The Restaurant Finance Monitor

Wall Street To Get A Taste Of Noodles

Noodles & Company, the Broomfield, Colorado chain of pasta-centric restaurants, is planning a $75 million initial public offering. The 18-year-old company filed its registration statement with the SEC this morning, giving public restaurant investors another option in the high-growth fast-casual sector.

Should Arby's Put King's Hawaiian On Regular Menu?

When Arby's was planning its limited time roast beef sandwich on a Kings Hawaiian bun, the company's distributors thought it would distribute 7,000 cases a week. It has distributed 30,000. So it has to be tempting for the Atlanta-based QSR to promote the sandwich to its regular menu, right? Perhaps, but that doesn't mean it'll give in.

Frozen Yogurt Starts Getting Some Competition

Frozen yogurt is here to stay. Let's face it: those pastel colors and swirly logos are going to be part of our retail and franchise lives forever. There will be no 90s-style industry collapse like last time. People are just too into yogurt, and thus the lines at Pinkberry and its ilk are too long. But that doesn't mean the industry shouldn't worry.

Bubble Restaurants Struggle With Obamacare

There may be a lot of uncertainty over how much it's going to cost, but there's no doubt that the Affordable Care Act--which goes into effect in a mere seven months--will have a significant impact on restaurants' labor force strategies. But no businesses are in as difficult a state as those on the bubble.

McDonald's And The Benefits Of Simplicity

The malaise that ultimately killed McDonald’s Angus Burger line is apparently infecting other items at the burger chain, at least according to Bloomberg. The company is considering the removal of more, poor-selling menu items. Which makes me wonder whether the broad menu that helped improve the chain’s sales could be hurting it.

Jack In The Box And Qdoba Have A Role Reversal

Two years ago, San Diego-based burger chain Jack in the Box struggled to compare to its fast-casual subsidiary, Qdoba. In its 2010 fiscal year, Jack’s same-store sales declined 8.6 percent while Qdoba’s sales grew and there was talk about “reinvigorating” Jack in the Box. There’s been a stunning role reversal since then.

Activists Have Been Good For Famous Dave's

Since March, stock in Minneapolis-based barbecue chain Famous Dave’s is up more than 22 percent. This isn’t entirely unusual—most restaurant stocks are up, after all. But this is coming in spite of weak financials, including declining sales, especially for franchisees, and profits. And now we know why.

Why No Restaurant IPOs This Year?

By all accounts, this should be a perfect time for a privately owned restaurant to jump into the IPO market. The market has rallied all year, and the vast majority of publicly held restaurant companies are up big so far in 2013. And still we have yet to see the first restaurant industry IPO. Why not?

Pizza Inn Stock Takes A Big Tumble

Pizza Inn shareholders must have a nasty case of whiplash. The Texas-based pizza buffet chain’s stock is getting hammered today, down more than 30 percent, after the company reported a steep decline in same-store sales, unit counts and earnings, continuing the stock’s 27-month roller coaster ride.

Cosi Tries A Reverse Stock Split

Well, I guess that’s one way to keep the Nasdaq Stock Price Police off your back. Cosi, the Deerfield, Illinois-based bakery/café chain, today said it is planning a 1-for-4 reverse stock split, effective tomorrow, as the chain’s stock has languished at 70 cents for months has kept it under the threat of a delisting.

An Applebee's Franchisee Files For Bankruptcy

The recession’s impact is still working its way through the restaurant industry. Case in point: AppleIllinois, a 33-unit franchisee based in Crestview Hills, Kentucky that suffered steep sales declines during the recession, began losing money to the point it fell behind on payroll and is now up for auction.

Soft Leverage Ratios Make A Comeback

The lending markets really have returned. Want some evidence? Just look at some of the terms in the amended credit agreement at LRI Holdings, the owner of the Logan’s Roadhouse steak chain. The amendments gave LRI a pair of covenants that are decidedly borrower friendly.

Prices Are Going Up For Restuarant Properties

This might be a good time to do a sale-leaseback. Thanks to a dearth of supply, combined with improving economics, cap rates for restaurants have come down nearly 20 percent—more than a full percentage point—bringing those rates down to levels not seen since before the recession.

Chuck E. Cheese Stock Joins The Party

Restaurant stocks have had a strong 2013 so far, with a few key exceptions like Irving, Texas-based CEC Entertainment, better known as Chuck E. Cheese. The pizza-and-games chain’s stock has fallen slightly this year, continuing two years of underperformance. That all changed late last week.

Famous Dave's Shareholders Endorse The Activist

Shareholders really wanted some new blood on the Famous Dave’s board. Patrick Walsh, the 37-year-old activist investor who has targeted mid-sized restaurants, was elected to the Minneapolis barbecue chain’s board in a landslide, receiving by far the most votes of any other nominee to the company board.

First Bennigan's, Next Steak And Ale?

Paul Mangiamele is leading one of the most unlikely comebacks in the restaurant industry, helping lead the Bennigan’s system back to growth less than five years after the half the chain’s restaurants were padlocked and many of the rest were going out of business. But now he’s looking toward a comeback that’s even less likely: Steak and Ale.

Does Tim Horton's Stock Need A Push?

Tim Horton’s has an agitator. According to Reuters, the Boston-based hedge fund Highfields Capital Management has raised its stake in the Canadian coffee and doughnut chain to 4 percent and is pushing the company to use a debt-funded stock buyback to improve returns. But does Tims really need a kickstart like that?

Buffalo Wild Wings Burdened By Big Chickens

In the first quarter, Buffalo Wild Wings paid a record $2.10 a pound for chicken wings. So far in the second quarter, that price is down to $1.75. By June, the company expects wing prices to fall to $1.50 a pound. And yet the company’s stock is down and it got an analyst downgrade. The reason? Big chickens.

Despite Controversy, Chick-fil-A Had A Good Year

2012 was a trying year for Chick-fil-A, at least since the chain’s president, Dan Cathy, decided to wade into the gay marriage debate by speaking against it, which ignited a boycott by gay marriage supporters and then an anti-boycott by opponents. But none of it slowed the freight train that is the chain’s growth.

How Many Units Should Franchisors Own?

It's clear that most franchise restaurants love franchising because of the low capital costs and high profits associated with the business model. Yet many, if not most, believe they have to operate some locations to maintain credibility with their franchisees and test out new concepts. But what is the right percentage of company ownership?

Last Year Was Good For Restaurants

Here’s one sign that the lending market has returned and restaurants are busy building again: the total volume of syndicated leveraged loans in the industry grew 21 percent last year. That’s according to the latest Chain Restaurant Industry Review from GE Capital, Franchise Finance, released today.

Can Delivery Boost Burger King?

Delivery has worked for pizza, Chinese food and subs, so why can’t it work for burgers? Burger King is about to find out. The Miami-based quick-service chain, which has been testing delivery in Miami, Washington D.C., Houston and New York, said today it plans to expand that service into Chicago, San Francisco and Los Angeles.

Bagger Dave's Makes The Big Leagues

Diversified Restaurant Holdings is moving up in the world. The Southfield, Michigan-based company this week started trading on the Nasdaq exchange under the symbol “BAGR” after years trading over the counter. BAGR is short for Bagger Dave’s, the company’s 12-unit casual burger concept.

Six Different Views Of Chipotle's Stock

Few restaurants on Wall Street generate polarized opinions quite the way Chipotle does. Everybody admits it’s a good concept. But many think it’s overpriced for a concept whose growth is slowing. The Denver-based burrito concept’s first-quarter financials did little to ease that debate, beating expectations but also showing signs of a slowdown.

On Crumbs' Crumbling Sales

We read with interest this Wall Street Journal piece on the cupcake fad, in light of sales declines at the New York-based cupcake shop Crumbs. But a deeper look at the sales declines show that Crumbs’ issues are not so much related to the end of the cupcake fad, so much as they’re due to concerns about Crumbs itself.

Chicken Wings Not So Mighty For McDonald's?

There’s wide speculation that McDonald’s is planning a national launch of its Mighty Wings test product some time this year as the Chicago burger giant looks to regain the edge on product innovation this year. Yet there are some indications that the product may be more troublesome for the chain.

Restaurants Had A Tough First Quarter

Thank goodness that first quarter is out of the way now. The first three months of 2013 were brutal for the restaurant industry, and though the environment improved in March, the market was still a tough one, at least based on the latest sales report from Black Box Intelligence and People Report.

Restaurant CFO To CEO: A Mixed Bag

This morning, Miami-based Burger King shuffled the chairs of its executive ranks amid news that its CEO Bernardo Hees, will soon jump ship to Heinz. His successor will, eventually, be the wunderkind Daniel Schwartz, who is all of 32. But age is not the reason to be concerned about the hire. This is: He’s the CFO.

Yum Brands Has A New China Problem

Just when Yum Brands thought it was out of the woods in China, something else comes along to muck things up. This time, it’s the bird flu, which is already generating fears that the slump bedeviling the company’s big KFC brand in China might continue for another few months yet.

Goebel Gives Pie Five A Big Boost

Dave Goebel may have left Applebee’s, but he certainly hasn’t left the restaurant business. The casual dining chain’s former CEO, who currently operates Goodcents Fresh Deli, among other things, is now getting into Pie Five. Goebel has agreed to open 10 units of the fast-casual pizza chain in the Kansas City area.

Caribou Shutting Stores, Converting Others

UPDATED—Joh. A. Benckiser spent $340 million on Caribou Coffee last year. It spent $1 billion on Peet’s Coffee earlier that year. It doesn’t take rocket science to figure out which chain is going to be the conglomerate’s major focus from here on—and indeed, Caribou will be a much smaller chain in a week.

A Sale May Be The Only Way Out For Cracker Barrel

Cracker Barrel may not be able to fend off Sardar Biglari without a sale of the company. According to the San Antonio Express News, the chairman of Biglari Holdings indicated that he won’t go away anytime soon, suggesting there will be more proxy fights to come. How many? You be the judge.

KFC To Finally Go Boneless

KFC finally appears to be getting out from under the shadow of its famous founder. The venerable Louisville-based chicken chain today said it plans to offer a new line of boneless chicken, a move that could arguably be the chain’s biggest product introduction since Extra Crispy.

Upgrades Give Panera A Big Boost

Analysts have recently come to believe that the restaurant industry is headed for a better spring, and the chain that may be benefitting the most from that epiphany is Panera Bread, the recipient of a pair of upgrades that took the chain’s stock to an all-time high today—over $175 a share.

Restaurant Sales Appear To Be Stabilizing

OK, so remember how restaurant sales started weakening late last year, then turned starkly south in January and February, sparking fears of another economic slowdown as restaurateurs and even some economists likened the situation to 2008? Yeah, about that. Never mind.

Will Pizza Put Chili's Over The Top?

Dallas-based casual dining chain Chili’s is getting ready to roll out its new pizza nationwide this month, the company’s first test of new ovens that give the chain the ability to make just about anything. The pizzas could open the chain to new demographics with an item that is more profitable than its typical fare.

Yup, Restaurants Had A Bad February

News flash: traffic was down last month. According to the latest Restaurant Performance Index from the National Restaurant Association, the industry’s sales and traffic fell last month, taking the index into contraction territory for the fourth time in the past five months.

Sbarro Replaces Its Chief Executive

We’ve seen Jim Greco at several conferences over the past year, and each time he confidently declared that one day Sbarro would become the premier fast-casual Italian chain in the country. So we were surprised today to find out that Sbarro replaced Greco as its CEO just 14 months after he took the job.

Marty Kotis And The Spurned Wife Billboard

Those of you who use the Internet might have come across a photo of a North Carolina billboard recently in which a woman named Jennifer told off her cheating husband. As it turns out, said billboard, followed by other billboards and a video, was all a marketing ploy—for a billboard company owned by none other than one Marty Kotis.

Another Private Equity Group Gets Into Franchising

Among the biggest trends we’ve seen in recent years has been the eager investment by private equity groups into the franchise sector. Here’s another one: Acon Investments, a Washington D.C.-based private equity group that recently bought 40 Applebee’s units in the Midwest and hopes to do more.