced a deal with an investment group, including noted activist investor Bill Ackman, to take the company public through the back door in about a month. The Carrols deal helps pretty the chain up for its return to the public sphere. ...continue reading.

Could Obamacare Hurt Franchise Financing?

Posted: Tue, April 03, 2012 at 1:51pm (CDT)

Franchise systems are doing more now to help their franchisees get financing than they have in years. They're talking with lenders, sometimes making personal visits to the banks, developing their own loan programs and guaranteeing debt. Now they may need to do one more thing: predict future health care costs. ...continue reading.

Activists Appeal To J. Alexander's Independent Directors

Posted: Tue, April 03, 2012 at 10:58am (CDT)

The activist investors targeting Nashville, Tennessee-based casual dining chain J. Alexander's aren't just reserving their appeals to the company's shareholders. Late yesterday, the Privet Fund released a letter in which it appealed to a different group: the chain's three independent directors. ...continue reading.

Bryan Elliott Is Pessimistic About The Recovery

Posted: Mon, April 02, 2012 at 9:41am (CDT)

There's been a growing consensus that the recent sales gains at restaurants are sustainable, because they coincide with employment improvement and a bolstered consumer confidence. But Bryan Elliott, analyst at Raymond James, doesn't buy into that. This morning, he downgraded several restaurant chains on his coverage list. ...continue reading.