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Jimmy John’s Sells Majority Stake to Arby’s Owner

Jimmy John’s is selling a majority stake to Atlanta private-equity firm Roark Capital Group. Terms were not disclosed. No management changes are planned as part of the deal, and the Champaign-based company’s founder, Jimmy John Liautaud, will remain chairman of the board. He will “continue to help shape the company’s high-level strategic direction,” and remain the company’s largest individual shareholder, the company said in a statement. James North will continue as president and CEO, leading day-to-day operations of the sandwich chain, which has more than 2,5000 locations in 43 states and $2 billion in sales. Jimmy John’s has been growing at a rapid clip, opening an average of 200 restaurants in each of the past five years. The company plans to add more than 1,100 restaurants over the next several years. Roark owns such brands as Arby’s, Corner Bakery, Cinnabon and Wingstop. Last year it took a minority stake in Chicgo-based Naf Naf Grill. Boston-based investment firm Weston Presidio, which in 2007 bought a 27 percent stake in Jimmy John’s, will exit the company. The sale comes about a year after Liautaud, the firm’s enigmatic founder, announced plans to take Jimmy John’s public and traveled the country to meet with bankers and potential investors. He shelved those plans months later, saying he wasn’t comfortable rubbing shoulders with Wall Street. After graduating high school, Liautaud opened his first sandwich shop in 1983 in downstate Charleston with $25,000 in seed money from his father. He enrolled briefly at Eastern Illinois University but dropped out before finishing the first semester to expand his business. The chain opened its 1,000th shop in 2007 and its 2,000th in 2014. The majority are owned and operated by franchisees. “Jimmy has built an amazing business with unlimited potential,” Neal Aronson, managing partner of Roark, said in the statement. “It’s a testament to his vision (and) commitment to quality and the team’s outstanding execution. We are thrilled to be a part of this iconic brand and look forward to supporting its continued growth.” After this deal, Roark will have acquired 56 multi-unit or franchise brands that generate $23 billion in revenue through 25,000 locations worldwide. CHAIN UNDER PRESSURE. Jimmy John’s has been under pressure this year for some of its employment practices. The company reached a settlement in June with the New York Attorney General and agreed to tell its franchisees there to void noncompete agreements signed by its restaurant employees and stop including sample noncompetes in hiring packets it sends to franchisees. The noncompetes, thought to be some of the most stringent in the business world, prohibited sandwich makers for a period of two years after leaving the company from working at any establishment within a 2-mile radius of a Jimmy John’s restaurant that made more than 10 percent of its revenue from sandwiches. Jimmy John’s noncompete agreements also are the subject of a lawsuit filed earlier in June by Illinois Attorney General Lisa Madigan that remains active, as well as part of a proposed class-action lawsuit filed in 2014 against the chain and one of its franchisees that also accuses the company of engaging in wage theft by forcing employees to work off the clock. That case is pending in U.S. District Court in Chicago. – Source: Crain’s Chicago Business.

Starbucks New Tea Line Chases China’s $9.5 Billion Market

Starbucks Corp. plans to increase its global tea business to $3 billion over the next five years as its starts selling its new line of tea drinks, known as Teavana, across the Asia Pacific region Monday following the products’ entry in China last week. China is Starbucks’ fastest-growing market and the Seattle-based coffee chain is opening 500 stores a year in the world’s most populous nation, aiming for a total of 3,400 stores by 2019. The company is looking to China for growth momentum, honing in on China’s 63.2 billion yuan ($9.5 billion) tea fixation, which is almost ten times bigger than the country’s coffee market. Starbucks’ new tea products may also align with Chinese consumer’s growing demand for products aimed at promoting healthy lifestyles. “The health trend is growing strongly across Asia, and as with most things, uptake of new trends in China tends to be faster than the rest of the world,” said Matthew Crabbe, Mintel Group Ltd.’s head of Asia-Pacific research. “There is a strong tea identity in Asia and it also chimes well with the particularly Asian view of healthcare as being centered around prevention, rather than cure. Because of this, tea-based products are likely to see strong growth.” Tea Culture. Starbucks acquired Teavana, a line of teas and tea houses, in 2012, and says the drinks have done well in its U.S stores. American consumers seeking out healthier food and drink options have propelled its tea business to grow 12 percent last year, with best-seller iced tea growing at 29 percent. In China, the much larger market for tea drinkers is growing at about 6 percent, roughly the same pace as coffee. For Asia, where tea-drinking is a well-developed habit, Starbucks had to invent tea drinks in bolder and more sophisticated combinations to catch consumers’ eyes. With the rich tea culture here, we couldn’t have beverages that are expected or common, or we could not give consumers that feeling of pre-miumization and of being different,” Vera Wang, the company’s director for product line innovation in China and Asia Pacific, said in an interview. For Asia, its offerings include black tea with ruby grapefruit and honey and green tea with aloe and prickly pear, relatively more complex recipes compared to U.S bestsellers like mango black tea and peach green tea. Starbucks may already be late to the game, with growth in China’s tea market slowing to 5.8 percent last year, after steadily decelerating from an 18 percent growth rate in 2010, according to data from Euromonitor International. “Tea is, of course, a mature market in Asia,” said Crabbe. “It’s been around for thousands of years and we saw how rapidly bubble tea took off among teen consumers across Asia several years ago. But as those younger consumers get older, they will trade to something more sophisticated, which is where Teavana could fit in.” – Source: Bloomberg News

Dig Inn names Irene Cook COO

Dig Inn has named former Panera Bread Co. senior vice president, chief company and joint venture operations officer Irene Cook as its new COO, effective Monday, the 12-unit fast-casual operator said. In her new role, Cook will oversee human resources and operations-related functions. She will be based in Boston, a market Dig Inn entered with one location in July. Dig Inn has another 11 units in New York City. “[Cook’s] commitment to food accessibility, purposeful sourcing and culinary education aligns perfectly with Dig Inn’s overall mission,” a public relations representative for Dig Inn wrote in an email. In the same email, the representative said that Dig Inn, which prides itself on serving nutritious, local and seasonal food, plans to open five to six new locations in New York and Boston by early 2017. Dig Inn was founded in September 2011, when Adam Eskin, who had worked for a private-equity firm on Wall Street, bought Pump Energy Food, a five-unit chain, and converted it to the Dig Inn brand. Since then, Dig Inn has raised $21.5 million in financing, most recently $15 million in Series C financing from a group of investors led by Wexford Capital. Cook joined Panera Bread’s management team in 2004 as vice president of learning and development. She became vice president of operations in 2006, senior vice president and chief company and joint venture operations officer in 2012, and vice president of company operations in 2014. Before that, she was vice president of training and recruiting at casual-dining Italian chain Bertucci’s. – Source: NRN.

Ruby Tuesday’s President, CEO Resigns

Ruby Tuesday, Inc. announced that, effective immediately, the board of directors appointed F. Lane Cardwell, Jr. as interim president and chief executive officer following the resignation of James J. “JJ” Buettgen. Additionally, Buettgen, who had also served as board chairman, will not stand for reelection at the upcoming annual meeting of shareholders on October 5, and lead director Stephen Sadove was named non-executive board chairman. The company’s board of directors has retained Heidrick & Struggles to begin a search for a permanent president and chief Executive Officer. Stephen Sadove, board chairman and lead director, says, “We would like to thank JJ for his dedicated service to Ruby Tuesday. During his leadership, JJ built a strong team, improved the health of the organization, and positioned the company to execute against its Fresh Start initiatives including the recent completion of the asset rationalization program. We wish him well in his future endeavors. We appreciate Lane stepping into the president and CEO roles. Lane possesses decades of restaurant and management expertise, which is ideal for ensuring a smooth and orderly transition during this interim period. His tenure on our Board will help facilitate leadership continuity until we can complete the process of identifying a suitable permanent replacement.” The company also announced the appointment of Sue Briley as chief financial officer. Briley has been serving as interim chief financial officer since June 2016 and before that, had been vice president of finance since joining Ruby Tuesday in July 2014. Sadove says, “Sue has done an exceptional job since taking on the responsibilities of interim chief financial officer and has proven to be the right candidate for the position to lead our strong financial team going forward.” Cardwell has been a director of the company since October 2012 and member of the executive compensation and audit committees. Since June 2012, Cardwell has served as the president of Cardwell Hospitality Advisory. Before that, he held several positions, including president of P.F. Chang’s China Bistro, as well as board member, and President and Chief Executive Officer of Boston Market. Previously, he served on the board of Famous Dave’s of America prior to becoming interim president and chief executive officer and also served as president and chief executive officer of Eatzi’s Market and Bakery. Before joining Eatzi’s, Cardwell was executive vice president and chief administrative officer and board member of Brinker International. F. Lane Cardwell, Jr., interim president and chief executive officer, adds, “I appreciate the opportunity to accept this expanded role and look forward to working with the board and the talented management team as we move toward restoring Ruby Tuesday to sustained profitable growth.” Preliminary Fiscal First Quarter 2017 Results. The company also announced the following preliminary financial results for the fiscal first quarter ended August 30: Total revenue, including franchise revenue, of around $256.7 million. Same restaurant sales declined approximately 2.7 percent. As of today, all 95 restaurants have closed under the company’s asset rationalization plan announced on August 11. Additionally, these locations have been excluded from the calculation of the company’s same restaurant sales performance for the fiscal first quarter and will be excluded on a go-forward basis. Preliminary results remain subject to the completion of normal quarter-end accounting procedures and adjustments and are subject to change. Specifically, the charges for closed restaurant lease reserves reflected within closures and impairments, net associated with the company’s asset rationalization plan are subject to change pending the conclusion of the first quarter evaluation. – Source: fsrmagazine.com.

Stuart Campbell Heads up Spedifi’s Drive for UK Market Share

Former CaterQuotes and Nayati executive joins Specifi in UK as vice president of international sales. Specifi LLC, a global leader in the provision of design and publishing tools to the Foodservice equipment industry, has appointed Stuart Campbell to the post of vice president of international sales. Based in the UK Campbell returns to a part of the industry he helped shape during a six year period as managing director of CaterQuotes. Explaining the reasons behind taking up his new post Campbell pointed to the growing importance of the world market and the many advantages of Specifi to all areas of the industry. “Those that know me well will be aware of my belief that access to information and the simplification of all business processes is the key to success,” he says. “There is perhaps no better recent demonstration of this here in the UK than the introduction of BIM. The importance of joined up thinking, and an ability to work cohesively and efficiently only works if businesses possess the right tools. As the only global, end-to-end solution supporting the foodservice equipment specification process, I believe Specifi offers the right tools to companies working in every area of the industry. I am looking forward to prospect of working with all UK businesses and bodes, to provide the best solutions possible for their personnel, members, partners and customers.” – Source: Specifi LLC.

Irvine Owner of Baja Fresh Sold for $27 Million to Restaurant Company Tied to Pinkberry

The parent company of Irvine­ based Baja Fresh Mexican Grill has been purchased for $27 million by a multi-­brand Canadian hospitality giant with ties to Pinkberry and Cold Stone Creamery. In the deal, Montreal ­based MTY Food Group will assume ownership of BF Acquisition Holdings, which operates 162 Baja Fresh restaurants and 23 La Salsa Fresh Mexican Grill locations. MTY Food Group is a franchisor and operator of several quick service restaurants in Canada and the U.S. It recently acquired Kahala Brands, which operates 18 brands in 27 countries, including Pinkberry, Planet Smoothie, tasti D­lite, Maui Wowi, Taco Time, Cold Stone Creamery and Blimpie. BF Acquisition purchased Baja Fresh in late November 2006. As part of the sale, MTY said it is moving the company’s corporate offices to Scottsdale, Arizona, which is the headquarters for Kahala Brands. Here’s how El Torito owner Real Mex will remake 3 aging Mexican chains Buying two big U.S. ­based restaurant companies, Kahala and BF Acquisition, is part of MTY’s strategy to accelerate its growth in North America, the company said Friday. “The acquisition of Baja Fresh Mexican Grill and La Salsa Fresh Mexican Grill perfectly aligns with our growth strategy and is one more step towards building a bigger and better organization for the future,” the company said in a statement In 2015, the two fresh­Mex chains generated more than $145 million in sales. For the second quarter, ended May 31, MTY Foods reported sales of $27.1 million (U.S. dollars). It’s unclear what changes might occur to the fresh­ Mex pioneers, whose ownership has changed a few times over the years. In 2006, a consortium led by an Anaheim investor bought the struggling Baja Fresh for $31 million ­ four years after Wendy’s paid $245 million for the fresh­ Mex chain. When Wendy’s bought Baja Fresh, then based in Thousand Oaks, the fresh­ Mex chain was one of the hottest concepts in the fast-­casual segment. By purchasing Baja Fresh, Wendy’s hoped to put some muscle in its own earnings. But, soon after the acquisition, rival chains with similar strategies and faster service began winning the attention of diners, including Chipotle Mexican Grill and Jack in the Box’s Qdoba Mexican Grill. Over the last few years, Baja Fresh has revamped its menu multiple times and tested a prototype restaurant in Irvine. In 2014, the chain named Roberto “Pepe” Lopez, who spent 31 years at Cypress ­based Real Mex Restaurants, as its new director of product development. Real Mex is the parent company of El Torito, Chevys Fresh Mex and Acapulco. It’s unclear if Lopez is still with the chain. Representatives for Baja Fresh, which operated 298 restaurants in 2007, could not immediately be reached for comment. – The Orange County Register.

Growing Diversity and Demand for Vibrant, Healthy Cuisine Drive the Latin American Food Revolution

For centuries we have been cooking the “European” way. Classic European cuisine is what we were taught in culinary school as the non-negotiable foundation and is still the model for the majority of reputable culinary schools today. However, chefs from around the world are challenging the status quo and trying to find their own culinary identity, confidence for self-expression and independence through food. A food revolution is rumbling, particularly in Latin America, and is expanding rapidly to other continents of the world.  Latin flavors, ingredients and techniques have become an added alternative to help chefs develop their own style and culinary voice worldwide. The “New World”, as the Europeans called it back in the day, has been enjoying and utilizing these ingredients and techniques for centuries. Today, thanks to leading chefs and professionals from the Caribbean and Latin America, these ingredients have become one of the most potent influences for US chefs. Globalization has made it is easier and less expensive to travel, therefore expanding the knowledge of this generation of diners along with their expectations for newer and more exciting dining alternatives. More than ever before, customers are demanding variety and healthier choices on menus. Latin cuisine offers a vibrant combination of ingredients that does not necessarily need to be heavy with butter, fats or heavy creams in the manner of French cooking. Latin cuisine is mostly based on a blend of fresh vegetables, nuts, seeds, fruits, chocolates and healthier oils (avocado, dende and coconut) which makes it ideal for lighter, healthier and more nutritious menu items. I still remember the days when the kitchens of the most renowned hotels, resorts and restaurants in Latin America and the US were directed mostly by European chefs and a plethora of products were being imported to the New World from the Old World so they could execute their cuisine. There is now more diversity at the helms of those kitchens, and Latin American chefs that are in those key positions are finally listening to their inner voices. They are going back to their roots, opening vaults and re-discovering a wealth of ancient recipes and techniques, allowing them to develop a unique and distinctive culinary identity. With this diversity, a new Latin American food revolution and independence from the European culinary rule is taking place and is rumbling louder and louder. I invite you to join the revolution — not Simon Bolivar’s, Che Guevara’s or Emiliano Zapata’s 18th or 19th century Latin American revolution — but the 21st century Latin American food revolution. I guarantee that you will find it to be a new adventure of charm and success. – Source: SmartBrief’s.

Applebee’s Raises More Than $1.2 Million For Childhood Cancer Research

After a month-long campaign in July, more than 1,000 Applebee’s Neighborhood Grill & Bar restaurants raised a record of more than $1.2 million for Alex’s Lemonade Stand Foundation (ALSF), an organization that funds childhood cancer research. This marks the 11th straight year that Applebee’s has supported ALSF and brings their total funds raised to more than $7 million since the partnership’s inception in 2005. Applebee’s Neighborhood Grill & Bar restaurants raised a record of more than $1.2 million for Alex’s Lemonade Stand Foundation, an organization that funds childhood cancer research. The 10 participating Applebee’s franchise groups raised funds at each restaurant in various ways, including: selling $1 or $5 lemon pin-ups; donating a portion of each lemonade sale through the restaurants’ Citrus Summer Squeeze promotion; offering $5 bounce back cards and holding events for guests, such as lemonade stands, golf tournaments, donation nights and more. “Applebee’s is proud to continue the fight against childhood cancer. We are amazed at the incredible support from our guests and franchise groups year after year,” says Julia Stewart, chairman and CEO of Applebee’s parent company DineEquity, Inc. and president of Applebee’s. “Because of their support, we had our most successful fundraising year yet and have reached our goal to raise more than $7 million total since the inception of our partnership, all for critical lifesaving research.” “Applebee’s has been a wonderful partner for the last 11 years and we are always in awe of the commitment their guests and team members demonstrate in carrying out Alex’s dream to find a cure for all kids with cancer,” adds Liz Scott, co-executive director of Alex’s Lemonade Stand Foundation and Alex’s mom. – Source: fsrmagazine.com.

McDonald’s Reshuffles Leadership Team

Chris Kempczinski, executive vice-president of strategy, business development and innovation at McDonald’s Corp., has been tapped to lead the fast-food company’s U.S. business upon the retirement of Mike Andres at the end of the year. A 30-year veteran of the company, Mr. Andres assumed the role of president of McDonald’s USA in 2014, overseeing the company’s largest market, with more than 15,500 restaurants in the United States and Canada. Under his leadership, McDonald’s most recently has removed artificial preservatives and high-fructose corn syrup from a number of menu items and introduced all-day breakfast nationwide. Importantly, the segment returned to growth last year after seven straight quarters of sales declines. “As we thank Mike for his contributions, we are confident Chris is the right leader to build upon our U.S. progress and bring a new level of convenience and excitement to the restaurant experience,” said Steve Easterbrook, president and chief executive officer of McDonald’s. “His proven track record of driving change is invaluable as we continue to transform McDonald’s into a modern, progressive burger company.” Prior to joining the company last year, Mr. Kempczinski held various strategy and operational positions with leading consumer companies. Most recently, he was executive vice-president, growth initiatives and president of international at Kraft Foods Group. In the months ahead, he will begin to focus his efforts on the U.S. business alongside Mr. Andres to ensure a smooth transition. “I look forward to building upon the significant progress in the U.S. and continuing the innovation and collaboration among our owner-operators, suppliers and employees to take McDonald’s to the next level,” Mr. Kempczinski said. McDonald’s announced additional changes to the leadership team. Doug Goare, president of International Lead Markets, will assume additional responsibility as chief restaurant officer. Mr. Goare will oversee a number of business functions managed by Pete Benson, chief administrative officer, who is retiring in September. Mr. Goare’s expanded responsibilities include supply chain, information technology, global restaurant operations, development and digital business functions. Additionally, Lucy Brady will join the company in September as senior vice-president of corporate strategy and business development. Ms. Brady will succeed Mr. Kempczinski in overseeing strategy development, planning and innovation. Previously, she was a senior partner and managing director at The Boston Consulting Group. “I am confident we have the right leaders in place to accelerate our turnaround and further strengthen the McDonald’s brand,” Mr. Easterbrook said. – Source: FoodBusinessNews.

Sam Fox to Launch 16th Restaurant Brand, Doughbird

Sam Fox has spent the summer crisscrossing the country while working on national rollouts of True Food Kitchen, Flower Child, North Italia and Culinary Dropout. But the James Beard Award-nominated restaurateur is preparing to launch a new concept here in the Valley, and it’s a two-for-one deal. Doughbird, slated for a February launch in Phoenix’s Arcadia neighborhood, will be a casual full-service restaurant with a menu built around pizza and rotisserie chicken. “I don’t think anybody’s doing what we’re going to do here, and that’s why we’re going to do it,” Fox said in an exclusive interview at his corporate headquarters in Phoenix. The 16th concept in Fox’s expanding portfolio, Doughbird will open on the southwest corner of Indian School Road and 44th Street. While menu development is in the early stages, Fox anticipates offering a seasonal rotation of 12 to 15 pizzas, three flavors of rotisserie chicken, vegetable sides, salads and folded sandwiches. The heart of the operation, as the name implies, is the pizza and chicken. But Fox isn’t interested in adding another Neapolitan-style pizzeria to the mix. “The idea is to take some great flavors that I love and use the pizza as a sort of palette for great ingredients,” he explains. The pizza. Fox plans to incorporate local and regional grains, and expects to develop house recipes for whole-wheat and gluten-free crusts in addition to Doughbird’s standard crust. “It’s going to be a little bit lighter and healthier,” he says. Early ideas include pizzas like: Crispy pastrami and Gruyere cheese; Roasted delicata squash with brown butter apple puree and toasted hazelnuts, and Roasted rosemary turkey with Brie and avocado. The chicken. Fox plans to offer rotisserie chickens at a high level of quality. “We’re going to use an all-organic bird, we’re going to air-dry them, we’re going to have great marinades and a better cooking process,” Fox says. Doughbird’s chickens also will rotate flavors with the seasons: lighter marinades in the spring; bolder backyard barbecue-style flavors in the summer; spices and warming flavors in the winter. The chickens will be paired with vegetables, but diners will have the option to substitute from a list of other sides. Doughbird will use its pizza dough to build a small selection of folded sandwiches. And the kitchen will utilize the rotisserie chicken in many of its salads, offered in individual and family sizes. Northern Cal vibe. Fox envisions Doughbird as a family destination, but he wants to provide a comfortable experience. The space will accommodate about 150 guests. “It’s full-service. It’s not fast-casual,” he says, describing Doughbird’s future home, a 4,000-square-foot standalone building, which is under construction. “I was inspired by a building that I saw in Sonoma, so it’s going to have sort of a soft, Northern California vibe.” All of Doughbird’s cooking will be done in a central, open kitchen surrounded by a large bar. The restaurant will be open for lunch and dinner daily, offering beer, wine and spirits, for dining in or out. Fox expects a brisk takeout business and is designing Doughbird with that in mind. “There’s going to be a counter, you can call ahead, and we’re building a big walk-in with a glass door for all of the (alcoholic drinks), so we’ll have a to-go license for beer and wine.” Fox plans to keep prices affordable — pizzas at $10 to $16 and the check average estimated around $25 per person. But the restaurant will feel more refined than the price point might suggest. “It’s a little more elegant,” he says. “It’s a different experience.” – Source: The Arizona Republic.

Così Hires Turnaround Firm as Interim CFO

Così Inc. has hired a turnaround firm that will also act as interim CFO, the company said, as the perpetually struggling operator works to recover from years of financial losses. James O’Connor, president of The O’Connor Group Inc., and Edward Schatz, senior managing director of the firm, will serve as “interim co-chief financial officers” following the resignation of CFO Miguel Rossy-Donovan, who is taking a position at another company. The O’Connor Group will advise the 104-unit chain on “financial and strategic matters.” The firm, based in Bedford, Mass., specializes in corporate turnarounds. The hiring of The O’Connor Group comes three weeks after Così fired CEO R. J. Dourney, and Rossy-Donovan announced his resignation. Patrick Bennett, a member of the Così board, will serve as interim CEO under a consulting fee of $15,000 a month. The shakeup at the Boston-based fast-casual operator came just weeks after the company reported disappointing second-quarter results, including a 7-percent decline in revenue and a 4.5-percent decline in same-store sales. The company reported a net loss of $3.1 million. Così stock has lost nearly 80 percent of its value since March, and is currently trading at 19 cents per share. – Source: NRN.

Boudin Bakery Names New CEO of Restaurant Group Boudin SF

Boudin Bakery has appointed food industry vet Clarice Turner as CEO of Boudin SF, the bakery’s fast casual restaurant group that operates 28 locations throughout California. Headquartered in San Francisco, Boudin Bakery is famous for it’s “Original San Francisco Sourdough,” which has been baked with the same mother dough since 1849. Boudin is the oldest continuously operating business in San Francisco and is now a company with a worldwide reach. Most recently, Turner served as a senior vice president for Starbucks where she led the company’s food business in the United States and Americas. She also pioneered Starbucks’ Evenings program, which brought wine, beer and small plates to the cafes. Prior to Starbucks, Turner was president, COO and board director of Papa Murphy’s. Turner also serves on the Culinary Institute of America board of fellows and is an executive board director for the National Restaurant Association and vice chair of its Food & Healthy Living committee. “Clarice Turner is a proven, gifted business leader who brings the perfect combination of experience and expertise to drive the future growth of Boudin SF,” Sharon B. Duvall, co-chair and CEO of Boudin Bakery, said in a statement. “Clarice’s extensive experience, combined with her strong leadership skills, is a long-awaited and much welcomed addition to the strategic leadership of Boudin.” – Source: San Francisco Business

Cicis Enters Next Phase of Turnaround with Sale. Pizza Buffet Chain Looks to Grow after Sale to Arlon Group

Darin Harris didn’t have an easy task when he took over as CEO of Cicis in 2013. Consumers had been turning away from Cicis for years, even though they could get all the pizza they wanted for just a few bucks. Same-store sales had been falling for years. Cicis and its franchisees were closing restaurants. Today, the chain has 200 fewer units than in 2009, when it had 650 locations. “Five years of negative comps and multiple store closures,” Harris said. “It was a revitalization story.” Now, even after adding more than $100,000 to the average unit volume and encouraging franchisees to rebuild again, Harris is hardly ready to call Cicis’ turnaround complete. “We’re probably in the fourth or fifth inning of revitalization,” he said. Still, Cicis’ performance was strong enough to prompt its sale to private-equity firm Arlon Group this week. “We needed to show we have the ability to grow restaurants and [market] share, versus continuing to decline,” Harris said. “We’ve reversed trends over the last three years and are looking to start growing, versus shrinking.” Harris said Cicis started focusing on “people and culture” when he became CEO. Then the operator worked to transform its business strategy. Cicis honed the strategy “by listening to guests, listening to franchisees and our people,” he said. Cicis revamped its menu by upgrading the quality of items. It added offerings like stuffed-crust pizza to the buffet. Stuffed-crust pizza “was not a new product,” Harris said, “but it’s new for our guests.” The option of stuffed-crust pizza at a buffet improved Cicis’ value perception, he said. “That’s just an example where they see us enhancing value instead of cheapening the product,” Harris said. Cicis also improved its core product by increasing the quantity of cheese used. Improving the menu has been a key element in Cicis’ turnaround. “When you don’t innovate your product line for 15 years and listen to guests, and when you enhance it, that opens up frequency,” Harris said. “You get new customer trial. We’ve been able to tap into that with targeted marketing.” Cicis also added an operational training system and programs to improve cleanliness at restaurants, which had grown “tired and dirty.” The chain developed a new prototype and came out with a new logo. And it enhanced the game room, something Cicis’ base customer of families find vital. The results have been strong. Same-store sales have increased for 13 straight quarters, and are on track to grow for another quarter. The increase has added $150,000 to the chain’s average unit volume. Perhaps most impressively, Cicis’ best performance has been this summer, when it reported six of its 10 best weeks in company history. “We’ve had a very, very strong summer,” Harris said. That’s notable because Cicis performed strongly just as the industry overall seemed to stumble. “We’ve been able to crack the value code,” Harris said. “We were able to listen to our guests. Between the quality and value going up, that’s been resulting in sales increases.” Cicis is now focused on adding restaurants. The company has deals to open 70 units in the coming years. Many of these deals are with existing franchisees who see a better return on investment in the chain due to improved unit economics.  Harris said that Arlon can help Cicis reach the ninth inning of its turnaround. This year, Cicis went through a standard search process as it looked for a buyer, and it received “good attention in the marketplace.” Arlon is no stranger to the restaurant space: It’s a big investor in K-Mac Holdings Corp., an operator of more than 290 Taco Bell, KFC and Long John Silver’s restaurants. Arlon has made investments in a range of food and agricultural businesses. Harris said Arlon’s expertise could prove beneficial. “They have relationships around the world we can benefit from,” he said. “They have strength and knowledge of distribution and supply chain. They’re bringing in best practices, resources and support that could help make the supply chain more effective. And they understand what it’s like to also operate restaurants.” – Source: Cicis.

Teriyaki Madness Adds yet another Veteran to the Executive Team

Just months after CEO Michael Haith acquired Teriyaki Madness, the evolving Asian fast casual restaurant concept has taken another major step in developing the brand into a national powerhouse. Closing in on 50 Teriyaki Shops in 15 different states, Teriyaki Madness has announced the hire of seasoned franchising veteran Todd Owen to further the national TMAD craze. Owen, who will now work as the restaurant’s Vice President for Development, comes to TMAD with 21 years of experience in the franchising industry, holding a vast array of leadership roles at franchise restaurant companies such as Taco Bell and Qdoba Mexican Grill. At Qdoba, Owen was instrumental in the growth of the fast casual brand from 60 units to more than 630 in just over a decade. At Taco Bell he franchised hundreds of Taco Bell locations across the United States, working with multi-unit and multi-brand operators in both traditional and non-traditional venues and cities. “The recruitment of Todd and other proven executives to the team will help us achieve our goal of smart, aggressive expansion,” Haith said. “We are looking forward to his experience in helping our franchisees achieve their expansion goals while meeting the increasing demand for Asian fast casual comfort food.” The fast casual industry has seen a rise in consumer spending over the last five years, bringing in nearly $20 billion since 2011. Approximately 45 percent of households in the United States consume food with teriyaki at least once per month and Asian food is the fastest growing segment in the fast casual industry. Franchising since 2005, Teriyaki Madness currently operates in 30 percent of the United States, and recently brought the Madness to the state of North Carolina for the first time when it opened its first of 10 projected shops in Charlotte, N.C., this month. Owen’s new role with TMAD will be to grow the restaurant similarly to the likes of Qdoba and Taco Bell, a role he feels comfortable with given his past experiences. “Teriyaki Madness is a restaurant brand on a roll with a huge upside,” Owen said. “They are the perfect storm for national success with a food that has been a staple of the Seattle restaurant scene for decades. With the new ownership by an experienced fast casual franchise team, I’m excited to see TMAD achieve dramatic success with guests across the country and become a major player in the fast casual industry.” Teriyaki “TMAD’s franchise model is a unique style that is highly desired among prospective business owners,” Owen said. “Not only are you investing in a nationally-known, emerging restaurant, but you are also customizing the environment to your liking.” – Source: Teriyaki Madness.

Tim Hortons Plans Full-Service Coffee Shops in England, Scotland, Wales

Tim Hortons is continuing its international expansion with plans to open its first full-service coffee shops in Great Britain. The company partnered with an investor to establish a master franchise joint venture company that will open the stores in England, Scotland and Wales. In late July, Tim Hortons announced a similar agreement in the Philippines, which is the brand’s first stop in Southeast Asia. It did not specify how many stores it plans to open in Great Britain or when, but a spokesperson said in an email that it seeks to be a leader in the market. Daniel Schwartz, CEO of Restaurant Brands International, said in a statement that the area is an attractive market with a strong and growing coffee culture. RBI, the parent company of Tim Hortons and Burger King, is looking to grow Tim Hortons globally. It reported its second quarter earnings earlier this month, which showed the number of Tim Hortons locations increased about three per cent to 4,464 stores in the quarter. – Source: Montreal Gazette.

Buffalo Wild Wings Looks for New Growth Avenues

Buffalo Wild Wings Inc. has grown revenue by 24 percent a year over the past five years thanks to a steady diet of new locations and improving same-store sales. But as the Minneapolis-based chicken-wing chain fills out its market in the U.S., and as same-store sales that once consistently rose stumble this year, the company is looking toward new avenues. Specifically, Buffalo Wild Wings is targeting urban areas to reach younger consumers moving away from the suburbs, and rural areas where its sports bars haven’t reached yet. In addition, the company is looking at international markets, where it has relatively few locations, but where its potential is far greater than in the U.S. “International franchising will someday be a bigger part of our growth strategy than domestic Buffalo Wild Wings,” CEO Sally Smith told analysts during the company’s Analyst Day presentation in Denver. The presentation comes at a critical juncture for Buffalo Wild Wings. Same-store sales, which had been rising for years, even as casual-dining competitors struggled, have fallen for two straight quarters. That includes a 2.1-percent decline at company-owned restaurants in the second quarter ended June 26. Investors have started to put pressure on the chain, too. Last month, the activist investor Marcato Capital Management revealed that it had taken a position in the company. That has since helped generate enthusiasm for Buffalo Wild Wings stock, as investors anticipated major changes at the company — its stock rose more than 26 percent at one point in the days after Marcato’s filing. But investors didn’t get all they wanted from Buffalo Wild Wings on Tuesday — the company’s stock fell more than 2 percent. Buffalo Wild Wings did announce plans to borrow more money and buy back another $300 million in its own stock in a bid to drive up the share price. That comes on top of $75 million already remaining in a previously approved $200 million share buyback. Executives also said that they would explore paying dividends to investors. “Our stores are generating cash flow beyond what’s required for growth,” Smith said. Still, Buffalo Wild Wings’ presentation didn’t include any major changes in the brand or its strategy from before Marcato took its position. Buffalo Wild Wings operates nearly half of its 1,179 locations in the U.S. and Canada. The company has been strategically buying out franchisees over the years when such acquisitions could provide it with a return. And executives hinted that strategy would continue. “We still think that a well-operated company restaurant can create significantly more profit than franchising,” James Schmidt, chief operating officer of Buffalo Wild Wings, said during the analyst presentation. The company is also optimistic that it can continue to develop new locations in the U.S., despite concerns of overall market saturation among casual-dining concepts, as well as Buffalo Wild Wings’ own recent slowdown. Buffalo Wild Wings says it can develop another 500 locations in the U.S. and Canada. But the company is slightly shifting from a more suburban model to one in more small towns and urban areas, Schmidt said. Urban areas can satisfy younger consumers, as well as Baby Boomers who are moving back into cities. Smaller cities require a smaller box. Buffalo Wild Wings is looking at cities with populations under 50,000 people, where it would build units of 4,000 square feet to 5,000 square feet, rather than the typical 5,000 square feet to 6,000 square feet. The smaller restaurants cost $1.8 million to open, instead of $2.3 million, but have fewer seats — 200 instead of 240 — and lower unit volumes of $2.4 million, instead of $3.2 million. Buffalo Wild Wings is also working extensively on its “Stadia” remodeling program. The company expects to spend $40 million to $45 million a year for the next five years to remodel 60 to 70 company-owned locations annually. Franchisees also expect to remodel locations. Executives said that the remodel generates 5 percent in additional sales. The company highlighted areas that it hopes will reverse the same-store sales slip. Buffalo Wild Wings is pushing its lunch daypart, including a 15-minute guarantee, and is also promoting a Wing Tuesdays campaign offering half-price wings. Buffalo Wild Wings also hopes delivery can ultimately drive sales, while online ordering and to-go business can compete with takeout chains that are stealing some of its sales. The company is testing delivery in two markets, and says its wings would satisfy consumer demand. Technology, meanwhile, could also be part of the equation. Servers use handheld devices in high-volume restaurants, in some high-cost markets, to reduce labor costs. The company is also exploring menu ordering and payment from the table. The technology “will drive efficiencies and keep labor flat while labor costs are rising,” Smith said. Buffalo Wild Wings also affirmed its commitment to growth concepts. The company owns a majority position in the taco concept R Taco, and a minority position in the fast-casual pizza chain PizzaRev. “We have a responsibility to our stakeholders to be forward-looking,” Smith said. “If we find a concept that has the potential to become a success story, we know how to build restaurants. We know how to build a brand. And we have franchisees that want to expand.” The two brands “are currently a very small part of our business. But there’s strong potential for future growth.” – Source: NRN.

Four Corners Property Trust Announces Acquisition of 2 Arby’s Restaurants for $3.5 Million

Four Corners Property Trust, a real estate investment trust engaged in the ownership of high-quality net leased restaurant properties, is pleased to announce the acquisition of two Arby’s restaurants in Roanoke Rapids and Rocky Mount, North Carolina for $3.5 million. FCPT funded the acquisition with cash on hand. The restaurants are occupied under a triple-net lease with approximately 18 years of remaining term, and the transaction closed at a going-in cash cap rate of 6.6%, exclusive of transaction costs. The properties are above average performers in well-trafficked retail corridors, and the tenant is a growing and profitable franchisee. Source: Four Corners Property Trust.

Tennant Company Expands in Mexico; Acquires Dofesa, a Long-Time Mexico Distributor of Tennant Equipment

Tennant Company, a world leader in designing, manufacturing and marketing solutions that help create a cleaner, safer world, today announced that it has acquired the assets of Dofesa Barrido Mecanizado (“Dofesa”), Tennant Company’s largest and long-time Mexico distributor, based in Aguascalientes in central Mexico. The transaction closed on September 1, 2016, and terms were not disclosed. Tennant Company completed the acquisition through its existing Mexican subsidiary, Tennant Sales and Services of Mexico (“Tennant Mexico”). In addition to other Tennant distributors in Mexico, this acquisition will enable Tennant Mexico to have broad and deep representation in key regions such as Mexico City, Monterrey, Guadalajara, and Puebla. “This acquisition represents a key investment into Tennant Company’s growth in targeted emerging markets. Tennant Company is interested in opportunities that expand our sales and service networks and enhance our ability to meet customer needs more quickly. We’re very excited to see all three of these coming together with Dofesa. Adding the 50-plus Dofesa employees to the Tennant Mexico team and with the distribution facilities of Dofesa, Tennant Mexico will be able to provide equipment, parts and service directly to our distributors and customers, shortening the time to delivery and avoiding extra costs,” said Rusty Zay, Senior Vice President of the Americas for Tennant Company. “Tennant Company has great respect for Dofesa and its 40-year legacy as a Tennant distributor in Mexico. We look forward to building upon this foundation as we take Tennant Mexico to a whole new level,” Zay continued. Alejandro Hernandez, owner of Dofesa, commented, “Our business has enjoyed a very successful relationship with Tennant Company for many years. Representing the high-quality Tennant brand to our customers in Mexico has helped Dofesa become the leading name in cleaning in this market. We are very confident that Tennant Mexico will carry on the commitment to quality that our companies have shared for so long.” This is the second acquisition announced recently by Tennant Company. On July 28, 2016, the company announced its acquisition of the commercial floor coatings business of Crawford Laboratories, maker of Florock® brand floor coatings. Zay noted that these transactions are consistent with the company’s strategy of pursuing add-on acquisitions to gain access to interesting products or to expand its global sales and service coverage. – Source: Tennant Company (TNC).

 

If you have news for our Global Foodservice Newsletter, email Katie at kwilson@ariteam.com. Thanks for reading!

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