Filippo Berti Assumes Role of Chief Executive Officer for the Ali Group
Effective September 1, 2016, Filippo Berti will assume the role of Chief Executive Officer for the Ali Group. As Chief Executive Officer, Filippo Berti will have responsibility for all of the Group’s operating companies worldwide. Luciano Berti will continue in his role as Chairman of the Ali Group and remain actively engaged with Filippo and other corporate staff. Filippo Berti joined the Ali Group in May 2008 with the acquisition of Beverage-Air where he held the role of President. He most recently served as Chief Executive Officer and Chairman of Ali Group North America based in Chicago, Illinois. Filippo’s leadership was a key element in the successful acquisitions of Beverage-Air, Edlund, Scotsman Industries and InterMetro Industries. “Since Filippo joined the Ali Group in 2008, he has proven to be a dynamic, discerning manager, well respected by his team and those in the foodservice industry. Over his career, I have provided him with direct experience in the field and the opportunity to see the many different aspects of our business. Filippo has shown himself to have vision and a great sensitivity to the market,” Luciano Berti said. – Source: The Ali Group.
Bloomin’ Brands Sees Expansion Opportunities in Latin America
The company has hired a global real estate firm to look for growth opportunities specifically in South America, said Cathie Koch, spokeswoman for Bloomin’ Brands. The company will likely target metropolitan areas in Chile and Argentina, while continuing to grow its presence in Brazil, real estate experts said. There are no new locations to announce yet. “We view South America as an international growth opportunity,” Koch said. Real estate and restaurant experts agree that Latin America is a natural next step for Bloomin’, where — despite Brazil’s sputtering economy — the company has found some success. Bloomin’ has opened three Abbraccio restaurants, the international version of Carrabba’s Italian Grill, in Brazil since last year. Bloomin’ also operates 75 Outback Steakhouses in Brazil. Expansion plans include more Outback Steakhouse, Abbraccio and Fleming’s Prime Steakhouse and Wine Bar locations in Brazil and other Latin American countries. “With domestic expansion stalled, global growth is a big opportunity especially for proven American brands,” said Darren Tristano, president of Technomic, a Chicago-based food research firm. “Ultimately working in other countries requires a strong partner who knows the industry, markets and the business. This is critical to risk and success.” Bloomin’ currently operates one Outback Steakhouse inside a mall in Chile. Latin America has three of the top 10 countries worldwide primed for retail expansion — Brazil, Uruguay and Chile — according to a recent report by the global real estate firm, JLL. Bloomin’ has 90 restaurants in seven Latin American counties right now, the JLL report shows. Bloomin’ plans to operate 100 restaurants in Brazil within three years, including opening its first Fleming’s Prime Steakhouse and Wine Bar in the country this year. Other American brands are targeting Latin America in a big way. Nike, Old Navy, Skechers and American Eagle see opportunities for growth in countries like Mexico, Argentina and Colombia. “American brands appeal to residents and tourists in Latin American because they seem to them as a quality name,” said Brian Connors, a hospitality consultant with Connors Davis Hospitality in Fort Lauderdale. “Latin America is an easier market to move into than say the Middle East, because it’s closer and the customers there have more similar tastes to what you see in America.” The push for more international locations comes at a time when U.S. sales are slumping for Bloomin’s concepts. But, pointed out Andrew Carlson, vice president of retail brokerage for JLL in Tampa, some other American brands in Latin America are thriving while their U.S. locations close or sales continue to shrink. He was referring to has been names like Sizzler, Ponderosa and Fuddruckers restaurants. “I think there was still a Blockbuster Video down there just two years ago,” Carlson said. Bloomin’ Brands, which operates about 1,500 Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill and Fleming’s Prime Steakhouse and Wine Bar locations, can be found 22 countries and Puerto Rico and will expand soon to the Middle East. Some restaurants are franchise locations. Outback opened its first international restaurants in 1996 in Canada. By 2009, all Canadian locations were closed, though one restaurant has since opened in Edmonton, Alberta. Bloomin’ Brands announced in July that it plans to develop 26 Outback Steakhouse and Abbraccio restaurants in the Middle East over the next five years. Just a week after the Middle East expansion announcement, Bloomin’ sold its South Korean business for $49.4 million, according to a regulatory filing. The sale is expected to close in this quarter. The buyer, whose name has not been released, will assume ownership and operations of 74 Outback Steakhouse locations in South Korea as franchises. – Source: Tampa Bay Times.
Chipotle’s ShopHouse Tests Burrito Format for Asian Fare
ShopHouse Southeast Asian Kitchen is testing wraps at four units, including its original location in Washington, D.C., the company confirmed. Chris Arnold, communications director for ShopHouse parent Chipotle Mexican Grill Inc., said the test is a product of the fact that guests were bringing tortillas from a nearby Chipotle unit to the restaurant in Washington’s Dupont Circle and asking if they could roll the Asian dishes offered at ShopHouse like a burrito. So ShopHouse decided to test that option on the menu, using the same tortillas used at Chipotle. The test is in the Dupont Circle restaurant, as well as two units in Chicago and one in Los Angeles. Typically, ShopHouse offers the option of building a bowl over rice, noodles or salad, with various proteins, vegetables, sauces and garnishes. The wrap test was noted in a report Wednesday by Wall Street analyst Mark Kalinowski of Nomura, who said Chipotle continues to tinker with the 15-unit ShopHouse chain, which he described as “a concept that may simply be ahead of its time at present — but one we visit every chance we get.” Chipotle also is an investor in the Pizzeria Locale concept, and this fall plans to launch Tasy Made Burgers in Lancaster, Ohio. – Source: NRN.
Howard Johnson’s Restaurant to Close in Maine, Leaving only One More
The closing of one of the last two Howard Johnson restaurants in a couple of weeks will mark the end of its fried clam strips, ice cream and other menu staples that nourished baby boomers and leave the once-proud restaurant chain teetering on the brink of extinction. The slice of roadside Americana will no longer be served up in Bangor after Sept. 6. For waitress Kathe Jewett, it’s the only job she’s held since starting work when the restaurant opened in 1966. “It’s bittersweet, but it’s nothing to be sad about,” the 68-year-old Jewett insisted Tuesday during a break from serving customers. “I’ve been here for 50 years — and it’s time. The closing will leave only one Howard Johnson restaurant, in Lake George, New York. Before falling on hard times, Howard Johnson took restaurant franchises to a new level. The orange-roofed eateries once numbered more than 800, with the New England-based restaurant chain predating the ubiquitous Howard Johnson hotels. Howard Deering Johnson started the business in 1925, when he inherited a soda fountain outside Boston. That evolved into a chain of restaurants featuring comfort food and 28 flavors of ice cream. The orange roof with a blue spire represented a dependable place for travelers to park the family car, grab a meal and spend the night. In Bangor, the Howard Johnson Restaurant and Lounge in its heyday was popular with travelers and locals alike, including horror and science fiction author Stephen King. King, who lives in Bangor, said he used to eat there often and enjoyed the patty melts and milkshakes. Owners David Patel and his wife, Sally Patel, kept their restaurant going for the past four years as business slowed and hours were scaled back to just breakfast and lunch. “It’s not worth it to keep it open. We tried for four years,” Sally Patel said Tuesday, noting the hotel side of their business remains healthy and will be unaffected by the restaurant closure. “We felt bad to close it.” “We’re doing great,” owner John LaRock said. “We’re going to do some renovations this winter. Spruce it up, keep it going.” He said it’s a “good feeling” to be keeping the HoJo legacy alive. “Knowing I have the only one left makes it special,” he said. – Source: Boston.com/The Associated Press.
Bob Evans Credits Sales Decline to Restaurant Closing
President and Chief Executive Officer Saed Mohseni says, “BEF Foods began fiscal 2017 with continued strong volume growth during the first quarter. Additionally, BEF Foods achieved market share gains in both its key side-dish and sausage product categories. We have completed the expansion of our Lima, Ohio, refrigerated side-dish plant and are now gearing up to meet peak holiday production which begins during the back half of the second quarter. The Lima plant expansion provides the added production capacity that is critical to our ongoing efforts to gain additional points of distribution, particularly in West Coast growth markets. “While Bob Evans Restaurant sales remained challenged during the first quarter, we are encouraged by the moderating sales trend that began in July and continued into the second quarter, with quarter-to-date same-store sales of -2.0 percent through August 29. We believe our efforts to enhance the guest experience through improved hospitality and food quality are gaining the attention of guests and improving our sales trend. Positive guest comments increased 24 percent during the first quarter, while negative comments declined substantially; a trend we believe will contribute to future sales improvements. Our focus during the second quarter will be the system-wide launch of our exciting new value-oriented, guest-friendly menu along with relentless attention to improving the guest experience.” Bob Evans Restaurants’ net sales were $220.4 million, a decline of $18.3 million, or 7.7 percent, compared to net sales of $238.7 million in the corresponding period last year. Same-store sales declined 4.3 percent with the balance of the net sales decline due to net restaurant closures during the past year. Five restaurants were closed and no new restaurants opened during the quarter. At the end of the quarter, the company operated 522 restaurants. The April 2016 sale-leaseback transaction of 143 restaurant properties reduced operating income by around $0.4 million due to a $2.7 million increase in rent, partially offset by a $2.3 decline in depreciation compared to the prior year period. Looking ahead, Mark Hood, chief administrative and chief financial officer, says, “We have adjusted our fiscal 2017 outlook to reflect underlying changes in certain of our assumptions and are increasing our GAAP diluted EPS guidance range to $2 to $2.17, from $1.95 to $2.12. Likewise, our non-GAAP diluted EPS guidance range has been raised to $2.05 to $2.20, from $2.00 to $2.15 previously. “At Bob Evans Restaurants, we continue to expect full-year negative low-single digit to flat same-store sales and a neutral to slightly positive commodity cost environment. Additionally, we will continue to invest in improving the guest experience to drive sales. As for BEF Foods, we have lowered our sow cost forecast to reflect current expectations for the remainder of the fiscal year. At the corporate level, we have lowered our interest expense guidance to reflect a lower than anticipated interest rate environment this year and we will maintain our focus on lowering corporate and other costs required to support our businesses.” – Source: fsrmagazine.com.
Manufacturers Plan to Invest 5% of Revenue in Industry 4.0 Tech, PwC Says
Manufacturers participating in a survey plan to invest 5% of their annual revenue over the next five years in Industry 4.0-related technology, PricewaterhouseCoopers said in a report. PwC surveyed 423 representatives of industrial companies in 26 countries. Respondents were questioned about strategy involving Industry 4.0, which involves such things as additive manufacturing, automation, simulation, digitization, sensors and devices that share data via the internet. “The buzz around Industry 4.0 has moved from what some had earlier seen as PR hype to investment and real results today,” PwC said in its report. Among participants, 35% said they have a “high level” of digitization today and 76% expect they will achieve it within five years, according to the report. Also, 46% of respondents said they have reached high levels of digitization in product development. “Product development and engineering in the area where industrial manufacturing companies rate themselves as furthest advanced down the digitization and integration road,” PwC said. “Companies are already becoming adept at adding sensors and functionality to machines” and are “producing devices that provide more precision and can translate collected data into insights.” Respondents expect to cut operations costs by 3.6% annually using Industry 4.0 technology and to increase revenue 2.9% annually, the consulting company said. ‘Crucial’ Period. “Gains of the magnitude uncovered by our survey have the potential to change the competitive landscape within a very short space of time,” PwC said in the report. “In an increasingly cost-competitive market, no industrial manufacturing company can afford to lose out in operational efficiency against their market peers. The next two to three years will be crucial for companies looking to catch up.” PwC added Industry 4.0 “will also make the fight for the customer more intense.” Products and services will be “increasingly customized to customer needs, and many of our survey respondents say they plan to use data analytics to understand and meet those needs.” At the same time, 52% of respondents said a “lack of digital culture and training” were among their top challenges. Other problems identified in the survey were “unclear economic benefit of digital investments” (40% of respondents), “lack of a clear digital operations vision” (38%) and the cost of digital investments (38%). The consulting company urged manufacturers to adopt an Industry 4.0 strategy. “The biggest challenge companies face isn’t buying the right technology, it’s transforming their people and culture,” PwC said. “These require long-term change programs.” – Source: ADVANCEDMANUFACTURING.COM.
Fox & Hound, Champps Close 25 Units
The owner of sports bar chains Fox & Hound and Champps closed 25 locations, even as the company received a lifeline that will enable it to operate long enough to be put up for sale, according to bankruptcy filings and the company. Kelly Investment Group, a private-equity firm out of California that specializes in restructurings, has emerged to keep the chains’ owner, Last Call Guarantor LLC, from being shut down. Fun Eats and Drinks LLC, a Kelly subsidiary, recently acquired the rights to $75 million in first lien debt that Last Call had owed to Antares Capital. Kelly Investment then agreed to provide $5.4 million in financing to enable the company to continue operating through an expected auction next month, according to the filings. Without the financing, Last Call said in bankruptcy filings that it would “not able to continue their business operations beyond August 30” through the use of available cash and needs the financing. Indeed, just 10 days ago, Antares in a bankruptcy filing expressed doubt that any bidder for the company would emerge and pushed to have the bankruptcy converted to a Chapter 7 — which would have shut down the restaurants and the operation. “More than two months ago, [Last Call] hired an investment banker,” Antares said in its filing. “More than six weeks ago, potential bidders were contacted. More than four weeks ago, confidentiality agreements were signed and bidders were given access to sale information. More than two weeks ago, the deadline for indications of interests from potential bidders passed. No one has come forward with a viable bid. It is highly unlikely that anyone will come forward with a viable bid.” Last Call’s bankruptcy is its second since 2013. The company filed for federal debt protection with $117 million in debts. In bankruptcy documents, the company blamed a series of problems and failed decisions for its financial problems, including high turnover after it shifted workers to part-time in response to health care requirements. Going into the bankruptcy, Fox and Hound had 48 locations, Bailey’s had nine and Champps 23. According to a company spokeswoman, Last Call now operates 37 Fox & Hound locations, four Bailey’s and 14 Champps. DMV Maple Investments controls Last Call, having acquired control of the company from the investment firm Cerberus last May. Last Call has been seeking a buyer for its restaurants since June. Some potential buyers started working directly with the company’s lender, Antares Capital. One of those buyers, Kelly Investment Group, agreed to buy Antares’ debt. In so doing, that put Kelly in the driver’s seat in Last Call’s bankruptcy. First-lien lenders are the first to be paid back in a bankruptcy. Last Call then approached Kelly about financing to get it through next month’s auction. – Source: NRN.
America’s Fastest-Growing Restaurant Is On a Roll. Sandwich Chains Win as Fast-Casual Demand Grows
For a restaurant chain trying to build a national brand based on quality and freshness, a strong association with the state of New Jersey is a mixed blessing. A reference to the Garden State can evoke pleasantries such as tailgating at a Bruce Springsteen concert or the whiff of something rotten—the Lincoln Tunnel, waste management, Bridgegate. Despite the marketing challenge, Jersey Mike’s Subs, based in Manasquan, N.J., is, uh, eating away at market share across the country at a time when industry leader Subway is faltering. For the last three years, the trade publication Nation’s Restaurant News has named Jersey Mike’s the fastest-growing chain in America: The company had about 700 stores at the end of 2013 and now has more than 1,500 open or in development. Annual sales have grown from an estimated $402 million in 2013 to $675 million last year, according to Technomic, a research company. Despite its rapid expansion, you may have never heard of Jersey Mike’s. The chain keeps a low profile in the media and only recently began advertising on national television. Even so, it’s hardly a hoagie arriviste; it traces its roots to a family-owned business, Mike’s Subs, which opened in the beach town of Point Pleasant in 1956. Peter Cancro, the owner and chief executive officer, landed a job at Mike’s as a teen in 1971. A few years later he bought the place. In the ’80s, Cancro changed the name and began selling franchises. Jersey Mike’s grew gradually through the years, but a broader trend in American dining is driving its sudden proliferation, says Darren Tristano, Technomic’s president: the surging popularity of fast-casual chains. They offer quickly prepared, customizable meals that are slightly more healthy than traditional fast food and cost a bit more. The concept first shook up the hamburger industry when Five Guys Burgers & Fries and Shake Shack started luring away some customers from Wendy’s and McDonald’s. Tristano says the same dynamic is now roiling the pizza, chicken, and sandwich businesses. Fast-casual conquered burgers. Next up: Hoagies. Among other submarine slingers benefiting from the upheaval are Jimmy John’s and Firehouse Subs, Tristano says, all of which are expanding. In the meantime, Subway is struggling. In the past two years, according to Technomic, U.S. sales at Subway, the largest fast-food chain in the world, have fallen 3.5 percent as consumers have rejected its fast-food approach in favor of more artisanal breads, meats, and cheeses. In 2015 longtime Subway spokesman Jared Fogle went to prison after pleading guilty to sex crimes. “Our brand led the way for thousands of entrepreneurs to own and operate their own business around the world and for other brands to enter the sandwich segment,” a Subway spokesperson says. The dining area inside a Jersey Mike’s has a nostalgic, seaside vibe—a surfboard here, a vintage boardwalk postcard there. Customers place orders with an employee in a blue apron standing over a manual deli slicer. The apparatus is at once functional—the meat on each sandwich is sliced to order—and theatrical, turning the act of hero making into a rhythmic procession of ham and salami, pepperoni and provolone, tomato and shredded lettuce. (Add olive oil, vinegar, and Italian spices, and you’ve got it “Mike’s Way.”) Hoyt Jones, president of the company, says slicing meat in front of lunchgoers is key to establishing Jersey Mike’s bona fides as a purveyor of superior, handcrafted subs, not a rote assembler of prepackaged foodstuffs. “The slicer is the quarterback of the store,” Jones says. “It’s a coveted position.” It also helps, he says, that the hot sandwiches are cooked to order on flat-top grills and not heated up in microwaves. The resulting subs deliver livelier flavors than what you get at Subway. They’re also more expensive. Nationally, a regular-size original Italian with a fountain soda and chips goes for about $11. Josh Funderburk, the director for training, who joined the company 20 years ago, says the menu at Jersey Mike’s has changed only slightly since its inception. (Bologna sandwiches were removed.) Despite its growing success, the company tamps down the swagger. If you invert the preening, hot-tub splashing, ab-flashing attitude made famous on MTV’s Jersey Shore, you get the culture of Jersey Mike’s. “One of the sayings we have is, ‘Don’t spike the football,’ ” Funderburk says. Across the country, seasoned fast-food franchise owners are scrambling to join the fast-casual wave. For about 20 years, Jim Denburg owned almost a dozen Domino’s Pizzas from New York to Amsterdam. Five years ago he sold his franchises and got into the better-burger business, opening up several Smashburgers. Recently, Denburg hooked up with Jersey Mike’s. Later this year, in Uniondale, N.Y., he’ll open the first of five sub shops slated to colonize the Long Island suburbs. Although the burger space has become crowded, Denburg says, he sees room to grow in the delisphere. “Americans love a great sub, and in most places the choices are limited,” he says. “Jersey Mike’s fills that void.” He recommends the roast beef. – Source: BloombergBusinessWeek.
Taco Cabana Loses its Big Enchilada: CEO of Parent Company to Retire
Tim Taft, CEO and president of the parent company of Taco Cabana and Pollo Tropical, has informed the company’s board that he plans to retire as CEO, president and a director of Fiesta Restaurant Group Inc. at the end of the 2016 fiscal year. Taft oversaw the company’s spin-off from its former parent, Carrols, and has aggressively grown the Caribbean-themed Pollo Tropical brand, launching several locations in North Texas. Though both Taco Cabana and Pollo Tropical play in the rapidly growing fast casual segment, the company’s stock has taken a beating of late. Shares in Fiesta are down 31 percent this year and 54 percent in the last 52 weeks. The company also said it will re-examine a previously stated plan to spin off Taco Cabana to a stand-alone company and hinted that it may slow corporate growth. “A tax-free spin-off may remain a viable route to maximizing shareholder value, however, the board intends to reconsider fully Fiesta’s options, including the possible continued ownership of Taco Cabana,” the company said. “The board will also review the company’s new store opening and capital expenditure plan in light of new market dynamics and recent operating performance, as well as the company’s leadership transition. “Based upon this review, the board will take such actions as it believes appropriate to optimize the company’s capital structure in light of its long-term capital needs.” Fiesta’s chairman, Jack Smith, said in a statement: “We are extremely grateful to Tim for his outstanding leadership. Tim was instrumental in guiding the company through its successful transition as an independent public company and during his tenure improved operations at both brands, refined our marketing strategies and set the stage for ongoing growth.” The Dallas Morning Star.
Cooking his Way to Better Health — and a Restaurant Empire
The gig: Young Lee, 56, is chief executive of the Flame Broiler, a Santa Ana-based fast-casual restaurant chain. Lee opened the first Flame Broiler restaurant in 1995. More than two decades later, the company has expanded to 180 locations — nearly all of them operated by franchisees in five states. The privately held company’s annual revenue is about $100 million. In 2015, Lee was a semifinalist for the EY Entrepreneur of the Year award in Orange County. A healthful option: Lee graduated from UCLA with an economics degree and went to work as a life insurance salesman. He had to travel by car frequently for the job and often would eat at fast-food restaurants because more healthful food options weren’t readily available. But soon, Lee said, he became ill with nausea and skin sores. Doctors couldn’t diagnose what was wrong. Lee quit his job and made a commitment to eat healthy and exercise, resulting in a dramatic improvement in his health. For a while, Lee, who had once studied dentistry, ran a dental lab with his wife, Sarah. But Lee couldn’t stop thinking about how changing his eating habits had changed his life. “I thought about the quality of food and thought ‘Why don’t you start a restaurant that doesn’t serve any fried food, nothing processed, no MSG and with food that is helpful to the human body?’” he said. A small flame: In 1995, Lee opened the first Flame Broiler restaurant in Fullerton to serve healthful Korean-style meat and rice bowls with fresh vegetables. Although Lee had only minor restaurant experience from working at a bakery while attending UCLA, he quickly learned the ropes of operating a restaurant. The Flame Broiler gained popularity based on word of mouth and Lee opened a second restaurant in Santa Ana that same year. In 1999, Lee opened a third restaurant in Anaheim. “Only by demand it grew,” Lee said. “We did very well.” Customers began asking Lee to franchise, but he initially wasn’t interested because he had been in business for only four years. But increasing demand changed his mind. “I went to a session on facts about franchising and thought maybe I could do this,” Lee said. Tough tasks: Lee said his major challenge has been bringing in the right employees who share the same philosophy of healthful eating. Keeping up with the physical aspect of operating a restaurant is no easy feat either. “A lot of time is required cooking, cleaning and maintaining the restaurant,” he said. Family business: Lee sold the Flame Broiler in Santa Ana to his sons, Daniel and Christian, while all other locations are now operated by franchisees. Lee still works at the Santa Ana restaurant if needed, but his sons operate it on a day-to-day basis. Daniel also is marketing manager for the Flame Broiler operation. A third son, David, who is in high school, helps out at the restaurant and probably will join the family business someday. Doing it right: Lee said an important milestone was to be able to open his own restaurant that would improve the health of the community. “My father believed in honesty and integrity when he came to the States in 1967. I apply that same principle and that’s what’s happening today,” he said. “We [started the business] straightforward with honesty, integrity and tact.” Lee names In-N-Out Burger as a franchise he admires. ”We watched In-N-Out Burger very closely,” he said. “There’s simplicity in which they are operating. They haven’t really changed in their 75-year history. They are being consistent with their product, their customers and are straightforward and honest about it.” Future franchises: Lee will continue to franchise Flame Broiler restaurants. “We would like to see people’s health problems drop,” he said. “It’s very satisfying to hear people’s health has improved.” For each restaurant opened, Lee made a commitment to sponsor two children living in poverty through the ministry Compassion International. So far, 338 children have been sponsored through the Flame Broiler franchise. – Source: The Los Angeles Times.
With Milestone, Mooyah Burgers Courts Houston Franchisees
Mooyah Burgers, Fries & Shakes is marking the opening of its 100th restaurant with a special deal for potential franchisees as the chain looks to expand in metro Houston.Franchisees can get 100 days of free royalties if they purchase an outpost of the growing burger restaurant within the first 100 days after the grand opening of its 100th store on Monday, Aug. 29, chief operating officer Michael Mabry said. Franchises of Plano-based Mooyah have opened in 17 states from California to New York, but the company is focusing on developing markets in its home state of Texas. “Houston is absolutely No. 1 on that list,” Mabry said. Houston’s population and its similarities with the Dallas area make it ripe for development. “We really think Houston could rival Dallas with the amount of restaurants.” There are three Houston-area locations — in Deer Park, Katy and Spring — but the metro area’s population could support 20 to 30, Mabry said. That goal has remained consistent despite the energy slump’s impacts on the region, he added. Source: Houston Chronicle.
Activist Pushes Bob Evans to Sell Food Division
Sandell Asset Management is doubling down on its assertion that Bob Evans Farms Inc. should spin off its packaged foods subdivision — saying that it might be worth more than the entire company. In a presentation released last week, Sandell reiterated its long-held view that BEF Foods’ value is not fully reflected in the company’s stock price, which trades mostly on the performance of the restaurant chain. The activist, which has struggled to convince Bob Evans to sell the division even after placing several directors on the company’s board two years ago, estimates that BEF Foods is worth $1.2 billion. Bob Evans’ total enterprise value, or the company’s total value including market capitalization and debt, is about $1.1 billion, according to Yahoo! Finance. Given the value of BEF Foods compared with the valuations of other publicly traded food companies like Hormel suggests investors are giving Bob Evans’ restaurant division a negative valuation. “This is made all the more shocking when one considers the company still wholly owns the land and buildings to 305 of its operating restaurants along with 21 of its closed properties,” Sandell wrote. Bob Evans operates 527 restaurants in 18 states, mostly in the Midwest. Sandell has been an activist in Bob Evans since 2013 and currently owns 7 percent of the company’s stock. It won four seats to the company’s board the next year, a substantial say but not a majority. Bob Evans has since replaced its CEO and has undergone a series of sale-leaseback deals, selling company property and leasing it back from the buyers. But Bob Evans has held steadfast in its belief that the company would be better off keeping the division. Saed Mohseni, Bob Evans’ CEO, said earlier this year that the company trades at a higher valuation, given the restaurant chain’s sales struggles in recent years, because of the presence of the packaged foods division. Sandell, however, has intensified pressure on the company to reconsider that position. Earlier this year, the investor hinted that it could make another run at the board if Bob Evans doesn’t sell BEF Foods. The activist believes the presence of the restaurant company hides the presence of the packaged foods subsidiary. BEF Foods has substantially higher profit margins than the restaurants. Bob Evans Restaurants in the most recent fiscal year had a cash flow margin of 12.1 percent. BEF Foods had a cash flow margin of 23.4 percent, according to the presentation. BEF Foods made up 44 percent of the company’s cash flow last fiscal year despite having only about a third of the company’s revenue. Bob Evans trades at a multiple of 7.8 times cash flow, far lower than average — 8.9 times cash flow — for mostly company-operated restaurant chains. By comparison, according to Sandell, packaged foods companies on average trade at multiples of 13.7 times cash flow. Sandell also argues that there are few opportunities for the packaged foods division and the restaurant division to work together to lower costs. BEF Foods operates independently, with a separate management team. Mohseni, meanwhile, comes from a restaurant chain background, having most recently been the CEO of Bravo Brio Restaurant Group Inc. The investor also believes that BEF Foods could be better off away from Bob Evans because it would be able to sell products licensed from other restaurant chains. The investor also calls the division a “distraction” that could hamper Mohseni’s ability to reinvigorate Bob Evans. Same-store sales at the chain fell 2.5 percent in the most recent fiscal year. But traffic fell 5.4 percent. – Source: NRN.
Dallas-Based Which Wich Adds New President, Preps for Growth
As it prepares to step up the growth in its franchised locations, Dallas-based Which Wich Superior Sandwiches has added a new executive post. On Sept. 6, Ric Scicchitano will join Which Wich as president, “helping to guide menu innovation, marketing” and a strategic plan that calls for the addition of 90 restaurants system-wide next year, up from 75 new locations added this year, the company said. The sandwich chain, which operates in the popular ‘fast casual’ segment, has 409 locations total including 35 in Dallas-Fort Worth and 90 in Texas. All but three of the chain’s locations are owned by franchisees. The chain was founded in Dallas in 2003 by restaurant entrepreneur Jeff Sinelli, who serves as “chief vibe officer.” – Source: The Dallas Morning News.
Chipotle Is Giving Out Free Drinks to Students
Chipotle is trying to lure back customers with free drinks. For the entire month of September all students—whether they’re in high school (or home schooled), college, or graduate school—can get a free drink with any in-store purchase by showing a valid ID. According to a company press release, the promotion doesn’t apply to bottled drinks, just fountain soft drinks and iced tea. “It can be tough when the end of the summer collides with the reality of heading back to school,” Chipotle’s director of communications, Chris Arnold, said in the press release. “We’re filling—and refilling—student’s cups at all Chipotle locations to celebrate the beginning of the new academic year.” That statement isn’t exactly accurate considering the promotion doesn’t cover refills. The press release specifically states that “free drinks are limited to one per person.” This is just the latest in a series of attempts by the fast casual chain to win customers back. Following an extensive string of food safety incidents, Chipotle’s sales dropped by about 50% in just one year. In addition to free burritos and a new customer rewards program, Chipotle also began offering cheap alcoholic drinks earlier this month. About 300 locations across eight states serve beer and, at fewer outposts, margaritas. Depending on which location you’re imbibing at, you may encounter either a half price deal or a two-for-one special. Source: Fortune.
Fiesta Restaurant Group, Inc. CEO Tim Taft to Retire at Year-End
Fiesta Restaurant Group, Inc., parent company of the Pollo Tropical® and Taco Cabana® fast casual restaurant brands, announced that Tim Taft, Fiesta’s CEO and President, has informed the Board of Directors that he has decided to retire as CEO, President and a director of Fiesta at the end of the 2016 fiscal year. Fiesta’s Chairman of the Board, Jack Smith, stated, “On behalf of Fiesta’s Board of Directors, we are extremely grateful to Tim for his outstanding leadership. Tim was instrumental in guiding the Company through its successful transition as an independent public company and during his tenure improved operations at both brands, refined our marketing strategies and set the stage for ongoing growth.” Mr. Taft stated, “I am deeply grateful to our Board, management team, team members and shareholders for the confidence and trust they have placed in me. I’ve been honored and privileged to lead this outstanding Company and work with many wonderful colleagues, and they are largely responsible for the substantial growth and progress Fiesta has attained.” A committee comprised of independent directors of the Company’s Board will immediately commence a search for Mr. Taft’s successor and work with Mr. Taft to facilitate a successful transition. This committee will be chaired by Stacey Rauch and will include Barry Alperin and Steve Elker. This committee will also consider the composition of the Board and make any suggestions for continued enhancement. In addition, the Company’s Board of Directors has determined that, in light of this transition, as well as challenging market conditions affecting the entire industry, it intends to review the Company’s strategic plan, including the previously announced separation of Taco Cabana. Mindful of Fiesta’s relatively low tax basis in Taco Cabana of approximately $60 million (as of year-end 2015), a tax-free spin-off may remain a viable route to maximizing shareholder value, however, the Board intends to reconsider fully Fiesta’s options, including the possible continued ownership of Taco Cabana. The Board will also review the Company’s new store opening and capital expenditure plan in light of new market dynamics and recent operating performance, as well as the Company’s leadership transition. Based upon this review the Board will take such actions as it believes appropriate to optimize the Company’s capital structure in light of its long-term capital needs. Mr. Smith added, “The Board believes that Fiesta has a solid foundation to drive future growth and long-term profitability. We remain focused on taking the appropriate steps to maximize long-term shareholder value.” – Source: Fiesta Restaurant Group, Inc.
The PAR Solution Includes PixelPoint® Point-of-Sale Software and PAR’s Industry Leading Hardware and Services
ParTech, Inc., a wholly-owned subsidiary of PAR Technology Corporation, announced that BurgerFuel® Worldwide has completed their deployment of the PAR PixelPoint® POS solution, EverServ® 7200 terminals, and PAR peripherals within 83 BurgerFuel restaurants, globally. BurgerFuek Worldwide is a New Zealand-based gourmet burger concept with a presence in the United Arab Emirates, Saudi Arabia, Egypt, Iraq, New Zealand, and Australia. Centrally managing the brand and maintaining consistency across multiple countries was a key goal throughout the process and implementation. With rapid expansion after its IPO, BurgerFuel® Worldwide recognized an opportunity to streamline business functions and communications. A customer-centric operation, BurgerFuel set out to identify a POS solution that could not only scale at BurgerFuel’s aggressive rate, but also evolve with their ever-changing customer needs and market trends. A global partner was sought after that could understand BurgerFuel’s unique challenges and aptness to support rapid growth. PAR’s PixelPoint® HeadOffice Enterprise was chosen as the POS software solution for its ability to support the brand’s international expansion strategy. PixelPoint offers flexibility for processing international EMV payments and a fiscal framework that expedites global deployment, including an EFT integration with Payment Express as part of pilot testing. The software has been installed on PAR EverServ® 7200 terminals due to their ability to meet compatibility, as well as brand aesthetic requirements. “PixelPoint has adapted and scaled with us. BurgerFuel has a mixed model depending on country. PixelPoint allows us to maintain service levels regardless of the sale type, dine-in, takeaway, phone order, internet order, drive-through, and delivery,” said Sean Munden, Chief Information Officer of BurgerFuel Worldwide. “BurgerFuel looks at the relationship with PAR as a partnership that continues to grow. With ongoing discussions and support, the BurgerFuel brand continues its plans to grow globally, with the PixelPoint POS software.” BurgerFuel can now provide better service experiences for guests, while streamlining international variations in operations and maintaining regional compliance requirements. BurgerFuel’s IT team is now able to make a single, centralized system change that automatically updates all stores, while maintaining regional requirements as necessary. Management utilizes the centralized reporting feature, allowing for quicker decisions, supported by near real-time metrics. “Restaurants are requiring their in-store technical solutions provide a consistent approach to multi-nation store outlets and local currency requirements. PixelPoint HeadOffice Enterprise is that specific global solution with flexibility, scalability and administrative control to optimize operations for rapidly-growing multi-national companies, like BurgerFuel,” said Karen E. Sammon, President and CEO of PAR Technology Corporation. “PixelPoint is able to deliver a targeted on-premise solution to meet specific international technology requirements. PAR’s software is intuitive, easily configured and scalable. Our current installation base spans 110 countries worldwide, giving us the knowledge and experience to support a customer like BurgerFuel during their continued global expansion. We are pleased to add BurgerFuel to our extensive list of global restaurant customers and supporting their business for years to come.” Source: BurgerFuel Worldwide (BFW), New Zealand.
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