Potbelly Mulls Sale amid Disappointing Earnings
The Chicago-based sandwich maker reported second-quarter earnings that missed expectations. The company is “undertaking a comprehensive review of our business strategy,” interim CEO Michael Coyne said in a statement. Coyne said Potbelly tapped J.P. Morgan Securities “as our financial advisor to assist with this review and development of strategic business alternatives. Potbelly remains open to all strategic options that would potentially significantly enhance shareholder value over the long-term.” Potbelly swung to a loss of $138,000 from net income of $3.4 million in the same period last year. Revenue was up to $108.1 million, from $105.0 million a year ago, but below analysts’ estimates. Potbelly expects a mid-single-digit decline in company-operated same-store sales for 2017. Potbelly’s struggles are myriad. In May, the company announced that longtime chief Aylwin Lewis would step down; Michael Coyne, previously its CFO, was tapped as interim CEO last month. Lewis had led Potbelly for nine years, guiding it through an initial public offering and expanding the chain to 464 stores in the U.S., Canada, Britain and the Middle East. A bigger problem is that people aren’t eating out as frequently, instead opting for budget-friendly and healthier home cooking. That’s a major problem for the saturated fast-casual market. Before he departed, Lewis blamed this shift in customer habits for slumping customer traffic at Potbelly. “The operating environment remains highly challenging for restaurants, and our business performance in the first quarter was reflective of the negative traffic trends experienced throughout most of the industry,” Lewis told analysts on a first-quarter earnings call in early May. Potbelly wouldn’t be the only homegrown sandwich shop to sell. Last September, Jimmy John founder Jimmy John Liautaud sold a majority stake of his Champaign-based chain to Atlanta private-equity firm Roark Capital Group. – Source: Crain’s Chicago Business.
Libbey Inc. Announces Second Quarter Results
Business Highlights. Net sales $197.5 million, down 5.0 percent versus prior year, or down 4.1 percent in constant currency; Net loss of $0.8 million, down $9.5 million versus prior year; Adjusted EBITDA (Table 1) $20.2 million, compared to $40.6 million in the second quarter of the prior year. “Second quarter sales results were in line with our expectations, as an intensely competitive pricing environment continues to linger on a global basis,” said Chairman and Chief Executive Officer William Foley. “We remain confident that we are taking the appropriate measures to improve the long-term performance of our business. We’re seeing indications that certain pricing initiatives we implemented last quarter are taking hold, and that our new product initiatives are beginning to gain traction in the marketplace. We’re also very pleased that our new e-commerce platform launched on time and on budget in mid-July.” Foley concluded, “As we look to the second half of the year, we believe that the strategic initiatives we’ve been focused on over the last year will start to contribute and alleviate some of the short-term competitive pressures in our market. We remain the strongest, most innovative glass tableware company in the world, and we look forward to a better second half compared to the prior-year period, supported by improved profitability in EMEA as a result of our furnace realignment activities, improved operating performance and cost reductions, and sales contributions from new products and e-commerce.” Net sales in the U.S. and Canada segment were lower due to softer sales in the retail and business-to-business channels, which were down approximately 10 percent and 2 percent, respectively. U.S. and Canada foodservice net sales were flat versus prior year, despite volume increases in the channel. In Latin America, net sales declined as a result of lower net sales across all channels, primarily due to lower volume in the retail channel. Decreased volume in the business-to-business channel was offset by favorable price and mix. Net sales in the EMEA segment decreased primarily as a result of unfavorable currency. Net sales in Other were down as a result of softer sales in China. The Company’s effective tax rate was 163.0 percent for the second quarter of 2017, compared to 43.5 percent in the year-ago period. The change in the effective tax rate was driven by several items, including lower pretax income, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange losses compared to gains in the prior period. Net sales in the U.S. and Canada segment were lower due to softer retail and foodservice channel sales, which were down approximately 9 percent and 2 percent, respectively. U.S. and Canada business-to-business net sales increased compared to prior year approximately 4 percent, mainly related to an increase in volume. In Latin America, net sales declined as a result of lower net sales across all channels, specifically due to lower volume in the retail and business-to-business channels and unfavorable currency. Net sales in the EMEA segment decreased primarily as a result of unfavorable currency across all three channels, as well as lower volume in the retail channel. Net sales in Other were down as a result of softer sales in China. The Company’s effective tax rate was 12.6 percent for the first six months of 2017, compared to 41.0 percent in the year-ago period. The change in the effective tax rate was driven by several items, including lower pretax income, the timing and mix of pretax income earned in tax jurisdictions with varying tax rates, and the impact of foreign exchange losses compared to gains in the prior period. Balance Sheet and Liquidity: The Company had available capacity of $90.3 million under its ABL credit facility at June 30, 2017, with no loans outstanding and cash on hand of $28.2 million. At June 30, 2017, Trade Working Capital, defined as inventories and accounts receivable less accounts payable, was $202.4 million, a decrease of $17.0 million from $219.4 million at June 30, 2016. The decrease was a result of lower accounts receivable and inventories and higher accounts payable. Outlook: Today the Company affirmed its previous full-year 2017 outlook, but indicated that it expects Adjusted EBITDA margin (see Table 6) to be near the low end of its previously provided 11 percent to 13 percent range. The Company still expects: Net sales decline in the low-to-mid single digits, compared to the full year 2016, on a reported basis, with continued currency headwinds; Capital expenditures of approximately $50 million; “Competitive pressures have remained elevated through the first half of the year, and as a result, we believe Adjusted EBITDA margins for the full year will be near the low end of our previously provided outlook range,” said Jim Burmeister, vice president, chief financial officer. “During the second quarter, we repaid another optional $5.0 million on our Term Loan B, as we continue to pursue our goal of reaching our target Debt Net of Cash to Adjusted EBITDA leverage ratio of 2.5x to 3.0x (see Table 5).” About Libbey Inc. Based in Toledo, Ohio, Libbey Inc. is one of the largest glass tableware manufacturers in the world. Libbey Inc. operates manufacturing plants in the U.S., Mexico, China, Portugal and the Netherlands. In existence since 1818, the Company supplies tabletop products to retail, foodservice and business-to-business customers in over 100 countries. Libbey’s global brand portfolio, in addition to its namesake brand, includes Libbey Signature®, Masters Reserve®, Crisa®, Royal Leerdam®, World® Tableware, Syracuse®China, and Crisal Glass®. In 2016, Libbey Inc.’s net sales totaled $793.4 million. – Source: PRNewswire/ Libbey Inc.
Buffalo Wild Wings COO James Schmidt to retire in August
James Schmidt is retiring as COO of Buffalo Wild Wings Inc. effective Aug. 14, according to an SEC filing on Thursday, continuing an overhaul of management staff amid upheaval in the company’s boardroom. Schmidt had been with the Minneapolis-based chicken wing chain since 2002, and was named COO in 2011. The role was a newly created position at the time. His departure was announced with only a single line in a securities filing. Longtime CEO Sally Smith announced her retirement in June, the same day that activist investor Marcato Capital Management, which had called for her departure, won three seats to the chain’s board of directors. Buffalo Wild Wings stock has fallen 18 percent since the proxy vote was announced. – Source: NRN.
Chef David Chang’s restaurants are pilgrimage sites for foodies from Sydney to New York
Chef David Chang’s restaurants are pilgrimage sites for foodies from Sydney to New York. But the founder of the Momofuku restaurant group recently disclosed that he gets inspiration on kitchen management from a US fast-food chain where a double cheeseburger, fries, and a drink together cost less than a small plate of pea shoot at Chang’s Momofuku Noodle Bar in New York. Chang is a fan of In-N-Out Burger, a popular chain of drive-through joints scattered across the western US. On the Aug. 1 episode of the “House of Carbs” podcast, he told hosts Joe House and Bill Simmons that he goes to In-N-Out for the food—his standard order is a grilled-cheese sandwich with grilled tomatoes served animal style But he also goes just to watch the staff at work. “Every time I go to In-N-Out, if there’s time permitting, I stay there until I see something happen,” Chang said. “I stay there until I see one of the employees drop something.” He went on to explain what he meant: David Chang: ‘Cause it’s always so busy. They drop something, they don’t know they drop something, and then someone else picks it up.… Let’s just say they dropped a napkin. They pick up the napkin. They don’t go, “Hey jackass, you dropped this,” like most people would do. They pick it up, they don’t say anything. Bill Simmons: They get rid of it; David Chang: Yeah. They do their job. Bill Simmons: Great team chemistry at In-N-Out Burger; David Chang. Great team chemistry!; Bill Simmons: Like the Warriors. Like the 2017 Warriors; David Chang: Everyone has each other’s backs. And they’re like 17, 18-year-old kids. It takes me like six months to train somebody who wants to be a chef to actually care about something like that. I’ve always, always admired that. Quartz contacted the Irvine, California-based chain to ask what makes their staff run smoothly. “Our Associates do work hard to make sure our customers have a great experience,” vice president of operations Denny Warnick said via email. “A higher pay structure is helpful in making that happen but it is only part of our approach. It is equally important to us that we treat our Associates very well and maintain a positive working environment in all of our restaurants.” The company has a 4.3 out of 5.0 rating on Glassdoor from nearly 900 current or former employees, with 90% saying they’d recommend the organization to a friend. (By comparison, 56% of McDonald’s employees on the site would do the same.) Employees rated In-N-Out especially high in compensation (4.4) and culture (4.5), consistent with Warnick’s emphasis on higher pay and a positive working environment. Previous research has found that organizations that show concern for employees’ development and welfare have higher levels of productivity and job satisfaction. Unhappy workers make more mistakes (paywall), have more accidents, and are more likely to be absent. One key to maintaining happiness among the rank-and-file is to ensure good behavior at the top of an organization. Researchers have found that employees are more motivated to help co-workers when they see people in leadership positions going out of their way to do the same. If Chang wants In-N-Out levels of cooperation in his own restaurants, he should probably make sure he’s picking up dropped napkins, too. – Source: IN-N-OUT Burger.
Smashburger exec takes helm at Mici Handcrafted Italian
Former Smashburger executive Elliot Schiffer has been named CEO and an equity partner in the four-unit Mici Handcrafted Italian chain, the company said. The Denver-based fast-casual chain is owned by the Miceli family offering premium pizza, pastas, salads and paninis, with dine-in, delivery and catering. Schiffer said the company just completed a Series A round of financing with the goal of rapid expansion. A franchising program is expected to be launched within a couple years. The chain hopes to reach 100 units within about eight years, with two to five corporate locations opening initially in Colorado over the next few years. Schiffer said he sees Mici filling a gap for more-premium pizza that is not filled by the quicker-cooking fast-casual brands like Blaze Pizza and MOD Pizza, or by quick-service delivery brands like Dominos. “We’re definitely not fast. We’re not a two-minute pizza,” he said. “We’re never going to have a $7.99 medium two-topping pizza deal. It’s not in our DNA.” Instead, Mici offers individual pizzas for $9 to $12, and larger pies in the $15 to $20 range, made with high-quality ingredients, dough made in house daily and mostly imported toppings. Unlike other fast-casual players, Mici’s pizza travels well and the chain does roughly half of sales in takeout and delivery, allowing for high volumes out of units as small as 1,600-square feet with only 25 seats. Schiffer was previously senior vice president of non-traditional development for Denver-based Smashburger, where he developed units of the burger chain in airports, casinos and college campuses. Previously, he helped build the M Burger concept with Lettuce Entertain You Enterprises, Richard Melman’s multiconcept restaurant group based in Chicago. Jeff, Michael and Kim Miceli opened the first Mici Handcrafted Italian in downtown Denver in 2004, based on family recipes. Schiffer, who holds a minority stake, said he is among about a dozen investors. He noted that the chain also is not competing for the much-sought-after 2,200-square-foot end-cap favored by fast-casual brands, and is happy in smaller in-line locations. “The 2,200- to 2,600-square-foot end cap is a difficult piece of real estate to find, with so many brands looking for that, especially with a drive thru. Mici doesn’t need visibility,” he said. “Mici needs access to a good neighborhood with families and young professionals. An in-line at 1,600-square feet is not a problem.” – Source: Restaurant Hospitality.
25-year vet served at DQ, Taco Bell & KFC
Del Taco Restaurants, Inc. has named M. Barry Westrum as chief marketing officer. Westrum brings more than 25 years of marketing experience to the Lake Forest, California-based Del Taco. A California State University, Fullerton graduate, Westrum will report directly the company’s president and CEO John D. Cappasola. “We are thrilled to welcome Barry to the Del Taco family,” Cappasola said in a prepared statement. “Barry is an established brand leader who has deep experience in strengthening brands, enhancing marketing and innovation, and creating strong partnerships with operators and franchisees to build sales and profits.” Most recently, he served as the executive vice president of marketing for International Dairy Queen Inc. Prior to that tenure, Westrum spent 17 years with Yum! Brands where he worked for both Taco Bell Corp. and KFC USA. Westrum also spent time as chief marketing officer of A&W and Long John Silver’s Restaurants. “Del Taco has had great marketing success to date, which has led to some of the best results in the restaurant category, and I look forward to working with the team to grow the Del Taco brand,” said Westrum. There is no outgoing chief marketing officer at Del Taco. The brand currently has more than 550 restaurants in 15 states. – Source: NRN.
Sonic Appoints Chief Brand Officer
Sonic Corp., the nation’s largest chain of drive-in restaurants, announced the appointment of Jose A. Dueñas as executive vice president and chief brand officer. Dueñas will be responsible for the end-to-end customer experience including marketing and culinary innovation, digital strategy, consumer insights, guest relations, concept development and overall evolution of the SONIC brand for the long term. He joins the brand with more than two decades of marketing and brand senior leadership in the restaurant and consumer packaged goods industries, most recently leading same-store sales growth and profitability for Olive Garden where he served as executive vice president and chief marketing officer. “I am delighted to welcome Jose to Sonic this month,” said Clifford Hudson, Sonic CEO. “His experience and impressive track record complements our recent appointment of Lori Abou Habib as chief marketing officer. Jose brings broad expertise and talent to Sonic; we are confident his leadership and expertise will support continued growth of our brand.” In his five years with Olive Garden, Dueñas served as marketing lead with responsibility for brand strategy, food innovation, guest experience design, advertising and communications, digital and social media, market research and guest relations. Under his leadership the brand achieved 11 consecutive quarters of same-store sales growth, outperforming the industry. Dueñas joined Olive Garden after 15 years of progressively responsible positions at the Kellogg Company in the United States and Mexico. The company also announced that its Board of Directors has approved the continuation of the Company’s quarterly cash dividend program. Beginning in the first fiscal quarter of 2018, the Company expects to declare a quarterly dividend of $0.16 per share of common stock, which represents an increase of 14% from the current quarterly dividend of $0.14 per share. As previously announced, a dividend of $0.14 per share is to be paid to shareholders of record as of the close of business on August 9, 2017, with a payment date of August 18, 2017. In addition to the dividend, the Board of Directors has approved an incremental $160 million share repurchase authorization. The new authorization allows for the repurchase of up to $160 million of common stock through the end of fiscal 2018. Future declaration of quarterly dividends and the establishment of future record and payment dates are subject to the final determination of the company’s board of directors. Share repurchases may be made from time-to-time in the open market or otherwise, including through an accelerated share repurchase program, under the terms of a Rule 10b5-1 plan, in privately negotiated transactions or in round lot or block transactions. – Source: Sonic.
Alexander’s will acquire 99 Restaurants, LLC
Alexander’s Holdings, Inc. and Fidelity National Financial, Inc. announced that J. Alexander’s, Fidelity Newport Holdings, LLC, and Fidelity National Financial Ventures, LLC, a direct wholly-owned subsidiary of FNF, have entered into a definitive agreement under which J. Alexander’s will acquire 99 Restaurants, LLC, in an all-stock transaction valued at approximately $199 million, including the assumption of $20 million in net debt. The transaction was approved by the board of directors of J. Alexander’s and the board of managers at FNH and is expected to close in the fourth quarter of 2017. FNH is a majority-owned subsidiary of FNFV. Lonnie J. Stout II, President and Chief Executive Officer of J. Alexander’s noted, “Ninety Nine Restaurant & Pub is a well operated concept. Founded in 1952, they are a strong regional competitor in the New England market with 106 restaurants currently in operation. They have a culture very similar to ours in that they are committed to outstanding guest service and putting employees first. Led by President Charlie Noyes, Ninety Nine has a tenured and deep management team. The team has weathered the casual dining headwinds very well and has posted same store sales growth over the last few years that has outperformed the market. They have a regional menu supported by a strong value proposition with a heavy concentration of restaurants in Massachusetts and the other New England states. This creates somewhat of a moat around the business. Another appealing characteristic is there is a solid business at Ninety Nine. It is a well-managed company. For all these reasons, we believe the Ninety Nine Restaurant & Pub group will be a perfect fit with our management philosophy at J. Alexander’s.” At closing, J. Alexander’s will acquire ownership of 99 Restaurants via merger whereby 99 Restaurants will become a wholly-owned subsidiary of J. Alexander’s Holdings, LLC. In consideration, J. Alexander’s will cause to be issued to FNH and FNFV, collectively, a total of 16,272,727 shares of J. Alexander’s Class B Common Stock, which will be a newly authorized, non-economic class of stock entitled to one vote per share, and 16,272,727 Class B Units of J. Alexander’s Holdings, LLC (which units will be exchangeable for shares of J. Alexander’s Class A common stock on a one-for-one basis, and upon such exchange a corresponding number of shares of Class B Common Stock will be cancelled). As a result, immediately following the transactions, FNH and FNFV will own approximately 52.5% of the outstanding shares of capital stock of J. Alexander’s. In connection with the transaction, J. Alexander’s will amend its charter to redesignate J. Alexander’s currently outstanding common stock as Class A Common Stock, which will continue to be traded on the NYSE, and to create the new Class B Common Stock to be issued to FNH and FNFV, which will not be listed for trading. The total number of authorized shares of J. Alexander’s common stock will be increased. In addition, J. Alexander’s’ subsidiary J. Alexander’s Holdings, LLC will amend and restate its current limited liability company agreement to, among other things, create the new class of Class B Units (that will be a non-voting, economic equivalent of common stock of J. Alexander’s, exchangeable for shares of J. Alexander’s Class A Common Stock on a one-for-one basis), and existing Class B profits interest units will be renamed as “Class C Units,” but will otherwise retain their current characteristics. In addition to the equity consideration described above, $60 million of 99 Restaurant’s indebtedness will be outstanding at closing, and $40 million of such indebtedness will be repaid immediately following the closing with the proceeds of a pre-closing cash contribution to 99 Restaurants by FNFV, resulting in $20 million of net debt to be assumed by J. Alexander’s in connection with the transactions. Strategic and Financial Benefits of Transaction. Stout continued, “Since we were spun out of Fidelity National Financial, Inc. in September of 2015, we have considered various strategic options to growing our business. We believe the acquisition of the Ninety Nine Restaurant & Pub group will help us with scaling our business. During 2016, Charlie and his team generated over $300 million in total net revenue and approximately $30 million of Adjusted EBITDA with an average check per guest, including alcoholic beverages, of $15.82.” Adjusted EBITDA is a non-GAAP financial measure used by J. Alexander’s to evaluate operating performance and the effectiveness of its business strategies. For a definition of “Adjusted EBITDA” as used in this release and a reconciliation of Adjusted EBITDA to the nearest GAAP financial measure, net income, please see the information and calculation attached to this release. Stout went on to comment, “We believe this transaction will be significantly accretive to our earnings in 2018. We believe this additional scale and liquidity will benefit all of our existing shareholders. Our Board has been narrowly focused on creating shareholder value. We believe the Ninety Nine acquisition is a key step in that direction. “In connection with the transaction, the J. Alexander’s board of directors will be expanded to include Bill Foley. We believe this is an additional benefit to the transaction and with Bill on the board, we believe we will have one of the strongest boards in the restaurant industry. “We have also recently negotiated for the termination of the consulting agreement currently in place with Black Knight Advisory Services, LLC (‘Black Knight’), effective upon the closing of the Ninety Nine Restaurants acquisition. This will eliminate the annual consulting fees associated with the agreement and will also trigger, within no more than 90 days after the closing of the transaction, an election by Black Knight to settle the profits interest grant they were issued in 2015. Once the grant is settled in shares of J. Alexander’s common stock, we will no longer be required to recalculate the fair value associated with that grant on a quarterly basis as has been the case since our spin transaction in 2015.” Management and Board Composition. The J. Alexander’s senior leadership team will continue to manage the combined company following the closing of the transaction. In connection with the transaction, William P. Foley, II is expected to join the J. Alexander’s board of directors. There are no other expected changes to the J. Alexander’s board of directors or its executive officers in connection with the transaction. Approvals and Conditions. The transaction is subject to the approval of the shareholders of J. Alexander’s, including the approval of a majority of the votes cast by disinterested shareholders under applicable law, the restatement of J. Alexander’s charter and the approval of amendments to the J. Alexander’s NYSE listing application to reflect the reclassification of J. Alexander’s listed common stock. The transaction is also subject to other conditions to closing, including the approval of 99 Restaurant’s lender, the receipt by J. Alexander’s of a waiver by FNF of various covenants and other provisions under agreements entered into with J. Alexander’s in connection with its 2015 spin-off from FNF and audited financial statements of 99 Restaurants, regulatory approval under the Hart-Scott-Rodino Antitrust Improvement Act of 1976 and other customary closing conditions. – Source: J. Alexander’s Holdings, Inc.
Garden Fresh Sold to 2 Private-Equity Groups
Garden Fresh Restaurant Corp. has been acquired by two private-equity groups just seven months after the parent to the Souplantation and Sweet Tomatoes brands was sold out of bankruptcy, the companies said. The 97-unit San Diego, Calif.-based salad chain was acquired by Washington, D.C.-based Perpetual Capital Partners and CR3 Capital LLC, an investment affiliate of Dallas-based CR3 Partners LLC. Terms of the deal were not disclosed. In January, Cerberus Capital Management LP acquired Garden Fresh out of bankruptcy. Cerberus was among several lenders to which Garden Fresh owed more than $175 million, according to bankruptcy filings. The company filed for bankruptcy in October 2016, attributing the filing to declining sales and higher labor and rent costs following sale-leaseback deals to investors. Souplantation and Sweet Tomatoes units are noted for their 50-foot salad buffets as well as a selection of soup, pastas, breads, muffins and desserts. “This creates new opportunities for all of our employees, guests and business partners as we move forward,” said Gene Baldwin, Garden Fresh interim CEO and a partner at CR3 Partners. CR3 Partners led Garden Fresh Restaurant’s restructuring and has managed the company for several months, the companies said. Garden Fresh has restaurants in nine states. – Source: NRN.
Ms. Grant serves as the Chief Executive Officer of ThinkFoodGroup
Performance Food Group Company announced that it has appointed Kimberly S. Grant as an independent director to serve on its Board of Directors effective as of July 31, 2017. Ms. Grant serves as the Chief Executive Officer of ThinkFoodGroup, a global hospitality management company that owns and operates innovative dining concepts created by two-star Michelin awarded chef José Andrés. From June 2002 to June 2013, she served as the Chief Operations Officer and President for Ruby Tuesday Inc., a publicly traded restaurant company. In her role at Ruby Tuesday, Ms. Grant had direct P&L responsibility for more than 800 restaurants with $1.3 billion in revenues. “Kimberly’s extensive background in the restaurant and hospitality industry combined with her operational and financial expertise will contribute significantly to our Board of Directors,” said Douglas M. Steenland, PFG’s Chairman of the Board. “We are pleased that she is joining our board and look forward to working closely with her.” Ms. Grant holds a master’s degree in banking and financial services management from Boston University and a bachelor’s degree in hotel and restaurant management from Thomas Edison State University. – Source: Performance Food Group Company.
Church’s Chicken® Selects JWT Atlanta as New Advertising Agency of Record
Church’s Chicken®, the global quick service restaurant (QSR) chain that’s been serving hand-battered fried chicken and scratch-made honey-butter biscuits for 65 years, announced a new strategic partnership with J. Walter Thompson (JWT) Atlanta, after a four-month search. This new partnership is yet another step in reigniting market share momentum for the iconic brand. Under new marketing leadership, Church’s Chicken is stepping up its game to win in QSR’s hyper-competitive marketplace. “Throughout the selection process, JWT’s leadership continued to demonstrate great passion for our brand, franchisees and guests,” said Hector Munoz, Executive Vice President and Global Chief Marketing Officer (CMO) for the Church’s and Texas Chicken brands. “We believe the agency’s enthusiasm for our brand will resonate through the creative in meaningful ways that will engage and delight our guests and drive transactions.” A first order of business for Church’s new Agency of Record (AOR) will be repositioning the brand to set it up to compete for the next 65 years, while working alongside executives, franchisees and other key business partners. JWT Atlanta will be doing so in partnership with Georgia Margeson, Senior Director of Advertising, Munoz, and the entire Church’s marketing leadership team. “We are thrilled and honored to be given the opportunity to support such an iconic brand,” said Spence Kramer, CEO, J. Walter Thompson Atlanta. “Church’s is looking to serve its guests in new and innovative ways, and we can’t wait to work with them to accomplish big things.” JWT Atlanta will lead messaging strategy across all consumer touchpoints, inclusive of TV and radio. Creative content will be led by Vann Graves, who serves as Chief Creative Officer for the agency. Consumers can expect a first peek at the new campaign in early 2018. The Church’smarketing team encourages an integrated collaboration with all of their marketing partners, and JWT will lead the efforts in this approach. “In addition to key leadership and structural changes earlier this year, JWT Atlanta is the next piece in the progression of Church’s marketing vision,” said Munoz. Church’s previous AOR was with Made Movement of Boulder, CO, a multi-year relationship that ended in late 2016. The brand has been recently working with San Francisco-based Erich & Kallman on a project basis and will be using their work through the end of 2017. – Source: Church’s Chicken®.
Longtime Wendy’s franchisee Cedar Enterprises, led by central Ohio’s Karam family, has sold its more than 200 restaurants.
Columbus-based Cedar first bought Wendy’s franchises in 1976 and grew to become the third-largest franchisee in recent years with stores spanning the U.S., from Seattle to New England. The sale of Cedar’s stores, which numbered close to 220, occurred sometime in the second quarter, which ended July 2, and was brokered by Wendy’s. Several companies bought the hundreds of stores, according to Wendy’s CEO Todd Penegor. He briefly acknowledged the transaction during Wendy’s second-quarter earnings call Wednesday morning. No sales price was announced. Cedar Enterprises did not own any Wendy’s locations in central Ohio. “Cedar’s portfolio was split among several strong operators with a demonstrated commitment to the growth and development of the Wendy’s brand,” said Wendy’s spokeswoman Heidi Schauer. Attempts to reach Cedar Enterprises for comment were unsuccessful. The company’s phone system simply states that “Our office is currently closed.” Penegor added during the call that Wendy’s has been talking to many longtime franchisees about succession plans. It all appears to be business as usual to Bob Welcher, president of Restaurant Consultants Inc. “I think it is just normal business lifecycle,” Welcher said. “It’s like playing poker. You have to know when to hold them and when to fold them.” The Karams, who have been less visible at Cedar in recent years as J. David Karam exited and became president and CEO of Sbarro, may have just decided that their interests lie elsewhere, Welcher said. “People move on, retire, have different interests,” he said. “New franchisees might have more energy and be more aggressive, which is probably what Wendy’s is looking for.” Cedar’s sale was overshadowed Wednesday by Wendy’s announcement that, in a separate deal to sell longtime franchisee DavCo’s stores, the company took a loss of $43 million. The DavCo sale much higher-profile given the recent legal battle between Wendy’s and that franchisee. Cedar Enterprises and J. David Karam were in the spotlight a decade ago when he and two private-equity companies announced they were putting together a bid to buy Wendy’s. The company was ultimately sold in 2008 to a firm owned by investor Nelson Peltz. Karam was then hired as president of Wendy’s North America operations, a position he held through the end of 2011. Karam became CEO of pizza chain Sbarro in 2013 and moved Sbarro’s headquarters to Columbus following the company’s emergence from bankruptcy in 2014. Under Karam’s leadership, Sbarro has invested in new stores in central Ohio and a fast-casual pizza concept called Cucinova. – Source: The Columbus Dispatch
Judge set to rule on deal for Joe’s Crab Shack, Brick House parent
Landry’s Inc. won the bankruptcy court auction for Ignite Restaurant Group Inc., CEO Tilman Fertitta told NRN. The companies are awaiting the federal judge’s approval. A judge must approve the sale in a bankruptcy court hearing, which is scheduled for Aug. 17 in Houston. The Houston-based parent to the Joe’s Crab Shack and Brick House Tavern + Tap chains filed for bankruptcy protection June 6with a $50 million “stalking horse” deal in place with Kelly Investment Group, which bought Champps and Fox & Hound out of bankruptcy last year. However, Fertitta’s company, Houston-based Landry’s, later made a $55 million bid for Ignite’s assets in U.S. Bankruptcy Court for the Southern District of Texas. “We did not bid on Brick House,” Fertitta said, “but because we had the largest combined bid, we bought Brick House. We’re excited to be able to bring back Joe’s to what it was once before: a very casual, fun seafood restaurant that serves a lot of crabs.” Brick House will be sold separately when the deal closes, Fertitta said. “It will be on the market,” he said. “If we don’t find a buyer soon, we’ll be hiring a banker to sell Brick House.” Fertitta originally bought the Joe’s concept in 1994, when it had one restaurant, and sold the brand to private-equity firm J.H Whitney & Co. in 2006, which went public in 2009 and assumed the Ignite Restaurant Group name. “I don’t think what has happened to Joe’s in the past 12 years has been good,” Fertitta said, “and we’re excited to make the old Joe’s what it was. We will be shrinking the concept down tremendously.” With closures over the past few months, Joe’s Crab Shack has about 75 units. “We’ll probably end up with about 60 units,” Fertitta said. As of April 3, in its last public report before the company was delisted, Ignite reported 112 Joe’s Crab Shack restaurants and 25 Brick House units in 32 states. The company franchised three Joe’s Crab Shack locations in Dubai. “We all have to make adjustments in this industry,” Fertitta said. “I feel like in the past 12 years under this ownership they’ve made the adjustments the wrong way.” “Joe’s will get back to fundamentals of good service, hot food hot and cold food cold — and a fun time,” he said. Fertitta said he planned to keep all the operators. “They’ve been very short on management in the restaurants,” he said. “I think that’s been one of their issues. So even the restaurants we close, we’ll be transferring a lot of the management and hourlies to the restaurants we will be keeping.” Landry’s and its affiliates own and operate more than 40 hospitality brands, including five Golden Nugget Hotel and Casino locations as well as such restaurant concepts as Landry’s Seafood, Chart House, Saltgrass Steak House, Bubba Gump Shrimp Co., Claim Jumper, Morton’s The Steakhouse, McCormick & Schmick’s, Mastro’s Restaurants and Rainforest Café. – Source: NRN.
Dunkin’ Brands Appoints Board Member
Dunkin’ Brands Group, Inc. named Roland Smith to its board of directors. Smith served as president and CEO of The Wendy’s Company and CEO of Arby’s Restaurant Group, Inc. as well as CEO of Office Depot Inc. “Roland is a veteran public company CEO with experience in a broad range of industries, including consumer goods, quick-service restaurants, and grocery and specialty retail stores,” Travis said of the West Point graduate via release. “His track record of delivering strong business results, including growing revenue and increasing operating profit, as well as his more than 30 years spent heading up complex, global companies, will greatly benefit Dunkin’ Brands as we work to position both our brands for success.” The chain also appointed Jason Maceda to senior vice president of Baskin-Robbins U.S. and Canada. Maceda is a 19-year Dunkin’ vet and most recently served as the company’s VP of U.S. Financial Planning and Corporate Real Estate. “During his tenure with Dunkin’ Brands, Jason has contributed greatly to our success. He has a strategic financial mind but has never confined himself to a traditional financial role in the corporate office,” said chairman and CEO, Nigel Travis via statement. “He has also served as business partner to our operations teams, both Baskin-Robbins and Dunkin’ Donuts, and has been actively engaged in the field and the day-to-day business of the restaurants.” Dunkin’ Brands is based in Canton, Mass. and is currently distributed in more than 60 countries. – Source: NRN.
IHOP and Applebee’s Closing over 100 Restaurants
DineEquity said that it will close more than 100 Applebee locations and up to 25 IHOPs this year as the struggling restaurant company seeks to cut costs. DineEquity will close at least 20 IHOP locations, though globally it plans to open more such restaurants. The company also announced the appointment of Steve Joyce as its new CEO — he was formerly chief executive of Choice Hotels since June 2008. “We are investing in the empowerment of our brands by improving overall franchisee financial health, closing underperforming restaurants and enhancing the supply chain,” interim CEO Richard Dahl said in a statement. “We believe 2017 will be a transitional year for Applebee’s, and we are making the necessary investments for overall long-term brand health and expect to see improvement over the next year.” DineEquity shares have lost almost half their value this year, closing Thursday at $38.81. In the latest American Customer Satisfaction Index report, which tracks the restaurant industry, for the first time fast-food restaurants are actually scoring higher in consumer satisfaction than their higher-end rivals. Customer satisfaction with full-service restaurants slipped 3.7 percent to 78 points on the ACSI’s 100-point scale. Fast-food chains, by comparison, held steady at 79 points. The results are based on a survey of almost 5,600 customers between June 2016 and May 2017. Millennials, the biggest generation in America, prefer to cook at home, or spend less on eating out, which may be giving fast-casual chains like Panera a boost. Meal-kit services such as Blue Apron may also be squeezing sit-down restaurants, given some consumers’ desire to make their own meals with recipe kits. – Source: CBS News.
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