May 2014

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Sandell, Bob Evans In Dust-Up Over Email

Bob Evans today confirmed that it offered to settle its proxy fight with Sandell Asset Management in January and that Sandell refused. The comment came during the chain's response to criticism from Sandell over the company's efforts to contact the investor's board nominees.

Popeyes Is Eating KFC's Lunch

Much of the focus in the chicken sector recently has centered around how Chick-fil-A has overtaken KFC to become the nation's largest chicken concept. But the chain that's actually been taking share from the Louisville-based chain has been none other than Popeyes.

Greg Flynn's Latest Deal Is Huge For Franchising

Leave it to Greg Flynn to find a new way to fund a franchise. The CEO of the country's largest restaurant franchisee, Flynn Restaurant Group, just received a $300 million investment from a Canadian pension fund as part of a management-led buyout of the company's private equity investors.

Papa Murphy's Gets Little Love

Papa Murphy's at one point was trading below $9 a share this month, nearly 20 percent below its IPO price. Its valuation entering the day is among the lowest of restaurant companies on Wall Street.

Noodles Buys 16 Locations

Noodles & Company this morning announced that it bought the Indianapolis market from a franchisee, 16 stores for $13.4 million. The move continues a counter trend in which franchisors are buying up franchisee units when the opportunity arises.

Starboard Accepts Darden's Challenge

In agreeing to sell Red Lobster in spite of a shareholder vote to discuss the issue, Darden basically dared activist investors to launch a proxy. On Thursday, they accepted the challenge. Starboard wants to replace all 12 board members.

Are Weak Sales Slowing M&A?

Never mind the recent sales of Red Lobster and TGI Friday's. The M&A market, at least for large-scale franchisees, could be slowing down this year, stalled by a combination of high prices, rising costs and weak sales.

Casual Dining Has Lost A Lot Of Customers

Casual dining chains have lost 7.1 million customers since 2009, according to a report this morning from the market research firm NPD Group. The sector has lost roughly 2 percent of its customers each year during that time, and it's not getting any better.

Restaurants Holding Back On Price Hikes

Are restaurant owners afraid to raise prices? Perhaps. Or perhaps they're taking a wait-and-see approach when it comes to looming increases in food costs. That explains the gap between restaurants' price increases, and the food inflation expected this year, according to survey results from the purchasing co-op SpenDifference.

Why The Red Lobster Multiple Is Too High

Darden Restaurants this morning said that it sold Red Lobster to Golden Gate Capital for $2.1 billion, for a multiple of 9x EBITDA. But given that Golden Gate already has a deal to sell the chain's real estate, the effective multiple is lower than that.

Families Are Dining Out A Lot Less

Want an explanation why casual dining concepts have losing so many customers? Families. Dining out occasions by families has dropped by more than 1 billion since 2008, according to the NPD Group. Demographics and the economy are just part of the explanation.

A Look At Chipotle's Efficiency

Chipotle has somehow managed to attract a seemingly endless stream of traffic into its restaurants. But a deeper look at the company's sales numbers have demonstrate exactly how good it's been at serving lots of customers in a small space.

Food Costs Take NPC By Surprise

Many restaurant owners came into 2014 expecting this to be a good year for food costs. But rising costs for things like cheese and pork have hit some operators hard—such as big Pizza Hut and now Wendy's operator NPC International.

Wendy's Remodels Are Generating Sales

Wendy's remodels, which it calls "Image Activation," have been generating a substantial sales lift for the company and its operators. Executives said today on the company's conference call that the remodels improve sales 10 percent to 20 percent.

Starboard Accuses Darden Of Delay

More than two weeks have passed since activist investor Starboard Value told Darden it had the votes to call a special meeting, and yet the casual dining company has yet to schedule one. Now Starboard is getting antsy, and is suggesting a proxy fight could be forthcoming.

Former Quiznos Executives Respond

Former Quiznos executives, including Rick Schaden and former CEO Greg MacDonald, responded to charges that they misled debt holders in a 2011 restructuring in a recent filing in the chain's bankruptcy. They argued that the ill-fated restructuring deal included numerous warnings of risk factors, some of which predicted the chain's current predicament,

How Much Bigger Can Subway Get?

Subway is already the biggest restaurant chain in the world by unit count, and yet it keeps getting bigger, even in the US where it is allegedly saturated. The company believes it could add another 7,000 to 8,000 domestic units.

Chains Restaurants Still Grabbing Market Share

For all this talk of dying restaurant chains and surging independents, big concepts are still taking market share. According to GE Capital, sales at the 100 largest restaurant chains grew 3.5 percent last year, outpacing the entire industry.

Papa Murphy's Raises $64 million

Papa Murphy's sold 5.8 million shares of stock in an initial public offering at $11 a share, raising $64 million. The stock quickly rose a modest 6 percent a share in early trading.

A Look At Yum's David Novak Era

David Novak will step down as CEO of Yum Brands to become the company's executive chairman, to be replaced by Taco Bell CEO Greg Creed. Novak's tenure has been marked by wins and losses, but those wins have been big.