Nation’s Restaurant News – Will Restaurant Sales And Traffic Momentum Pick Up In 2025?

Photo courtesy of Pexels / Andrea Piacquadio

Traffic and sales picked up in October and November, creating some optimism that 2025 will be more stable for the industry

Consumer Trends

Sequential improvement continued through November and some operators expect a resurgent and stable year ahead

Alicia Kelso | Dec 18, 2024

For plenty of restaurant brands across all segments, the end of 2024 can’t come soon enough. The year was mired in challenges, many driven by consumers fed up with stubbornly high menu prices. Traffic – a critical metric for brand health – fell off a cliff earlier this year, leaving companies no choice but to go to war on margin-squeezing value offerings.

But, as we heard throughout third quarter earnings calls, there has been sequential improvement throughout the industry as we barrel toward the end of the year. Traffic in October turned positive in the quick-service segment for the first time all year, according to Revenue Management Solutions, and continued in the black throughout November – up 1.3%.

Is this trend enough to create optimism heading into 2025? It depends on your definition of positivity, but it’s probably fair to call the current – and near-term – environment “mixed.” For instance, net sales were also up in November by 4.9%, though they were driven in large part by average price increases (up 2.6%), RMS data shows. Price increases are what got us into this mess in the first place.

Indeed, RMS’ Jana Zshieschang notes that three out of four consumers believe restaurant prices are higher than in recent years, and those high prices are the primary reason they are cutting back on restaurant spending. Despite nominal traffic gains, RMS’ Q4 consumer survey shows that respondents are now dining out less across all categories – with fast casual and full service being hit the hardest. Thirty percent of respondents dined at QSRs less – but 42% reported going less to fast casual, and 46% reported going less to full-service restaurants.

Further, data released this week from the U.S. Census Bureau shows that restaurants continued to take market share versus grocery/supermarket stores, with 56.3% in November. While that is positive, and the percentage is just 10 basis points below the all-time monthly gain for the industry, according to Kalinowski Equity Research, the year-over-year increase marked the lowest rise in share for the restaurant industry since February 2021. President and chief executive officer Mark Kalinowski adds that any additional market share gains by the restaurant industry in 2025 will be much smaller than those in previous years.

In other words, spending at restaurants has slowed, while same-store sales growth is expected to be the lowest of any non-pandemic-impacted year since 2016.

Still, this is largely a glass-half-full industry, so let’s zoom in on the “sequential improvement” and what it could mean for the year ahead.

During a recent interview, Pacific Management Consulting Group founding principal John Gordon said, “If red is bad and green is good, I’m somewhere slightly green about 2025. I think the industry has gone through tremendous travails. We’ve already been through our red years.”

And, in an interview with CNBC, Savory Brands co-founder and partner Andrew Smith said, “We feel confident going into 2025 that it’s going to be a resurgence year, a stabilization year.”

“Tough times pass. We’re starting to see traffic finally come back so we feel like the American consumer is tired of waiting and they’re excited to come back into restaurants,” he said.

Importantly, Smith adds that consumers are starting to worry less about price and more about operational execution factors such as speed and accuracy.

“That’s an indication to me that it’s not hitting their wallet as much. It’s about them moving on with their life, which I think we all want to do,” he said. “We’re feeling like this is the year to get back to business and get into offensive mode and not playing in defensive mode.”

Contact Alicia Kelso at Alicia.Kelso@informa.com

Wray Executive Search – Restaurants: The Need For Meaningful Catalysts

by John Gordon, Principal and Founder, Pacific Management Consulting Group

With thoughts and hopes building for 2025, developments in 2024 help to set the foundation. Like every year since 2019 and the Pandemic onset in 2020, the Restaurant Industry continues to be ever dynamic. 2024 was overall a weak year unfortunately, with soft sales and traffic declines across the board, except for the major players in the fast casual segment. Six US brands continue to be very strong. Even with a weak year, there is still plenty to do, for operators, franchisees, investors, suppliers, consultants and advisors, journalists and others in this huge industry, to get ready for the next positive cycle.

The need for restaurant catalysts

This business needs catalysts to move. We are at a weakened position , and meaningful catalysts are needed to move the needle. Several Q3 earnings calls forecasts pointed to a better “second half of 2025”. It seems to me for that to happen we need much better people development at all levels, including at the CEO level. We need to work our way out of the almost world wide price angst problem. We need more focus to the middle of the P&L and CAPEX costs and discipline. We need to rationalize the number of restaurants in the US. And finally, new product and concept development to fix legacy problems and attract core and aspirational guests.

Current Developments

October Advance Foodservice Sales improved. Census seasonally adjusted sales wiggled higher in October, plus 4.3%, versus 3.9% YAG. From this we have to subtract app. 4 full percentage price for price/check increases, so we were still slightly negative on implied traffic. However, this was a still a slight improvement over September.

Forward View on US Tariff Impacts: While of course we don’t know what will happen at this point, announced tariff future actions to date will have some impact on restaurant foodstuffs. The University of Michigan recently ,ran an analysis on sources of worldwide imports by country, traced back to Canada and Mexico. The following food impacts which could impact restaurants, were:

· “Other vegetables and melons”, 79% of US per ton imports from Canada and Mexico.

· Bread and Bakery materials: 72%

· Meat x Poultry: 48%

· Malt and Beer, 84%.

Hat tip to Prof. Jason Miller, MSU.

Any foodstuff increases are just the beginning cost into the food manufafacturing and delivery chain, which are typically slower moving than the raw material costs. Consensus reporting from public restaurants now indicate low single digit commodity cost basket inflation. Another factor to watch.

Restaurant Bankruptcies Inevitable in 2024

There have been 30 major restaurant chain or multiunit franchisees bankruptcies in 2024.[1] At least one more brand is the works, Boston Market. It had failed Ch11 filings in 2024. Red Lobster was the largest. It has already found a home, with the distressed ownetrship group, backed by Fortress investment Group. It closed north of 120 units.

When the SOFR interest rate [2] began to rise in July of 2023, it rocketed up from .3%, peaking at 5.32% in August 2024. That put stress on restaurants that had debt that indexed to this rate, or had resets coming where they had to refinance. With a weakening sales environment especially in older brands, AND the double food and labor cost inflation impact in 2022/2023 made it a predictable but perfect storm.

There will be more in 2024. One observation from these developments is once again, poor new unit construction, remodeling, and shaky business purchase acquisition planning and due diligence are seen. The restaurant industry from shift supervisor to CEO to Boards of Directors over emphasize the income statement to the exclusion of the P&L.

My first area manager told us endlessly, ‘Its not what you expect, it is what you inspect’. This means watch more things. Debt and capital plans simply must be linked to operational reality. Over use of the EBITDA metric contributes to this disconnection. EBITDA is a mere subtotal and is “profit before everything”[3] To implement this improvement, changes in CEO, Divisional, District and Area leadership, and some corporate staff bonus and performance appraisals will be required. More corporate reporting beyond “adjusted EBITDA” will be essential. By example, look at CAVA’s reporting of net income, net cash provided by operations and free cash flow as a model[4].

Other Notable Notes:

Taco Bell should be recognized for multiple new drink tests and implementations such as green tea based Agua Real Fruit Rereshers ($3.99, 16 ounces), and now the test of the Live Mas Café in a store platform. I’m positive they will learn a lot.

Jersey Mike’s

The Jersey Mike’s acquisition was amazing. It resets the table in terms of world wide sandwich competition, with a strong brand, with great management and store economics entering the fray.

I asked my friend, Alicia Miller, founder and CEO of the franchise analysis and advisory firm, Emergent Growth Advisors to provide perspective. Alicia specializes in investment and advisory of franchise organizations of all sizes, and is a foremost expert.

“One in seven franchise brands with a history of PE backing are owned by Roark. Blackstone’s recent acquisitions demonstrate no one can be complacent. Right now Subway has the edge internationally. It will take time for Jersey Mike’s to get there. But Subway’s international growth is mission-critical to offset further expected contraction of Subway units still to come in the US market and not end up over-leveraged. Whereas Jersey Mike’s still has plenty of opportunity to take significant share in its home market and has higher quality, more reliable cash flow. It can be choosy picking the right international partners and gradually developing the support infrastructure and brand awareness. Plus, Jersey Mike’s still has Peter Cancro – one of the best operators in all of franchising. Subway will have a tough time finding a for-hire leader that comes close to Cancro’s proven ability to execute and build solid relationships with his franchisees.”

About the author:

John A. Gordon is a long time restaurant analyst. Specializing in restaurant brand assessment, financial management practices, and operations efficiency and organizational assessment. His consultancy, Pacific Management Consulting Group, was formed in 2002. He works complex issues and investigations for anyone who needs deep perspective in restaurants Call him anytime at 858 874 6626, email jgordon@pacificmanagementconsultinggroup.com

[1] Restaurant Business Online, December 6 2024.

[2] The replacement benchmark for many loans.

[3]. The late Charlie Munger, decades long partner of Warren Buffett.

[4] See: https://investor.cava.com/news.

Wray Executive Search – Restaurants: Hoping For A Better 2025

by John A. Gordon, MAFF

As observed at the outstanding Restaurant Finance and Development Conference (RFDC2024) last week, the question de jour was of course, what does 2025 look like. Without question, the restaurant lending community, which was present in force, was cautiously optimistic. Many felt that the concluded election, a now cumulative year 75 basis points decline in the Fed Funds Rate, the building impact of some weaker restaurant locations being closed via bankruptcies, more positive signs from lenders, and improved October sales via Census Department’s Advance Food Service Sales tracker is setting the stage for an improved 2025.

The upcoming ICR Conference will tell you more. Here, 25-30 public restaurant brands are present, along with 10-15 up-and-coming brands. I will attend as usual and will report more about brand outlook for 2025.

We as an industry want it and need a better 2025. We have continued backwash from the 2020 Pandemic. We lost a full year of normalized sales in most casual dining brands, raging double impact food and labor cost inflation, especially in 2022-2023. The industry, both in the US and international markets finally had our cumulative price increases catch up with us. We now have a negative reaction worldwide. And now, to no surprise, we have experienced a dramatic US price war, especially centered in the QSR sector. This was led by McDonald’s, which talked about sales softness for three quarters, and then finally rolled out a $5 “Mead Dea” which improved the US traffic trend, but did not generate material positive SSSs and profitability.

Fortunately, of the US publicly traded brands, we have a “Magic Six” brand group that continue to do very well: Texas Roadhouse, Chipotle, CAVA, Dutch Bros, and Wingstop. Chili’s is entering the group, with its sales momentum.

Weaknesses have been present in casual (over a lengthy period of time) and fine dining (beginning in early 2023) brands (The One Group (STKS) and Darden’s Capital Grill are the most readable results.) The weak upper end steakhouse results are contrary to prior weak periods, which illustrates the widespread nature of the negative consumer price effect.

So, to get to a better 2025, in my view, we need material catalysts. These can be more improvement.to restaurant operations, execution, service, menu complexity, and more attention to the middle of the P&L (to avoid need for more price increases).[i] We need better advertising.[ii] And more perspective to new unit placement and capital spending. Debt is higher than in the last ten years and construction and equipment costs are up over the 2019 level. Finally, better restaurant reporting metrics, by both company and franchised brands, beyond SSS and unit openings. SSS as the primary industry “bumper sticker” does disservice to the many other fundamental brand improvements underway.

Notable Notes from RFDC2024

· The debt interest rate index you have matters. Prime rate indices will reflect downward Fed interest rate changes, while a SOFR index base will not: Cristin O’Hara, Bank of America.

· Further on lending environment: “I am not going to say it is the go-go days. But we are back to banks wanting to put money out: also, Cristin O’Hara.

· Franchisee operator valuations were down in 2023 and 2024 to date. Dennis Geiger, the restaurant analyst at UBS, noted the new range is 4X to 7X EBITDA. He listed top view valuation brands as Taco Bell (number one), McDonald’s, Wingstop, Wendy’s, Dunkin Donuts and Popeye’s.

· “The period of restaurant multiples of 10-12X EBITDA are over” — Kevin Burke, Franchise Equity Partners

· On casual dining: “The casual dining space got deeply, deeply over built.” Per Greg Flynn, CEO of the largest US franchisee group. But “There will always be a large market for sit down dining with liquor.”

· For those restaurants who are in a tight position and cannot remodel or fix equipment: “You need an account” per Dan Dooley of Morris Anderson, the restructuring firm. Dan was referring to a restricted cash account, subset of total cash on the balance sheet.

· New lingo for most desirable franchisees: a “MUMBO”—multi unit, multiple brand franchisee.

· Restaurant valuation deal multiples are” down about 30% from 2019” per Shaun Coard Bremer Bank.

· Having an OPCO/PROPCO business entity structure for a sale should yield higher multiples, per Glen Kunofsky, STNL Advisors. [iii]

· M&A Panel: for sellers, more than 50 units is desirable. This follows the traditional logic that multiple units operating in multiple markets, and EBITDA of $5 to $10 million is desirable.

October Sales Results Preview

The always useful Census Department Advance Sales for Foodservice was published last week while we were at RFDC. This is based on consumer surveys, including non-restaurant food service sales, and is seasonally adjusted. The current month advance sales are updated next month. This is a good report, on top of what Black Box, Revenue Management Systems (RMS), Placer.ai and Technomic. Black Box and RMS provide a wonderful of detail. Technomic’s research is for paid clients, but they do publish a “TINDEX” index. [1]It is a measure of foodservice activity, based on transactions, consumer visit tracking and distributor sales information.

The Census numbers generally tell good news stories for restaurants.

Table One: Census Foodservice Sales

Line Item	Oct. vs YAG	Sept. vs. YAG
Vs. Year Ago, Month	Plus 4.3%	Plus 3.9%
Vs. Prior Month	Plus .7%	Plus 1.2%

Focusing on the year to changes, price increases or increased number of items ordered ran 3.8% in October and 3.7% in September. Comparing these values to the Table One year over year numbers, we actually gained 2% in September and .5% in October. That is an apparent traffic gain, small but positive.

All this is based on surveys. No chain or independent restaurants have reported sales yet. But still, as we have moved away from 5-6% price increases, things are trending better. The long-time historical Census and BLS food away price increases have trended in the 3.0 to 3.5% zone for literally decades. As we get closer to 3% and improve our execution, we may come out of this.[iv]

This will require smart brand operator and franchisor attention to cost containment, especially the middle of the P&L and remodeling CAPEX requirements.

About the author: John A. Gordon MAFF is a long-time restaurant analyst and management consultant. He focuses on complex analysis and advisory projects, and routinely works for investors, restaurant operators of all kinds, attorneys and lenders, and others who need a restaurant detailed drill down. He is a Master Analyst of Financial Forensics (MAFF) and can be reached at jgordon@pacificmanagementconsultinggroup.com, mobile and text 619 379 5561, and office 858 874 6626.

[1] See: https://technomic.com/tindex. Last retrieved Nov.17 2024.

[i] Think about Starbucks (SBUX) where the stores are deliberately kept cold temperatures, summer, and winter, even though 76% of the drinks are cold beverages.

[ii] Think about the effect of the creative and customer catching media at Domino’s as an example.

[iii] A OPCO are the restaurants themselves, with a market rent applied; a PROPCO is the owned read estate, with the same market rent as above applied as a revenue item.

[iv] Micke Halen, Senior Restaurant Analyst at Bloomberg, told me exactly that at RFDC2024.

Franchise Times – Value Meals ‘Killing Our Bottom Line,’ Say Subway Operators As Association Seeks Sit-Down

Subway’s $6.99 footlong sandwich deal ended this week, but the issue of value meals remains a major concern for the North American Association of Subway Franchisees.

“We sent a letter to the leadership of Subway on August 14 outlining our six biggest issues, and the first thing we addressed was the discounting of food. What it’s doing is killing our bottom line as franchisees and making it very difficult to operate at a sustainable profit,” said Bill Mathis, the chairperson for the NAASF, which says it represents 10,000 of the 20,000-plus Subway restaurants in North America.

The $6.99 footlong promotion by Subway, which ran from August 26 to September 8, was the latest in a series of corporate initiatives that drew criticism from franchisees who feel their input is being ignored in favor of aggressive pricing and other troublesome strategies.

Subway, which was acquired by Roark Capital for $9 billion in April and remains the world’s largest sandwich chain, is again facing problematic store performance. After reporting some encouraging growth in 2023 following years of lagging sales and massive unit closures, indications are that the brand’s sales numbers are down again in 2024 as it battles other sandwich chains such as Jersey Mike’s and Jimmy John’s.

“We got word this summer that weekly Subway sales were down about 16 percent from the prior year,” said John Gordon, principal of Pacific Management Consulting Group, which provides analysis on chain restaurant earnings. “I’m pretty sure they got some more traffic with their promotions, but traffic and profit are two totally different things.

“What we’ve found is that discounting over a long period of time degrades the store value and brings in customers who have no loyalty to you because after they’ve taken your product, they’re going to look down the street to the next brand that offers an extreme discount,” Gordon said.

“We haven’t seen the data yet,” said Mathis, “but from what I’m hearing from franchisees that I’ve communicated with is they were not at all happy with this past promotion and they’re bracing themselves for the next one.”

Bill Mathis is the chairperson for the North American Association of Subway Franchisees, which says it represents 10,000 of the 20,000-plus Subway restaurants in North America.

Mathis said many franchisees are grappling with narrow profit margins, and that the $6.99 footlong deal on sandwiches that usually sell for $11 to $17 did not take account the impact it would have on operators already dealing with rising food and labor costs. He said his association advised franchisees not to participate in the promotion, and pointed out Subway’s new point-of-sale system allows franchisees to opt out of certain promotions like the $6.99 footlong. With a lot of other promotions, he said, franchisees do not have that choice.

Subway in a statement said it has “a responsibility to make decisions that provide the greatest benefit to the entire Subway system.”

“For the entire restaurant industry, value is more important than ever. Subway’s approach to value is thoughtful and strategic based on data to help balance consumer needs while protecting franchisee profits. All value platforms and digital promotions are tested before being rolled out nationally,” a spokesperson said.

A growing list of concerns

Value meals are one of the many issues the NAASF brought to the attention of Subway leadership. Mathis said operators are being required to pay for costly store remodels or risk losing their stores. He also said they’re being “forced” to operate what he called “dangerous and costly” in-store deli slicers, which start at $3,161, he said, “and then go higher if franchisees want to purchase additional warranty time.”

Attorney Robert Zarco of Zarco Einhorn Salkowski, hired as general counsel for the NAASF in March, said the cost of store upgrades, which have become a major source of contention with franchisees, often start at $50,000 and go as high as $100,000, depending on the size and location of a restaurant.

“Subway corporate suffers from what I call the OPM syndrome, meaning using other people’s money with no regard to what the impact on them will be,” Zarco said. “It’s very typical of a company that is owned by a private equity firm that only cares about the short-term benefits and is already thinking of their exit strategy.”

“Look, we’re all for remodeling stores which need to be refreshed and looking new, but it has to be done reasonably so the franchisee can still get a return on the investment,” Mathis said.

“As for the slicers, we were told they would increase foot traffic and sales, but we haven’t seen the data yet to support that. We’re spending extra labor to operate these machines that have to be handled very carefully to avoid accidents.

“It would’ve been much more efficient and at a lower cost for the meat manufacturers and producers to provide the product pre-sliced like we were doing before,” he said.

Mathis said another major issue the NAASF outlined in its letter to Subway CEO John Chidsey and his executive team last month was extended store hours the company now requires. He said franchisees are being instructed to keep their stores open 91 hours a week.

“Our suggestion in the letter was standard hours of 10 a.m. to 9 p.m. and if stores still believe they are open during unprofitable hours, then they should be able to submit a waiver.”

Next on the list is what Mathis referred to as “the fresh loc lids” problem.

“It’s a stainless steel piece that Subway attached to our sandwich units that block the views of our customers from seeing the meats,” he said. “In our view it makes no sense when we’re still known for freshness and we’re slicing meats. Our sandwich artists are being asked ‘Why are you hiding the meats?’”

Another issue vexing owners is the beverage agreement Subway signed with Pepsi in March after dropping its long-standing partnership with Coke. Zarco said the franchisor pressured franchisees to sign the new contract by threatening to terminate the franchise agreements of those who refused to do so.

“It’s just another example of Subway forcing their will on the franchisees without any regard to what they think or even works best for them,” Zarco said.

Asked what the NAASF’s next step is, Mathis deferred to Zarco.

“We have requested a sit-down meeting with the executive leadership of Subway to figure out a way we can work together and come up with a reasonable middle ground in all this,” the attorney said. “If we don’t get an appropriate response on that request, we’ll have no choice but to take legal action.”

Mathis remains optimistic the association and Subway can work together so each side benefits.

“At the end of the day we need each other to make this work,” Mathis said. “They need to recognize our association and we both need to be able to communicate openly and honestly so we can figure out how to make the business work. I do think we can make that happen.”

This story has been updated to clarify Subway’s response to Franchise Times’ request for comment.

Restaurant Business – BurgerFi International Declares Chapter 11 Bankruptcy

The owner of its flagship burger brand and Anthony’s Coal-Fired Pizza has been struggling with deepening losses in recent months.

By Jonathan Maze on Sep. 11, 2024

BurgerFi

The owner of BurgerFi and Anthony’s filed for bankruptcy Wednesday. | Photo: Shutterstock.

BurgerFi International filed for Chapter 11 bankruptcy protection on Wednesday following a brutal year in which the company struggled with deepening sales and earnings losses.

The Fort Lauderdale, Florida-based owner of its flagship fast-casual burger brand and the fast-casual Anthony’s Coal-Fired Pizza submitted its filing in a Delaware bankruptcy court. The filing lists between $50 million and $100 million in assets and from $100 million to $500 million in estimated liabilities.

The company has been hurtling toward this resolution for some time. Investors have acquired BurgerFi’s debt at discounts from the company’s lenders. BurgerFi has hired a chief restructuring officer amid a wave of resignations of company directors, and then last month said that a bankruptcy filing was a real possibility.

When it acknowledged the possibility of a bankruptcy, BurgerFi cited “significant adverse developments” that caused deepening financial losses. The company at the time said it had a net loss of $18.4 million in the quarter ended July 1, far worse than the $6 million loss of a year ago.

BurgerFi brought in new executives last year amid persistently weak sales, particularly at the burger chain. CEO Carl Bachmann promised a turnaround back in January, but those plans ran into deepening industry sales challenges. Same-store sales in the first quarter this year declined 13% at the burger chain.

The company will likely be sold. TREW Capital Management, which acquired Rubio’s out of bankruptcy, has bought the debt for BurgerFi and helped provide funding to carry the company in recent months.

Several restaurant chains have declared bankruptcy in recent months following a volatile period in which cost increases led to menu price hikes that led customers to cut back on dining out. But many companies also emerged from the pandemic in a weaker financial state, with heavy debt loads, leases or other issues.

Many other struggling chains, such as the fast-casual pizza chain MOD Pizza, avoided bankruptcy with out-of-court deals.

BurgerFi went public in 2020 in a reverse merger with the special purpose acquisition company Opes Acquisition. A year later it merged with Anthony’s.

John A. Gordon, MAFF on LinkedIn – Subway Acquisition At Year One: US Conditions Not Improving

A little over a year ago, the Subway franchisor entity, Doctor’s Associates Inc. was finally able to get itself sold to ROARK, the huge private equity group. With one of the longest M&A cycles—9 months– known in the restaurant space, and with over 70 investors signing and looking at the Book either not being interested or bidding too low, a floor purchase price of $8.995 billion plus another $600 million in terms of earnout was finalized There was a valuation gap between seller and buyer, hence the earnout, based on future cash flow performance. The EBITDA multiple was not announced, but the best belief is that it was in the 11-12X range.

The problem is that US Subway conditions are not getting any better. While sales/per unit (AUV) were said to be up in 2023, recently the SSS was confirmed to be down 10-15%, depending on region. While a whole new sandwich platform in the US was developed in 2023, Subway discounted the new items immediately. Currently, every sandwich is discounted via a $6.99 LTO national app offer.

While discounting is common in US QSR operations, Subway has always been a heavy discounter. The current offer discounts the whole menu at one time, which is very unusual. To counter franchisee angst, we understand that Subway Corporate is noting there is no variable labor or OPEX associated with discounted sales, to justify the low selling price. [That notion is incorrect]. See the New York Post report.

In addition to the impact of more franchisees closing [Subway lost 7000 units over 2015-2023; a 25 unit franchisees closed in August in Oregon due to very low sales and unit EBITDA], the Subway entity must service principal and interest outlays on the $8.995 acquisition. We can assume ROARK won’t want to inject more cash into the deal if Subway runs short.

Subway’s current foundational problems were decades in the making. Common sense Restaurant Management 101/301 level practices can help them to dig out.

Exclusive | Subway soda war forces owners to choose Pepsi over Coke or risk losing franchises (nypost.com)

Restaurant Business – Emerging Concept Everytable Restructures Concept

Once hailed as a concept that cracked the code on offering healthy fast food at affordable prices, the Los Angeles-based chain has retrenched. What happened?

By Lisa Jennings on Aug. 23, 2024

Please click here to read the full article: https://www.restaurantbusinessonline.com/emerging-brands/everytable-resets-its-table

New York Post – Subway Calls ‘Emergency’ Meeting With Franchisees As Sales Plummet: Sources

Subway has called a hasty meeting with franchisees of its 19,000 North American sandwich shops as they grapple with faltering sales and profits, The Post has learned.

The fast food giant — which sold itself in April for $9 billion to Roark Capital, owner of Dunkin, Arby’s and Baskin Robbins — told franchisees it will reveal plans to improve traffic and win back market share at the Thursday meeting.

“This conference is essential,” Subway said in the invite. “Join us … to discuss the state of the industry and an update on our business.”

The confab — which one franchisee called an “emergency” meeting, noting that the invite was only mailed out last week — will include a recap of promotional offers that are being tested in restaurants.

“We consistently and proactively communicate with our franchisees to share business updates and plans.”

Discounting has become a contentious topic of late.

A Subway franchisee with nearly 20 stores told The Post his same-store sales are down 5% to 10% in recent weeks compared to the prior year.

He blames the chain’s recent price promotions as customer traffic has dropped.

“They are doing crazy coupons,” the franchisee griped.

“Our gross sales are not even at 2012 levels, and profit then was five times what it is today.”

The franchisee added that his stores barely break even with the discounts. In a recent national ad campaign, NBA great Charles Barkley has been urging customers to “Buy any foot-long in the app and get one free.”

“Charging $6.99 for any sub while they are $11 on the menu,” the franchisee lamented.

“Offering three sandwiches for $17.99.”

Subway does not give its franchisees national sales information, but an Eastern US region with about 1,000 Subways saw average weekly same-store sales slip by 8.7% between June 25 and July 16 compared to a year earlier, according to data shared with The Post.

Subway’s meeting “seems very unusual,” said restaurant consultant John Gordon, who noted that he recently has seen Subway sales numbers in West Coast and East Coast regions that show same-store sales drops of 10% in the last few weeks.

Los Angeles and San Diego same-store sales are down 8% for the week ending Aug. 6, a Subway source said.

In the Southern California suburbs, they are off 2% to 5%, the source added.

That’s versus last year, when Subway boasted that its North American same-store sales were up by 5.9% chainwide.

Subway is discounting its best-selling items so it’s hard for it to compensate for the lost revenue, sources said.

The hope was the new $3 foot-long hot dipper snacks introduced in June would boost sales, but they are not selling enough of them, sources said.

Subway last year had more success when offering Sidekicks — foot-long cookies, pretzels and churros, which helped fuel positive same-store sales despite a 1.7% traffic drop.

But the buzz surrounding that snack offering has died off, according to Gordon.

Subway, which owns none of its restaurants and makes its money through 8% royalty fees it collects from franchisees, now faces interest payments on debt following its sale to Roark and can’t afford to have declining earnings, sources said.

Other chains increasingly are offering discounts to entice financially strapped customers.

White Castle slashed the price of its famed sliders to the lowest level in more than a decade, as The Post reported this month.

Nevertheless, fast-food restaurants excluding pizza joints in July saw same-store sales down 2.9% compared to negative 1.9% in June, according to Bank of America credit and debit card numbers.

Taco Bell was up 5%, while Wendy’s and Burger King in the second quarter were flat, according to data firm Technomic. McDonald’s is extending its $5 value meal into October.

The Golden Arches reported last month that same-store sales in the second quarter were negative for the first time in four years, dropping 0.7%.

“This shows the discounting wars are not working in total but are improving traffic a bit,” Gordon said.

Wray Executive Search – Restaurants: Context Really Matters

The restaurant industry, always dynamic, has gotten even more dynamic. A foggy logic seen in the past has now given way to an element of mania in it. The industry survived the Pandemic, but we are still rocking in its aftermath. Tension has spiked in the last 50 to 80 days; no wonder that most stocks are down. But of course, restaurants are always investable, there are things to do no matter the cycle, to get well positioned for the next.

There are so many meaningful issues and contrasts now, that we have to step back and ponder the overall situation. Context really matters in the analysis: the natural reaction of human principals to recite conclusions that support their position, and what is good for them personally. As such, opinions, management systems, data, and courses of action need special review. Not endless cycles of analysis as we are in an ever-changing consumer, but our systems need to be better grounded. Consider the following in real-time:

How did Starbucks get the most expansive CEO succession to Howard Schultz so wrong in 2022-2023? Along the way, how did Starbucks over invest in the China market which is now jammed full of lower-priced coffee brands? And how did basic café operations deteriorate such that Starbucks US is known in some quarters as both slow and expensive?
How did the industry pricing machine so overprice over the years even before the effect of commodity and labor inflation really began? To the extent now that we have virtually a worldwide guest obsession with price, on our hands? The industry took routine pricing actions of 3% annually for decades—until about 2019. All of the readers of this newsletter are well-versed in cost recovery and reading sales, traffic, check, and mix.
Why is it that the industry hasn’t found a solution even yet to the reality of producing and opening twice as many restaurants per capita versus that of US population growth? We know why it is occurring but no one can address it.
Back to the Starbucks/Chipotle shuffle this week, it was reinforced that we as an industry are not producing the grounding for great CEOs. Bian Niccol’s entire supportive background should be studied to see how he learned and developed. In our universal quest to reduce G&A costs, we have to remember resources must be left for people, to build and maintain a great team.
And despite our well-developed restaurant reporting, consensus data, and earnings cycle emphasis, the stock market can get away from us, on certain brands. Consider Dominos (DPZ) which had stellar results but was punished by the market in July.

Sales, Traffic, Mix, and Profit Trends

Despite fairly strong job growth, usually, our number one sales catalyst, weak consumer sentiment is the talk of almost every restaurant, retailer, and consumer company. While the restaurant standout brands are doing very well, getting sales and traffic gains, covering inflation, and picking up restaurant margins through positive leverage, many are not. A trend seen in Q2 was that sales shortfalls were covered by G&A cost savings. Of course, in a soft market, variable compensation trends like stock payouts and bonuses are expected to be down, aiding the G&A reduction. However, some company-owned and franchise organization structures have been ”hollowed out” for years. This is not good to produce more Brian Niccol(s) over time.

In July, restaurant demand fell off. Spending growth slowed across all income cohorts. The QSR and Pizza sectors registered more declines. The QSR spending declines were despite a price war that is underway throughout the segment. Despite worldwide attention, McDonald’s $5/$6 price combination (varied) seemed to generate very modest traffic gains, 2-3% for a time, that could not be enough to offset the discounting. McDonald’s will talk about the traffic gain as a huge win. Despite new products, discounting, and unbelievable amounts of TV and digital, one very large, nonpublic QSR brand is tracking down 7-9% in SSS and double-digit traffic losses. Fast casual remained positive but down sequentially; recent casual dining trends had a strong decline, to negative month to month. Store-based spending turned into negative territory; online spending remained positive but sequentially lower. [Source and Hat Tip: Bank of America and the Sara Senatore team].

Costs are said to be “deflationary” but in reality, the rate of increase is down from the late 2022-2023 disaster. Listening to earnings calls, food/commodities are up 2-3, while labor rates are plus 5-6%. So P&L efficiencies are required, along with extremely low price changes. So then restaurant-level margins could be up or down, depending on sales leverage, mix, and efficiencies.

Capital spending (CAPEX) for new units and remodels cost remains much higher than 2019; permitting problems remain. To brick-and-mortar CAPEX, companies including franchisors must fund IT/digital/loyalty OPEX and CAPEX. As a result, buildings have to be more cost-efficient. Many industry operators know this and have made progress, larger legacy units will be a drag.

There is always money to be made in the restaurant business, but we need profitable sales and non-price-driven P&L efficiencies.

Franchise M&A conditions are much slower.

I always listen to the quarterly Unbridled discussion forums. Rick Ormsby and team are among the best and have a dramatic QSR practice. They reported recently that while they have some transactions, 2024 is very slow and many franchisees are not selling. Many are hoping for the 2021 level of sales/margins and multiples to return. Never say never, but we have to accept that the 2021 period is not to be seen again. They noted some unit EBITDA percentages are very low and need to be in the 15% or higher range. That number has been confirmed many times. They noted that EBITDA multiple turns are a full 1.5 turns (150 basis points) lower than in 2021.

The top-tier brands are still doing well, and a 5X multiple is a good number. One recommendation: before a sale transaction, attempt to weed out the very unprofitable units. I’ve found in my engagements there is more review of clusters and individual underperforming units.

Bankruptcy Notes

We all know that restaurant Chapter 11s have risen dramatically and that there are several core reasons. Larger debt amounts and leverage, sales, and unit margin percentage and dollar deterioration, failed acquisitions, and static company guest mix trends to the most unprofitable type are driving reasons. Franchise over-expansion and cannibalization are the reasons also. Franchisors need more brand disclosure metrics so that unit counts are not the only metric seen.

The impact of private equity companies taking loans or dividends recapitalizations, that stress debt levels are seen. These issues were present in both Red Lobster (selling real estate and a corresponding new rent burden) and Rubio’s (sponsor took a loan). Not all private equity firms do this of course.

There are more to come. For an engagement recently, I identified one public brand that is shaky, one brand holding company, three major franchise brands, and four non-public brands as very risky. Overall, we need more attention to balance sheets, which are always less visible.

Starbucks and Chipotle: What to do?

The movement of Brian to SBUX and the stock declines at Chipotle speak to the key leader factor. SBUX stock gained the most ever on August 13, CEO announcement day, when Brian’s move was announced. Starbucks requires much more customer segmentation studies than what we have heard. During Laxman’s administration, the quality of earnings call disclosure deteriorated. In the US, the essential tension is between “maintaining the coffee focus” versus new products. In my opinion, since the addressable market, particularly in some age cohorts has changed, new product and concept development is critical. The Starbucks slow and expensive can be fixed. I know how.

The China question is a key issue for Brian, the Board, and the China division leadership. One reality is that the China market is flooded by lower-cost and expanding brands like Luckin. A coffee price war is underway, per Asia experts. Should new unit expansion be curtailed? Would it pencil out to refranchise China to a great master franchisee? I can imagine the numbers but no one outside of SBUX has the real numbers and potential. What Starbucks has said recently has little backup and seems dated. This is where context matters.

About the author:

John A. Gordon is a restaurant analyst and management consultant, with long experience in operations, corporate staff (20 years), and via his consulting firm (21 years), Pacific Management Consulting Group. He works in investor advisory, earnings and economics, M&A review, brand organization reviews, and of course, franchising engagements. Call him to talk about your issues, he will have useful and actionable input. He is at (858) 256-0794, email jgordon@pacificmanagementconsultinggroup.com.

The Deal – Elliott Eyes Starbucks Campaign Amid Slump

The Paul Singer-led insurgent fund is engaging with the coffee chain, which joined our Watch List of possible activist targets after it cut earnings and revenue forecasts.

By Ronald Orol

July 22, 2024 11:42 AM

Elliott Management Corp. has accumulated a large stake in Starbucks Corp. (SBUX) and is agitating to improve the coffee chain’s stock price, The Deal has confirmed.

Consequently, Starbucks becomes a Direct Hit and comes off The Deal’s Watch List of possible activist targets.

The chain joined the list July 12 after it cut fiscal 2024 earnings and revenue forecasts and reported that store traffic slipped 7% during the quarter ended March 31.

Starbucks shares jumped 6% following a Wall Street Journal report issued Friday, July 19, suggesting that Elliott has been engaging with the company. The chain and activist fund could reach an agreement privately soon, the report added.

Even with the spike, however, Starbucks shares are down 23% and 20% over the past 12 months and five years, respectively. Shares dropped significantly after the chain issued its dismal April 30 quarterly report.

It’s unclear whether Elliott, which declined to comment, may seek to shake up Starbucks’ board. The two sides could be negotiating over directorships.

Board Refreshments

There are several red flags associated with Starbucks’ directors.

No director on Starbucks’ 11-person board has direct coffee industry experience and only one, Richard E. Allison Jr., a former Domino’s Pizza Inc. (DPZ) CEO, has direct experience in quick-service restaurants, according to relationship mapping service BoardEx Inc.

Allison joined the board nearly five years ago, making him a newbie relative to board chair Mellody Hobson, who’s been a director for more than 19 years and could be considered overtenured. Hobson, a rare African American board chairman, has served as chair since 2021, and she has been co-CEO of Ariel Investment LLC, an investment management firm, since 2019.

Starbucks’ board could be vulnerable because it doesn’t contain anyone with multi-unit coffee chain or small-box retail experience, explained John Gordon, principal at Pacific Management Consulting Group.

“That isn’t right,” he said. He added that Allison is a positive board member, as he has QSR experience, including supply chain expertise, which is important.

However, Gordon noted that Domino’s and Starbucks are very different. “Domino’s has a supply chain in it, but they are talking about pizza and dough. Coffee is very different,” he said.

Gordon added that Starbucks should be able to find top-level former executives at other key coffee chains, such as Tim Hortons, Costa Coffee or Luckin Coffee Inc., which competes with Starbucks in China. “From a cultural standpoint, it is essential to have someone from China on the board because Starbucks has major competition from Luckin,” Gordon said, noting that China is Starbucks’ largest market outside the U.S.

In addition, a conflict may be emerging between CEO Laxman Narasimhan, who was installed in the top position in March 2023, and the Starbucks founder he replaced, Howard Schultz. A 1.9% holder, Schultz has held the title of chairman emeritus since September, though he noted recently that he doesn’t receive internal financial information about the chain.

The Starbucks founder has made some comments suggesting he could start agitating. Speaking on a June 3 episode of the podcast Acquired, Schultz said he can’t ignore a situation where the “company is doing a drift towards mediocrity,” and if that occurs, he would “hold leadership and the board accountable.” He added that “the company hasn’t executed the way that I think it should have,” though he added that he has no desire to return as Starbucks’ CEO.

Gordon said it’s essential to get Schultz back on the board. He added that perhaps Starbucks could install Schultz in a nonvoting but participatory capacity “where he could have a lot of influence but not overly dominate the board.”

Elliott hasn’t followed through on a director battle at a U.S. corporation since its 2017 contest at Arconic Inc. As a result, one adviser in the activism category said Elliott is “very aware” that it needs to do another serious campaign to keep its “fear factor.” The director nomination deadline for Starbucks’ annual meeting expected in May is Nov. 13. Even so, a contest at Starbucks would be a major undertaking for Elliott, as the chain has a $90 billion market capitalization.

In addition, Elliott hasn’t filed an activist 13D filing, and it’s likely the activist investor has accumulated a large cash-settled equity swaps position, rather than common shares, to back its campaign.

Nevertheless, it’s possible Elliott could be seeking to partner with Schultz to launch a campaign seeking to install the coffee chain’s founder in a full-time director role. Insiders, other than Schultz’s near 2% stake, hold very few shares and Starbucks’ three largest holders are Vanguard Group Inc., BlackRock Inc. (BLK) and State Street Corp. (STT), with a collective 18% stake.

Activists often push retailers to franchise locations, as a means of raising capital for debt reduction or share buybacks. For Starbucks, however, franchising isn’t seen as a viable solution. “There is no question that it would not pencil out,” Gordon said. “[In the U.S.], you cannot take a Starbucks company store now, which is averaging a 20% contribution margin, and make it work with a 5% royalty — which would essentially be the franchise contribution — coming in.”

Elliott Pivots Towards Operational Activism

It’s likely Elliott has privately launched an operationally focused activism campaign at Starbucks, even though the activist fund often encourages M&A as part of its efforts. Elliott appears to have partly pivoted toward operationally focused activism campaigns, as the M&A market has slowed, Barclays plc global head of shareholder activism Jim Rossman said.

“Look at Elliott Management, a bellwether of where activism is heading. Their campaigns in the first half of 2024 are focused on governance, operational and management changes,” Rossman said.

Paul Singer’s activist fund produced 11 campaigns in the U.S. and globally in the first half of 2024. Three of Elliott’s biggest campaigns of 2024 — at Southwest Airlines Co. (LUV), Texas Instruments Inc. (TXN) and SoftBank Group Corp. — have all steered clear of M&A demands.

In June, Elliott launched a campaign urging Southwest to reconstitute its board and bring in new leadership from outside the airline to address share price performance.

At Texas Instruments, Elliott expressed concern that the chipmaker risks building more semiconductor production capacity than it needs if it continues to press ahead with a capital spending plan it announced in 2022. Also in June, Elliott initiated a campaign at SoftBank urging it to authorize a $15 billion share buyback.

Nevertheless, Elliott has kept M&A as part of its agenda in some situations.

Goodyear Tire & Rubber Co. (GT), for instance, on Monday said it will sell its off-the-road tire business to Yokohama Rubber Co. Ltd. for $905 million. The sale comes after Goodyear in January named a new CEO after it launched a strategic review for some noncore assets including the OTR tire business. Two activist portfolio managers at Elliott greeted the M&A review, launched in November, as a “significant step towards a stronger and more profitable” company.

Starbucks declined to comment.

Forbes – This New Jersey Billionaire Is A Hometown Hero

The San Diego Union Tribune – Rubio’s, Still In Bankruptcy, Finds A Buyer

The Carlsbad-based chain’s lender, which was the only bidder, agreed to a purchase price of $40 million.

Rubio's Coastal Grill, which filed for bankruptcy in June, has found a new owner. (Rubio's) — Rubio’s Coastal Grill, which filed for bankruptcy in June, has found a new owner. (Rubio’s)

By Lori Weisberg | The San Diego Union-Tribune

UPDATED: August 5, 2024 at 5:15 PM PST

Carlsbad-based Rubio’s Coastal Grill, which just two months ago filed for bankruptcy protection after shuttering dozens of its restaurants, has found a buyer.

An affiliate of TREW Capital Management, which was Rubio’s lender, has agreed to purchase the decades-old taco chain for $40 million.

The firm, run by Jeff Crivello, the former CEO of Famous Dave’s, effectively used a portion of its outstanding debt to acquire Rubio’s. Because there were no other bidders, a planned auction was no longer necessary.

Founded 40 years ago, Rubio’s is a fraction of what it once was. Just days before filing for Chapter 11 bankruptcy, the company’s owner, Mill Road Capital, abruptly closed 48 of its restaurants, 13 of them across San Diego County. The remaining restaurants, most of them in California, number 86, less than half of the company’s once nearly 200 restaurants.

With the sale, which still must be formally approved by the bankruptcy court next week, the familiar Rubio’s restaurants will continue to operate, as they are now, but it remains a question as to how many will remain, said San Diego restaurant analyst John Gordon. Much of it will depend on customers’ willingness to continue patronizing the chain, especially in San Diego, he said.

“There is certainly some residual pride of Rubio’s in San Diego, but the company has lost so much money and now has to switch owners so that means there is a strand of uncertainty about Rubio’s in San Diego because they’ve already been through two bankruptcies,” Gordon said. “Hopefully, the sales trends in San Diego are higher than at other stores. but we don’t know what will happen or what will even happen to the Carlsbad corporate office.

“Rubio’s could have a sales challenge due to the news of the previous closings and the Chapter 11 filing because potential guests will assume they are closed.”

The chain previously filed for bankruptcy in 2020. At the time, then-Chief Executive Marc Simon said the filing was largely triggered by the COVID-19 pandemic.

Gordon said he expects the chain will need an infusion of money at some point. According to an article in trade publication Restaurant Business, Crivello had a reputation, when he was heading Famous Dave’s, of aggressively going after restaurant chains he could snap up at budget prices.

At the time of its Chapter 11 filing, Rubio’s said its assets were $10 million to $15 million, while liabilities were $100 million to $500 million. The number of creditors could be as high as 25,000, the company said in its filing.

Originally Published: August 2, 2024 at 5:25 PM PST

Bloomberg – McDonald’s Says $5 Meal Is Starting To Reverse Traffic Slump

McDonald’s $5 meal deal drove a “notable” bump in diner traffic and is helping to capture customers from rivals, according to a company memo to franchisees.

Please click here to read the full article: https://www.bloomberg.com/news/articles/2024-07-31/mcdonald-s-says-5-meal-is-starting-to-reverse-traffic-slump?srnd=undefined

Franchise Times – Will Andy Wiederhorn’s Criminal Indictment Impact Store Sales, Twin Peaks’ IPO?

By: Emilee Wentland

Illustration by Jonathan Hankin

The years-long investigation into FAT Brands chairman Andy Wiederhorn and his company continues, though the situation doesn’t appear to be impacting franchisees and it’s unclear if it will affect a potential Twin Peaks public offering.

The U.S. Securities and Exchange Commission and the U.S. Department of Justice charged FAT Brand’s former CEO in May, claiming Wiederhorn misappropriated company money for personal expenses. Wiederhorn, who remains company chairman, and others were criminally indicted in Los Angeles by a federal grand jury for tax evasion, wire fraud and other counts.

From what I’m told, these charges aren’t bothering franchisees or impacting their sales. It’s important to note FAT Brands provided me with these franchisee comments. None of the 10-plus franchisees I contacted agreed to an interview.

“Sales at our locations remain strong as the general consumer is focused on the food itself and the experience—not outside noise,” Fatburger franchisee Spike Garcha wrote. “We look forward to continuing our long, fruitful relationship with the FAT Brands team.” Garcha signed a 14-unit development deal in 2022 in Florida.

“I have seen it all—the beginning of the acquisition activity, the formation of FAT Brands, FAT Brands going public, and so on,” wrote Frank Di Benedetto, CEO of FDF Restaurant Brandz, which started in 2005. “I respect what FAT Brands has built under Andy’s leadership and I am proud to be a Fatburger franchisee.”

Funding a ‘lavish lifestyle’

The gist of the parallel investigations is Wiederhorn received $47 million in distributions that were recorded as shareholder loans and subsequently forgiven, in order to evade personal income taxes. Former FAT Brands CFO Rebecca Hershinger and Wiederhorn’s tax adviser, William Amon of Andersen, were also criminally charged.

In 1998, Wiederhorn founded Fog Cutter Capital Group. He started subsidiary FAT Brands in 2017. Fog Cutter owned 80 percent of FAT’s shares and the two entities merged in 2020.

FAT Brands issued a $30 million promissory note to Fog Cutter after Fog Cutter transferred ownership of Fatburger and Buffalo’s Cafe (FAT’s only two brands at the time) following the 2017 IPO. The $30 million was paid off by September 2018, according to court documents, but Wiederhorn allegedly continued transferring “millions of dollars” to Fog Cutter. The SEC alleges FAT Brands loaned Fog Cutter $28.3 million between July 2018 and December 2020, about $20 million of which was used to fund personal cash transfers to Wiederhorn.

“These transfers included payments for private jets, first class airfare, luxury vacations, Wiederhorn’s mortgage and rent payments, and nearly $700,000 in shopping and jewelry,” the government alleges

Wiederhorn, the subject of a Franchise Times cover story in 2018, pleaded guilty in 2004 to federal tax charges involving another company he ran, Wilshire Credit Corp., and spent 14 months in prison.

Wiederhorn’s attorney, Doug Fuchs, said his client had a “legitimate shareholder loan agreement with Fog” since 2010. In 2018, “Fog entered into a new shareholder loan agreement with Mr. Wiederhorn on the same terms. FAT was not a party to and was not otherwise involved in these shareholder loan agreements,” which were disclosed to investors, Fuchs said over email.

Fuchs says the promissory note was “extinguished at the demand of a third-party lender” in 2018. Fog Cutter apparently agreed to trade the outstanding balance for FAT stock so FAT could purchase Hurricane Grill & Wings. From 2018 to the 2020 merger, FAT loaned money to Fog Cutter, Fuchs said. “The intercompany loan proceeds were used to help pay Fog’s debts and fund the shareholder loan between Mr. Wiederhorn and Fog,” he wrote.

FAT Brands declined to comment on the charges.

Potential overhang

Twin Peaks, one of FAT’s 16 brands, is exploring an IPO. The impact of FAT’s and Wiederhorn’s legal mess on the valuation is unclear.

“The overhang because of Andy might be best defined as the unknown, in terms of if Andy is found guilty, what happens to FAT Brands’ capital structure,” said John Gordon, a restaurant analyst at Pacific Management Consulting Group. “There’s a complicated capital structure of loans that has fueled the growth of FAT brands, really starting during the pandemic.”

Twin Peaks CEO Joe Hummel told Franchise Times in June the brand is “unaffected” by the legal issues. “We are very siloed and pretty much stand on our own as a company without shared services,” Hummel said. “Because of that we have been able to operate successfully with the platform above us but really on our own.”

Prior to the charges, Gordon said he was unaware of “all of this internal money being shifted back and forth to Fog Cutter.” He continued, “What I could gather is that there’s a lot of debt supported by the EBITDA. So the goal of this IPO is to sell it and then to take the proceeds, or at least most of the proceeds, and then to pay down debt. And that’s a very solid financial strategy.”

Brand leaders often do a “road show” prior to an initial public offering “to display the wares of this new IPO,” Gordon said. “Is Andy really going to feel comfortable going out on a big road show given his current status? That’s what I see the issue to be, but most of the attention will be on the quality of the earnings to date.”

Wiederhorn did present June 27 during a virtual equity conference hosted by investment bank Noble Capital Markets. The company, he said, is on track to do about $2.5 billion in systemwide sales across all its brands this year, and “we hope to see Twin Peaks as a public company at the end of the summer.”

FAT Brands’ stock price fell from $7.58 May 9, the day before charges were made public, to $5.42 May 10—a 28 percent decrease. Share price varied through mid-July, but stayed below the May 9 high.

What comes next? Federal prosecutions aren’t known for their speed. Wiederhorn noted in his Noble presentation he doesn’t expect a resolution with the SEC until 2025 or 2026. That’s a sizeable shadow being cast over Twin Peaks’ potential valuation and FAT Brands as a whole.

Emilee Wentland is managing editor of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to ewentland@franchisetimes.com.

Wray Executive Search – Restaurants: Big Bets Underway

by John Gordon, Principal and Founder, Pacific Management Consulting Group

The restaurant universe has always been dynamic, variable, “up and down, back and forth,”[1] exciting, hard to predict, characteristic of individual brand booms and busts. However, it always remains investible year after year; there is always something to do to react to or prepare for the next cycle.

The summer of 2024 to date has been an amazing time. We have the most consumer, perspective, investor, restaurant history, data, and systems information that we ever have had. We are still being rocked by the Pandemic. We should be overjoyed that we survived the Pandemic, and many foundational factors have improved. But time waits for no one.

There is always the battle between short-term interest, benefit, and actions, and long-term interest, benefit considerations, and actions. It is up to the best CEOs Boards, and management teams to navigate that line. Right now, we have a lot of big bets underway.

Current Consumer Environment Weak

The current consumer environment is on edge about all kinds of things. The political news of late, President Biden’s withdrawal from the race, and news from the GOP convention is an influencer. So the fact that even QSR restaurants are considered a “luxury” by some is telling. Significant Is the fact that restaurant pricing hasn’t slowed up much and is still exceeding grocery store inflation by 400 basis points[2]. That is not helpful. Part of the price problem is due to the heavily franchised state of many brands; the individual franchisee has to cover OPEX and CAPEX costs and meet remodeling and new unit growth standards set by the franchisors. They do not have the same access to capital that the franchisor has.

Looking at June/July, consumer spending in restaurants is not the best, but not a disaster. Some brands/segments are better off. Sara Senatore at Bank of America has reported the Bank of America credit data and Bloomberg Second Measure, which track debit and credit card activity, among other indices. Median consumer spending was up 2.2% in June, versus 5.0 % in May. IT IS NOT A NEGATIVE VALUE, but momentum went side to side. The index was up in May. Recent restaurant spending spikes occurred in December 2022 and 2023, with generally descending values through each year. Bank of America data showed full-service restaurants as a whole remained positive and grew slightly to plus 1.8%. Fast casual was positive but marginally down in June. (see Chipotle (CMG), Shake Shack (SHAK).

QSR (less pizza) fell from .1 % positive to -1.4% negative. QSR July spending for a 6-day month shows a 1.1% deterioration.[3]

The overall economic backdrop remains the same. Despite a strong economy and job growth, usually a prime driver of restaurant sales, reported and expected same-store sales (SSS) remain depressed for many brands. Note total sales are up. The University of Michigan Consumer Confidence number last month fell to 66, versus app. 100 in 2019. Sour moods and perceptions hurt us.

“Houston we still have a problem”: Too Many Restaurants Continue

While there is no central coordination in this vast industry, and capitalism supports growth, the US still produces too many restaurants versus population growth. Still. The Bureau of Labor Statistics produces the unit count growth (both chains and independent), and the US Census Bureau produces the population growth.

US population growth has been very modest over the last decade and 3 years. The Census estimates show population growth of only .98%, not quite one full percentage point from the 2023 year-end versus 2019 year-end projected.[4]

At the same time, the number of restaurants in the US grew from 654,217 in 2019 to 711,15 at year-end 2023, a simple average growth rate of 8.7% over that period. [5]

[Yes, independent restaurants are included, no these are not CAGR numbers but those can be run.]

Naturally, it is hard to get US SSS traction with this as an additional limiting condition. That’s why international growth (Memo to Darden $DRI: you’ve got to!). New brands will get consumer attention (see Cava $CAVA). All brands need to have powerful unit economics and differentiators that speak to the desirable core and aspirational guests. In my opinion, the onus falls to public brands and especially franchisors to manage unit growth numbers; the US unit growth expectations need to be measured.

The McDonald’s Big Bet in the US

McDonald’s takes the stage prominently always because it is the US’s leading QSR brand, it has built management systems, brand marketing, and identity; along with economic success over time. Many of its franchisees have prospered and grown as well. McDonald’s has raised the issue for the last six months that there would be sales softness in the US, and softness with international franchisees due to global events and political backlash. They were most concerned with low-income consumers, especially those under $50K in household income. Eventually, this softness and McDonald’s initiated an industry price war.

So McDonald’s came up with a US $5 “Meal Deal” priced at $5 nationally, with some high-cost markets and territories at $6, which kicked off in late June. Unfortunately, compared to the great creative and product work done in 2021 and 2022, in my opinion, it was an offer without pizzaz, not smashing. It did not have much of a creative or social pop. There were no creative products. It was cast as a 30-day LTO, but that may expand. McDonald’s did not design a bar-bell approach with products and pricing. It seems to me it was just communication that McDonald’s has lower prices. To its credit, McDonald’s later rolled out a new sauce and an MCD Smoky BLT Quarter Pounder (not available after midnight[6]).

Of course, virtually every QSR brand was discounting too, many before MCD.

So we’ll see. There are varying opinions if this LTO should be kept longer. The franchisees I have talked to speak of heavy negative mix shifts, traffic improvement of some amount, and SSS either slightly up or down overall. The problem with this is even a small sales increase will likely lead to low or no profit flowthrough. Negative mix shifts always should have been considered. On the upcoming call, McDonald’s executives will talk to franchisees “cash flow”, and EBITDA-like numbers, and that they had a traffic uptick. The more significant issue is what does MCD US do to fix this price perception problem in the intermediate term. I hope it involves better, more sophisticated marketing, and hope that MCD product development can get new product new news out into the mix.

Meaningful M&A Breaks Out

Restaurant Companies react in all kinds of ways to the environment.

Darden (DRI) announced a not-unlikely acquisition of Chuy’s (CHUY), the Tex Mex southwestern-based company, in an all-cash deal of $605M in cash. The stock price offered was a 40% premium the the pre 60 day trading value. The EBITDA value is appx. 10.3X. Very quickly, Darden announced $15M in likely synergies. CHUY AUV is $4.5M and restaurant margins of 20%. Total acquisition costs are projected to be a hefty $50 to $55 million. Darden expects that the acquisition will add 12 to 15 cents/EPS share by 2027.

Investors and analysts should not be surprised by Darden’s portfolio management. It is always more efficient to buy a brand with potential, rather than build it from scratch. It is what Darden does. The question always is what kind of growth CHUYs can attain, synergies and how quickly can the acquisition costs be amortized, and get to free cash flow. And how does the new brand square with core and aspirational Darden guests? Is it expandable to the numbers necessary? For the industry, this is more consolidation into powerful casual companies. Think of Darden’s marketing, site selection, and balance sheet. However, like other casual diners, its sales have been soft. Uplift will be necessary.

Another interesting M&A report broke Friday that JAB/Panera was lining up to sell Caribou/Einstein/Brugger’s Bagels, Noah’s New York Bagels/Manhattan Bagels. JAB made these acquisitions in a coffee lead acquisition phase in XXXX. The deal’s EBITDA value was reported to be $150M (based on 2000 total worldwide units, including 800 Caribou units in the US), and a hoped-for $1.5 billion.

We don’t have financials or international unit counts. US franchise disclosure documents are useful. So anything is possible and potential. However, we don’t get the reported logic that JAB wants to sell the coffee/bagel brands BEFORE that of a listing, IPO, or otherwise of Panera. The listings could crowd out demand or influence multiples in an unfavorable way. Panera is the jewel. More to ponder and watch.

More: Starbucks has picked up an activist: Elliott Investment Management.

It was logical that pressure would be on SBUX before long, what with its US and China sales problems. And its store margins are down, due to dramatic labor and benefit investments and OPEX/CAPEX for new equipment to realign store workstations. SBUX has socio-political perception problems in the US (in the wake of the just concluded SEIU battle and internationally in some markets due to the crazy perception that Starbucks was influencing US foreign policy in the Gaza war. Starbucks has been reacting to the waves of business, consumer, and store economic changes from the Pandemic. Then, in the fall of 2023, US guest frequency fell off in some Gen Z cohorts due principally to price and political sensitivities.

See my quotes in The Deal on July 12, 2024, relative to SBUX problems and potential activist investors. I thought someone, but not Paul Singer. He was busy at Southwest Airlines and never had a retail multiunit campaign other than Barnes and Noble, which it acquired in 2019. Barnes and Noble are on the mend with a UK bookstore CEO as the joint combination book entity CEO. No restaurant engagements were seen.[7] Its investments are all over the business and a whirlwind of sectors. Elliott has a few hundred employees who are no doubt good spreadsheet people and can envision strategy. Starbucks is talking to them, without Howard Schultz on the Board.

P&L Notes Seen

In watching earnings results at Pinstripes, the company provided commentary that heavy startup costs, particularly labor affected company earnings. Large amounts of new employees are hired at company-owned concepts—and franchise brands—during the early ramp-up period. It’s been my long observation that such overstaffing—even after training–might not be necessary. Yes, employees will quit and others weeded out by hours of control. However, employees working in too easy of an environment might foster unrealistic expectations later. An area to think about.

US Restaurant metrics: Restaurant Research has published a brief note with good news. It noted that the top billion-plus brands had a small EBITDAR unit improvement to 18.6% in the second half of 2023. Franchise leverage on the whole was not stretched, although some of the recent wave of restaurant Chapter 11s are not in the data. Write to Restaurant Research for more of their valuable data.

About the author:

John A. Gordon MAFF is a long-time restaurant analyst and management consultant. With unit operations, 20 years of corporate staff experience, and 21 years via his consulting firm, Pacific Management Consulting Group, he has the knowledge and gravitas to work complex analytical engagements efficiently for clients. Call him at (858) 874-6626 or email, jgordon@pacificmanagementconsultinggroup.com.

[1] Credit to Sara Senatore, Bank of America, July 2024.

[2] There is a line of logic, that deserves further review, is that the “price paid” survey is overstated and is influenced by tipping and sales tax. Hat tip: Wally Burkus, Restaurant Research, June 2024

[3] From Sara Senatore security analyst reporting July 2024

[4] Census Bureau, www.usafacts.org

[5] Bureau of Labor Statistics, year end 2023 tables.

[6] MCD website.

[7] See a summary list of historical Elliott investments in Wikipedia, Elliott Investment Management.

The Deal – Activist Target: Starbucks May Need An Extra Shot Of Activism

Starbucks is the world’s largest coffee house with over 20,000 stores.

An insurgent investor could help the coffee giant reshape its board and accelerate operational improvements to satisfy, and win back, customers.

By Jean Haggerty

July 12, 2024 09:24 AM

Please click here to read the full article: https://pipeline.thedeal.com/article/00000190-a1a4-d933-adf3-b3ede6890000/deal-news/features-and-commentary/activist-target-tarbucks-may-need-an-extra-shot-of-activism

Wray Executive Search – Restaurants: How Did We Get Into This Pricing Problem?

by John Gordon, Principal and Founder, Pacific Management Consulting Group

Early in our management careers, we were taught to “manage what was measured”. As we grew more senior, that modified slightly into “measure what matters”. Whether we were at start-up, private or public firms, the essence of key restaurant success factors remain the same: sales, comps, restaurant level margin, unit growth, free cash flow, ROIC, franchisee profitability. Unfortunately, the SEC patterned income statement shows a simple this year/last year format. So that is what comes into our mind first. We as an industry took the easy way out: we took a lot of price: over 30% in LSR restaurants and a bit less in FSR restaurants from 2019 to present.

This set the stage for our current conditions.

The signals of consumer price sensitivity showed up everywhere in 2023. Darden (DRI) two quarters ago noted less alcohol sales mix and then last quarter negative SSS at all brands but one; McDonald’s, then coming off a great 2023 warned of weaker lower income guest mix for 2 quarters earlier and finally poor Q1 results; Wendy’s two quarters ago mentioned in their call they would test dynamic pricing and social media and then mainstream media blew up; and then Starbucks (SBUX) reported both US and China weakness as we noted last month. Not all of the SBUX variance was due to pricing.

Food at Home, e.g., grocery store inflation plunged, while restaurants continued taking price. That trend continued throughout 2023 and 2024 to date. We restaurants did have horrendous food and labor P&L shocks to cover, along with higher interest rates and CAPEX for new units and equipment in 2021-2022, with 2023 moderating food cost inflation.

Looking back to Quarter 1 earnings , a review of the transcripts reveals except for the standout brands—Texas Roadhouse (TXRH), Chipotle (CMG), CAVA (CAVA), Wingstop (WING), Dutch Bros (BROS)—that many CEOs reported getting pressure on pricing.

Most major restaurant brands are featuring price currently. McDonalds (MCD) took considerable time to get a late June $5 30 day LTO Burger or Chicken package in place. A problem is Burger King got their offer approved by franchisees more quickly and is on the street now, beating McDonald’s. Franchisee intelligence sources expect that the $5 MCD LTO will become permanent. Olive Garden now is running a $12.50 “Create Your Own Pasta” offer on TV highlighting the usual brand benefits. [1] There is no such rumoring about a permanent $12.50 platform at Olive Garden, it would be contrary to years of CEO guidance.

In a telephone interview, my friend, Lisa W Miller, CSP, consumer insights strategist and expert, who I trust greatly, wondered if this discounting deluge was too late. Too little, too late, actually. More work had to be done on the value side as opposed to the pure price side. [Lisa W. Miller & Associates, https://www.lwm-associates.com]

NRN’s Joanna Fantozzi wrote a great analytical piece[2] in May compiling several analytical reports and sources. The conclusions were that price is a subset of value and are closely related; that both about half of guests in 2020 (50%) and 52% in 2024 picked restaurants with lower prices. The exact same percentage of guests (68%) said they pay close attention to menu prices in both Q1 2020 and 2024. [3] HundredX data shows price perception has gotten much worse in the last six months, especially QSR brands, but that value has only slightly declined.[4] Both Sysco (SYY) and US Foods (USFC) noted the falloff of chain QSR cases sold in their recent investor days. [5]

I am wondering how do we get out of this “price problem” cleanly. For those brands that do a lower priced LTO, eventually the LTO can end when market conditions improve. For those QSR brands that overindex with lower income guests, how do you move away from a fixed price value platform in say, 3 years, when needed. Casual dining does not seem to have this problem. This should be a signal to Wall Street.

So, in my opinion, we got to this pricing problem by taking automatic price increases and not looking elsewhere in the P&L more to cover expenses. Operators did not help by installing “tip me” software almost everywhere, although the reason for that is understood. We should have moderated price immediately once grocery store inflation fell in 2023. But that is a hard thing for a decentralized franchisee centric QSR segment to do.

Red Lobster, Rubio’s and the spurt of other Restaurant Bankruptcies: What is up?

Everything relates to everything else of course, and the general industry sales, traffic and profit weakness took their toll on these two brands. We are NOT in “Restaurant Apocalypse”; these brands had long standing problems.

Red Lobster was Darden’s original brand and seems to have began its long decline in the early 00s. Under CEO Clarence Otis, Darden used LTOs and a mix of coupons and FSIs to sustain business. But financial visibility during calls was poor and Darden’s attention was on Olive Garden, and later Long Horn. It was impacted by the 2008-2009 recession like all casual dining operators. It overindexed with older guests who responded to discounts.

Red Lobster became a lighting rod in the 2014-2015 Starboard v. Darden proxy battle. Darden sold Red Lobster and its underlying real estate for $2.1 billion before the proxy shareholders vote to PE firm Golden Gate Capital Group in 2015. Golden Gate immediately sold the real estate to a REIT. Red Lobster then had to assume rent and other lease expenses for the first time. That was a significant blow to the P&L. Later, by 2020, Golden Gate sold its entire stake to Thai Union, a seafood supplier. While Thai Union had international restaurant partners, they did not have US casual dining experience. Red Lobster’s long time CEO, Kim Lopdrup retired in 2021, and Thai Union was unable to recruit and keep a industry veteran CEO afterwards. Internal struggles at Red Lobster cumulated in a money losing $20 “All Day All You Can Eat Shrimp” offer. The Red Lobster bankruptcy documents revealed an on going investigation regarding machinations and potential fraud in the supply chain benefitting Thai Union, who became its exclusive seafood supplier.

Red Lobster has closed about 100 units to date with app. another 100 units “on the bubble” pending lease negotiations prior to Bankruptcy Court rulings. That would still leave a significant national presence, but with a tremendous amount of work to do. Law360 has reported a logical linkage with Fortress PE and SPB Hospitality as a logical bidder through bankruptcy.

Rubio’s goes for Chapter 22: Rubio’s was one of the first fast casual dining restaurants, opened in 1983 in San Diego. Growing in Southern California in the 1990s via IPO in 1999. It went private in 2009 via a $91 million buyout by Mill Road Capital, with 195 units at the time. Via my conversations, Rubio’s made a cluster of bad development in the late 1990s and early 00s and could not grow out of the Southern California. Some have speculated its Baja Mexico theme did not work away from the coast. Rubio’s continued to close a modest number of units annually until 2020, when the first Chapter 11 was filed. 26 units were closed and leases were reworked.

After April 1 2024, none of us in California were surprised to see marginal restaurant operators close. This is a result of the $4 wage hike, AB-1228. Rubio’s closed 48 company units and may close more. Not surprisingly, franchisees have to continue operating, which is not right, but correct. If these units close cleanly, Rubio’s will have 86 units left in CA, NV and AZ. Similar to Red Lobster, new management and funds will be needed. The media reports alone will drive down Rubio’s sales for months.

Other restaurant bankruptcies are on the cusp—public BurgerFi, Tijuana Flats, Oberweis for example.

Building Company Culture Remains Critical

In this period of high stress, with focus on the top and bottom line, the top performing company companies work to achieve a blend of being the most attractive and rewarding places to work. One of my close friends and colleagues, Mr. Mac Brand shares with us a venue from his new book, Tending to your Garden (2023), Building and Sustaining Business Relationships

Mac explains one of his projects where he begins to build and identify identity charts that organize field and corporate staff members by contributory function to ease communications and blockages. See more at www.bellwetherfoodgroup.com

About the author: John A. Gordon is a long time restaurant industry veteran with experience in restaurant operations, corporate staff (20 years in FP&A) roles) and 23 years now via his founded management consultancy, Pacific Management Consulting Group. He is a certified master analyst of financial analysis, (MAFF), and works complex financial analysis roles for clients.

[1] Cable TV watching, ION Network, June 9 2024.

[2] https://www.nrn.com/quick-service/new-value-equation-restaurants May 16 2024

[3] Id. Technomic data.

[4] Id. HundredX data, Andre Benjamin.

[5] Restaurant Business, “Fast Food restaurants are hit hardest as customers cut back”, May 23 2024.

The San Diego Union Tribune – Hometown Taco Chain, Rubio’s, Shuts 48 Locations

Company blames higher fast-food employee wages

San Diego-founded Rubio’s Coastal Grill has closed 48 California locations. Thirteen of the closed restaurants are in San Diego County, including the one in Kearny Mesa, above. K.C. Alfred / U-T

By Lori Weisberg

A fast-casual staple in San Diego County since its founding in San Diego 40 years ago, Rubio’s Coastal Grill has abruptly shuttered 48 of its California restaurants — 13 of them in San Diego County.

The decision, which took both customers and employees by surprise, was driven by the rising cost of doing business in California, the company said in an emailed statement. Rubio’s, like other California chains, has been affected by the recent wage increase for fast-food employees, who are now paid $20 an hour as of April 1. That represents a 25 percent hike over the current $16 minimum wage in California.

“Making the decision to close a store is never an easy one,” said the statement provided by Strick and Company, a crisis management firm Rubio’s is using to communicate with the media. “The closings were brought about by the rising cost of doing business in California. While painful, the store closures are a necessary step in our strategic long-term plan to position Rubio’s for success for years to come.”

The closures, which were effective as of Friday, account for one-third of all Rubio’s restaurants.

The affected restaurants in San Diego are spread throughout the county, from Chula Vista to San Marcos. With the closures, there are now 29 restaurants remaining in San Diego County, including the original location on Mission Bay Drive in Pacific Beach that opened in 1983 as an homage to the original Baja California-style fish taco.

Even with 86 remaining Rubio’s outlets in California, Arizona and Nevada, the chain is a fraction of what it once was. A little less than four years ago, the company that boasts it’s the home of the original fish taco, had as many as 170 locations in the U.S.

In a highly competitive, low-margin market chock full of Mexican-themed brands, San Diego restaurant analyst John Gordon says that Rubio’s was no longer the cool kid on the block.

“Rubio’s is an older tired brand. It’s not cool anymore. Chipotle’s is cool, Cava is cool,” Gordon said. “Rubio’s had its day but once it left the publicly traded markets and (current owner) Mill Road Capital took it over, it went into maintenance mode. Ralph Rubio, the founder, continued to consult with them but nothing much happened.”

The biggest factor, though, fueling this latest evolution of Rubio’s, says Gordon, is the minimum wage hike for fast-food employees, thanks to legislation signed into law last year by Gov. Gavin Newsom. Some fast-food chains already have raised their menu prices in response to the wage increase.

“Without a doubt, the governor’s action, the union’s action on this Assembly bill action that dramatically raised the minimum wage to $20 with no phasing in was a dramatic shock to all fast-food restaurants in California,” Gordon said. “We knew it was coming, and the industry opposed it aggressively.”

According to an article in the trade publication Restaurant Business, Rubio’s has struggled noticeably in the past five years. The company, it wrote, averaged a 1.1 percent decline in overall sales during that time period, compared with a 10.4 percent increase for fast-casual Mexican chains in general.

Gordon said he wouldn’t be surprised to see Rubio’s forced into bankruptcy considering the potential debt it is facing from the closure of so many leased locations.

It wouldn’t be the first time.

In October 2020, the privately held Rubio’s filed for Chapter 11 protection to get out from under more than $100 million in liabilities. It already had closed a number of locations as it faced mounting debts and difficulty paying rent. And then, as the pandemic worsened, Rubio’s opted to not reopen 26 of its locations across California, Arizona, Colorado and Florida.

A pre-negotiated plan for restructuring the company’s substantial debt of more than $72 million was later approved by the U.S. bankruptcy court judge not long after the initial filing. As part of the plan, Rubio’s longtime lender agreed to provide $52 million in so-called “exit” financing. In addition, Mill Road Capital agreed to invest $6 million back into the company.

A company spokesperson confirmed that the locations below have been closed in San Diego County:

• 1480 Eastlake Parkway, Suite 901, Chula Vista

• 419 Parkway Plaza, El Cajon

• 1485 E. Valley Parkway, Suite A-6, Escondido

• 9500 Gillman Drive, Food Court, La Jolla

• 9187 Clairemont Mesa Blvd., Suite 7, San Diego

• 910 Grand Ave., San Diego

• 8935 Towne Centre Drive, Suite 100, San Diego

• 9254 Scranton Road, Suite 105, San Diego

• 2260 Callagan Highway, Building 3187, San Diego

• 7835 Highlands Village Place, Suite D101, San Diego

• 1158 W. San Marcos Blvd., Suite A, San Marcos

• 437 Highway 101, Suite 117, Solana Beach

• 1711 University Drive, Suite 110. Vista

Rubio’s workers had little advance warning of the restaurant closures. No formal notice was granted under what’s known as the Worker Adjustment and Retraining Notification Act, which requires a company — defined as an industrial or commercial facility — with 75 or more employees that is engaging in a mass layoff to notify its workers. However, the wording of the law is a little unclear as it applies to a company like Rubio’s where there are multiple locations, each typically employing far fewer than 75 workers.

On the online social forum Reddit, a number of Rubio’s employees complained that they did not receive advance notice of their termination, although one Reddit post noted that workers did receive their final paychecks upon learning that their place of employment was closing.

A spokesperson with the state Department of Industrial Relations advised any workers who did not receive their full pay upon closure of the restaurants to file a claim with the state.

lori.weisberg@ sduniontribune.com

The New York Times – Opinion | Want To Better Understand America? Consider All-You-Can-Eat Shrimp.

The downfall of Red Lobster suggests consumers are parched for value.

Please click here to read the full article: https://www.nytimes.com/2024/05/24/opinion/red-lobster-bankruptcy-economy.html

Orlando Sentinel – Orlando-Based Red Lobster Files For Bankruptcy But Will Stay Open

Red Lobster has filed for Chapter 11 bankruptcy and leaders plan to seek a buyer for the financially troubled seafood chain based in Orlando.

Please click here to read the full article: https://www.orlandosentinel.com/2024/05/20/orlando-based-red-lobster-bankruptcy/

Category: 2024