Restaurant Finance Across America
Archived postings from July, 2012...
Fidelity Kicks In More Cash For J. Alexander's
Posted: Tue, July 31, 2012 at 9:33am (CDT)
Facing a pair of competing bids, Florida-based insurance carrier-turned-restaurant collector Fidelity National Corp. increased the size of its bid for J. Alexander's. The Nashville-based casual dining chain said this morning that Fidelity has agreed to pay $13 a share, up from its previously announced $12 offer. ...continue reading.
CKE Is The Next To Set IPO Terms
Posted: Mon, July 30, 2012 at 10:27am (CDT)
California-based CKE Inc., is the next restaurant company to go through the door in the rush to go public. The operator of Hardee's and Carl's Jr., this morning said that it has set the terms of its $200 million IPO, joining several other restaurant chains entering the public markets this year. ...continue reading.
Del Frisco's Struggles Out Of The Gate
Posted: Fri, July 27, 2012 at 11:20am (CDT)
Wall Street in recent years has received restaurants with open arms, even when investors were shying away from the sector, as they demonstrated with Chuy's successful IPO earlier this week. So Del Frisco Restaurant Group had every right to expect the same when it went public today, but that hasn't happened. ...continue reading.
Starbucks Gives Us More To Worry About
Posted: Thu, July 26, 2012 at 4:20pm (CDT)
We're one week into earnings season and one thing is abundantly clear: restaurant executives are missing estimates and are blaming economic conditions. Those not blaming economic conditions are blaming competitors' response to those conditions. The latest example: Starbucks. ...continue reading.
Now Outback's Parent Sets Its Terms
Posted: Wed, July 25, 2012 at 1:55pm (CDT)
This has been an interesting week. Investors have pounded high-performing concepts for relatively narrow misses, cutting a third of the value of Chipotle over a 2-percent sales shortfall and shaving more than 10 percent off the value of Buffalo Wild Wings because of wing prices. And still restaurants go public. The latest: Outback Steakhouse. ...continue reading.
After A Long Slump, Restaurants Build Again
Posted: Wed, July 25, 2012 at 9:12am (CDT)
Restaurant closures became so common in the aftermath of the 2008-09 recession that used equipment could be bought for pennies on the dollar. But amid a brightened environment, and buoyed by cheap debt, they began building again last year, a fact confirmed by the latest count from Chicago-based market research firm NPD Group. ...continue reading.
Chicken Wing Prices Hurt Buffalo Wild Wings
Posted: Tue, July 24, 2012 at 4:51pm (CDT)
At the beginning of 2012, a few analysts predicted weakness this year at Buffalo Wild Wings, citing higher-than-normal prices on chicken wings. The Minneapolis-based chain responded with surging sales and profits and a booming stock price. But now, apparently, the chain is feeling the impact of those prices. ...continue reading.
Chuy's Survives A Tough Early Test
Posted: Tue, July 24, 2012 at 9:48am (CDT)
It's difficult to imagine a tougher environment for a restaurant chain to go public in than the present. Economic concerns have hammered the stock market in recent days, and restaurants have led the decline amid consumer spending concerns. Yet Texas-based Chuy's stepped into the public markets this morning with its IPO, and has seemingly survived. ...continue reading.
J. Alexander's Gets More Bids
Posted: Mon, July 23, 2012 at 5:23pm (CDT)
It's amazing what a little advertising can do. This afternoon, Nashville-based casual dining chain J. Alexander's said that it received at least two written bids for the company during a 30-day "go shop" period called for in its merger deal with American Blue Ribbon Holdings. ...continue reading.
McDonald's Expects Higher Health Care Costs
Posted: Mon, July 23, 2012 at 5:03pm (CDT)
Restaurant companies, and every other employer for that matter, will have about a year and a half to prepare for new health care rules, and yet estimates on the cost of these rules have been tough to come by. But McDonald's provided a decent estimate on its conference call today: $10,000-$30,000 per unit. ...continue reading.
Chipotle Has A Bad Day On The Market
Posted: Fri, July 20, 2012 at 4:21pm (CDT)
Anybody paying attention late yesterday afternoon knew Chipotle was in for a rough Friday. The company's stock fell a quick 7 percent after it released its disappointing second-quarter numbers. The stock fell further during the company's quarterly conference call last night. By this morning, it was off 17 percent. ...continue reading.
J. Alexander's Shareholders May Not Get Their $12
Posted: Fri, July 20, 2012 at 12:11pm (CDT)
The proposed sale of J. Alexander's shareholders to Fidelity in theory gives the chain's shareholders a choice: $12 a share in cash, or $3 in cash plus a share of stock in Fidelity's restaurant subsidiary, American Blue Ribbon Holdings. But, apparently, the deal is a bit more complex than that. ...continue reading.
Chipotle's Sales Slow Down
Posted: Thu, July 19, 2012 at 4:21pm (CDT)
Think about this: Your restaurant chain just reported 21 percent revenue growth, comp sales in the high single digits and extremely strong margins—and then investors immediately bid down the price on your stock. Alas, that's what is happening with Chipotle, following its second-quarter release this afternoon. ...continue reading.
Ignite's Inauspicious Beginning To Public Company Life
Posted: Thu, July 19, 2012 at 11:22am (CDT)
Executives at the newly public Ignite Restaurant Group hoped that their first conference call following the company's May IPO would be loaded with good news, notably an impressive increase in restaurant level profit. Instead, that conference call was spent dealing with an earnings restatement. ...continue reading.
Quiznos Makes Its Executive Changes
Posted: Thu, July 19, 2012 at 9:59am (CDT)
About the only thing surprising about Quiznos' announcement late yesterday that Greg MacDonald has resigned as CEO was that Chairman Harsha Agadi didn't take his place. Instead, the Denver-based sub chain named former UPS Store CEO Stuart Mathis to the post. ...continue reading.
Taco Bell's New Menu Is A Big Hit
Posted: Wed, July 18, 2012 at 4:07pm (CDT)
Some time ago, shortly after Taco Bell introduced its Doritos Taco, a franchisee told us that it was huge—so huge that the company could barely keep up with demand for the shells in its first few weeks. We've since come to know that it's been a ridiculously successful product launch—helping drive the chain's same-store sales up 13 percent for the quarter. ...continue reading.
Mimi's Cafe Didn't Work For Bob Evans
Posted: Wed, July 18, 2012 at 12:59pm (CDT)
Restaurant chains seeking to acquire secondary growth concepts should heed the example of Mimi's Cafe. A recent report from the Financial Times publication dealReporter indicated that Columbus, Ohio-based Bob Evans is seeking a buyer for its struggling casual dining concept—effectively waving the white flag on an eight-year-old mistake. ...continue reading.
Del Frisco's Sets Its IPO Terms
Posted: Tue, July 17, 2012 at 3:41pm (CDT)
So much for the IPO slowdown. For the second time in a week, a restaurant chain going public has set its IPO terms—this time it's Del Frisco's. The Texas-based steak chain said it will sell 7 million shares of stock at a range of $14 to $16 per share, which will give the company a market cap of just under $335 million at the mid-range. ...continue reading.
Chuy's Sets The Terms Of Its IPO
Posted: Mon, July 16, 2012 at 1:54pm (CDT)
Chuy's, the Austin, Texas-based restaurant chain, set the terms for its IPO last week, pricing its stock between $11 and $13 a share. At the mid-range of that price, that would give the 36-unit Mexican casual dining chain a market capitalization of at least $180.5 million. ...continue reading.
Darden Pays A Pretty Penny For Yard House
Posted: Thu, July 12, 2012 at 4:24pm (CDT)
Darden Restaurants really wanted Yard House. The Orlando-based operator of Red Lobster and Olive Garden added to its growing collection of chains with the purchase of the 39-unit Yard House from private equity firm TSG Consumer Partners for $585 million in cash, or about $15 million per restaurant. ...continue reading.
Buffalo Wild Wings Buys Some Stores
Posted: Thu, July 12, 2012 at 9:19am (CDT)
As we've been preaching for months now, anybody involved in the sale or purchase of a franchised unit has to be aware of what the franchisor might do. The latest evidence comes from Wisconsin, where Buffalo Wild Wings recently exercised its right of first refusal to buy nine units there from the West Allis-based Wings 27. ...continue reading.
Uh Oh: There Go Corn Prices Again
Posted: Wed, July 11, 2012 at 3:27pm (CDT)
The weather gives, and the weather takes away: the same odd weather that gave us our strangely mild winter, leading to brisk sales at many restaurants, could well lead to cost increases in the future. Corn prices spiked today after the federal government cut its production forecast for 2012. ...continue reading.
Perales Buys Some Arby's
Posted: Wed, July 11, 2012 at 12:11pm (CDT)
Guillermo Perales is betting on Jon Luther. The CEO of Sun Holdings added to his collection of franchises this week with the purchase of 51 Arby's units in Dallas from the franchisor—a risky deal that may quickly result in some store closures and lease renegotiations, but one he was willing to make because of his relationship with the former Dunkin' Brands chairman. ...continue reading.
Will Restaurants Outperform The Economy?
Posted: Tue, July 10, 2012 at 2:35pm (CDT)
We'll admit that we don't know what to think about the economy, though we suspect that the current weakness is the result of a combination of electoral uncertainty, European madness and an abundance of caution on the part of fearful employers. Yet the restaurant industry continues to outperform the broader economy. ...continue reading.
Privet Fund Is Fighting J. Alexander's Merger
Posted: Mon, July 09, 2012 at 1:06pm (CDT)
The Privet Fund isn't stopping with a simple letter to board members in its efforts to thwart J. Alexander's proposed merger with American Blue Ribbon Holdings. The activist investors, which own 10 percent of the casual dining chain, is taking its case to both shareholders and a courthouse. ...continue reading.