Ignite Restaurant Group said late yesterday that comp sales at its two “legacy” brands, Joe’s Crab Shack and Brick House Tavern, grew 1.3 percent last quarter. So why is its stock down 13 percent today? Macaroni Grill. The concept’s same-store sales sales fell 7.4 percent during the period, and that’s not even the worst of it.
Mounting competition in the lending environment has made life pretty good for restaurant companies and big franchisees, assuming they operate one of a handful of big, legacy chains. For the rest of the world, lending is still tough to find. The result: meager growth in the number of restaurant units over the past year.
Much is being made today in various news reports of a study out of Kansas that claims a Big Mac would cost 68 cents more if McDonald’s doubled worker salaries. Perhaps, but most of those doubled salaries would not be going to fast food workers because McDonald’s doesn’t own most of its restaurants.
Despite positive reports from Texas Roadhouse yesterday, and from DineEquity this morning, this has been a lackluster earnings season for the restaurant industry, and many have wondered why, given increases in home prices and consumer confidence. Here’s a hint: the economy is still really, really weak.
We wondered recently whether the successful debuts of Chuy’s, and now Noodles, would prompt other growth restaurant chains to seek a public offering. Now, apparently, we’re getting our answer: Vancouver, Washington-based Papa Murphy’s is preparing for an IPO, according to a report this morning by Reuters.
Casual dining chains are losing customers again. Ruby Tuesday, for instance, said that its same-store sales fell 3 percent last quarter, while chains like Cheesecake Factory have underperformed expectations. But one chain saw some improvement last quarter: Famous Dave’s. And it can thank its robust to-go business for that.
Restaurants can only handle so much capacity. At some point, a concept can bring in so many sales before it starts to reach its ability to handle its customer base. To wit: Panera Bread, the St. Louis-based bakery/café chain that today more or less said that it is straining its ability to serve customers, particularly at lunch.
Want to improve your franchise company’s stock price? Sell off company stores. That’s the lesson from Wendy’s this morning. The big Ohio-based QSR announced plans to sell off 425 company-owned stores by the second quarter of next year. Not surprisingly, its stock price shot up 9 percent despite mediocre quarterly financials.
Few restaurant sector booms over the years have been as pronounced and dramatic as the frozen yogurt explosion, and perhaps few have been as maligned. Experts, who have seen the sector boom before, seem to believe that frozen yogurt is in for another 90s-style collapse. But that may not be the case, thanks to froyo’s unfrozen sibling.
Lone Star Fund keeps cashing out on its Del Frisco’s investment. The private equity firm is selling 5 million more shares at of the steak chain at $21.84 a share, according to a registration statement filed with the Securities and Exchange Commission this morning. Its Del Frisco’s second such offering this year.
The 104-percent first-day return for Noodles & Company’s IPO late last month was the best performance by a restaurant IPO in at least a dozen years, and maybe longer. That kind of performance will almost certainly lead to more offerings—but which restaurant chains could be next to take the leap?
Guillermo Perales seems to be collecting restaurant brands like other people collect stamps or bubble gum cards. The CEO of Sun Holdings bought stores with another concept this month: Krispy Kreme, making it the latest in a series of deals that has vaulted Sun into one of the 10 largest restaurant franchisees in the country.
When Noodles & Company doubled in price on its first day of trading, some commentators called the performance “surprising.” But anybody who follows restaurant stocks knows there was nothing surprising about it: perceived growth chains are so rare on the equity markets that those who do go public get a big premium.
Restaurants can breathe a little easier now. The Obama administration’s decision yesterday to delay enforcement of employer penalties until 2015 gives the industry a one-year reprieve to figure out how they’re going to comply with the rules. But the delay’s ultimate impact will likely be modest at best.
We’ve been saying for a while now that big franchisees have had the access to capital and willingness to expand and grow, and the best proof comes from our latest Monitor 200 ranking of the largest restaurant franchisees. Collectively, that group’s sales and unit count easily outpaced the broader restaurant industry.
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