Executive Connections Newsletter: Issue 50, MAY 2004
| DICK'S EDITORIAL
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The last several months have seen quite a few changes at the top of a number of restaurant companies. According to our sources, Buca, Red Lobster, Cheesecake Factory, Back Bay, Cici's Pizza, California Pizza Kitchen, Pasta Pomodoro, Baja Fresh, The Noodle Shop, Tully's, and Johnny Carino's are among several companies that have recently had turnover among their CEOs or COOs and there is at least that many more to come over the next few months.
Why is all this top-level talent being replaced? The underlying situation is that many of the Boards want new eyes and new blood to take their companies through the next expansion. I have been in this business for 40 years and this cycle reoccurs after every down market. The Board, or the powers that be, want executives to look outside the boxes and give the company a new perspective.
Restaurants have to constantly reinvent themselves to keep up with the current trends - or even inventing their own trends. The market we are in is a moving target for candidates as well as clients, and at Dick Wray & Consultants, we are always keeping an eye out for those who are setting the pace.
Regards,
Dick Wray, CEO
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| SAMPLING OF CURRENT ENGAGEMENTS
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1. VP Marketing, Family Dining Chain
2. Director/VP Operations, Family Dining Chain
3. Sr. VP Real Estate Development, Big Box Retailer, Southeast
4. Director of Foodservice, C Store Chain, South
5. Director of Training, QSR Southeast
6. Regional Ops Directors, Casual Dining, Mid Atlantic
7. Director/VP Franchising, QSR Southeast
8. Vice President of Franchise Development, Regional QSR
9. District Managers, Area Directors, Quick Casual, Mid Atlantic
10. Director of Food & Beverage, Southeast
11. Area Director, Casual Dining, San Diego
Referrals are the life-blood of our business. If you know of anyone who may be interested in one of these situations we would be happy to review their credentials.
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| RESUME TIPS
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By: Jim Weber, COO, Dick Wray & Consultants, Inc.
Basic Formatting Guidelines
Resumes have a tendency to take strange twists and turns as they fly through the Internet, often arriving in less than desirable states. A marvelous product on the sender's computer may be transformed in a way that, well, reflects poorly on the candidate. I frequently open resume files to find headers on the wrong page, blank pages or pages containing only one line, and a myriad of problems with tabs and indentations. The good news is that these problems are easy to eliminate.
Headers and footers are important formatting features that not only add to the quality of the presentation, but also have a useful function once the resume is printed. This feature is so important that there is a set of commands in MS Word to help the resume writer get their headers and footers right. The Header and Footer function is located under the "View" option in the top-line menu bar. Get to know this feature, as it will save you time and trouble formatting your resume.
It is my recommendation that the candidate's name and basic contact information be included in the header section. Remember, the critical contact information to be included in today's resume is the candidate's name, telephone number and e-mail address. If a street address is necessary, it is best to put that information in the "Properties" Window, under the "Files" menu option. Footers should include page number, date, and possibly the file name for the resume. Of course, we learned in the last installment of Resume Tips, to name resume files by last name first, followed by first name, middle initial, and date of preparation. If the resume writer follows this tip, there will be no need to include a file name in footer.
So, don't take unnecessary risks with your resume. Use the Header and Footer function to ensure a quality product and keep headers and footers in their proper place.
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| EXECUTIVE MOVEMENT
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MIKE ELLIS was hired as senior vice president of development by CARLSON RESTAURANTS WORLDWIDE, parent of 820-unit T.G.I. Friday's. Ellis will be responsible for all aspects of real estate, construction, design, equipment purchasing and new-restaurant development for T.G.I. Friday's U.S.A. Most recently he served as executive vice president and chief development officer for Burger King Corp.
The CALIFORNIA RESTAURANT ASSOCIATION stated that JOHN D. DUNLAP, III, president and chief executive, had resigned in order to expand his career in advocacy and political consulting. The CRA did not name Dunlap's replacement.
DAVID SONZOGNI was named director of foodservice for CENTRAL MARKET, a seven-unit, high-end grocery chain based in Dallas. He was the former vice president of culinary services for BENNIGAN'S GRILL & TAVERN.
RANDALL LOPEZ, former Buca Inc. vice president of marketing, took a similar role at DEL TACO INC., parent of the 425-unit quick-service chain. At Del Taco, Lopez fills the VP of marketing position vacated by Tim Hackbardt, who joined Rubio's Fresh Mexican Grill last November. Del Taco chairman and chief executive, KEVIN MORIARTY, said Lopez's "experience, energy and passion for brand building are a welcome addition to our organization."
J.A. ARCHER was hired by BLIMPIE INTERNATIONAL INC. as vice president of franchise development. She will handle all aspects of franchise sales and new-unit growth and development as well as implement the company's in-store agreement with Wal-Mart to open 104 Blimpie Xpress units in 2004. Archer most recently served as vice president of franchise development for Pods USA in Clearwater, Fla.
In May, the WOMEN'S FOODSERVICE FORUM hired a full-time administrative staff that will establish its new headquarters in Chicago. Former senior vice president for the National Restaurant Association Educational Foundation, ELLEN MOORE, is the new executive director. Most recently, she was director of training at Sweet Traditions LLC, a Krispy Kreme franchisee with stores in Illinois and Missouri. CHRISTINE MELENDES is the new operations manager. Melendes worked in that capacity with the WFF when it contracted administrative duties with her former employer, Smith Bucklin and Associates. The new marketing director is DAWN HARRIS, former marketing and communications consultant for the Multicultural Foodservice & Hospitality Alliance.
SIDNEY J. FELTENSTEIN, chairman of the International Franchise Association was added to the board of directors of ROMA CORP INC., operator and franchisor of a chain of 224 Tony Roma's units. He was the former chairman and CEO of Yorkshire Global Restaurants, owner and operator of Long John Silver's and A & W Restaurants.
KRISTEN MERTENS was promoted to director of marketing at EATERIES INC., owner and franchisor of 58 restaurants, such as Garcia's Mexican Restaurant, Garfield's Restaurant and Pub and Pepperoni Grill. Most recently, she was senior marketing manager.
DISNEYLAND RESORT hired KRISTIN NOLT as senior vice president of public affairs. Nolt was senior vice president of marketing, communications and media relations at the National Restaurant Association.
BILL MORETON was named by WENDY'S INTERNATIONAL INC. as chief executive of its BAJA FRESH MEXICAN GRILL subsidiary, replacing GREG DOLLARHYDE, who had been the fast-casual Mexican chain's CEO since 1998. In February 2004, Moreton joined Wendy's as executive vice president of subsidiary brand strategy. His background also includes stints as executive vice president and chief financial and administrative officer for Panera Bread Co.
BURGER KING CORP. selected DENNY POST, the chief food innovation officer of KFC, as its chief concept officer. The nation's second-largest burger chain said Post would oversee product marketing and development, and report to RUSS KLEIN, chief global marketing officer. Burger King's corporate chef and senior director of product development, PETER GIBBONS, and CARLOS IRBAS, senior director of product marketing, will report to Post. Separately, JOHNNY LAW, KFC's director of culinary development, left the chicken chain, which is owned by YUM! BRANDS INC. No replacements have been named yet for Post or Law said KFC.
J. MARC MUSHKIN was hired by DELTA CO, operator and franchisor of a chain of more than 425 quick-service Mexican units, as senior director of franchise sales, replacing HELEN TRENT who took a post at El Pollo Loco. Most recently, he owned a franchise consulting company. Also, Del Taco promoted MIKE ANNIS, vice president and general counsel, to senior vice president, and ARNOLD DOMINUGUEZ, senior director of training, to vice president of human resources and training.
The appointment of five executives and a new setup for its U.S. Food Service unit was announced by AHOLD NV of the Netherlands, which was at the core of a $1 billion accounting scandal in February 2003. DAVID EBERHARDT is the new executive vice president and ROBERT FISHBUNE is chief financial officer. LAWRENCE BENJAMIN was appointed chief executive in October. AHOLD also named former lawyer, ROBERT AIKEN, executive vice president for strategy and GARRY BROWN as senior vice president of procurement. Brown is a consultant who has experience in dealing with troubled businesses.
The second high-ranking official in the last few months to leave ARBY's, the fast food chain, is JONATHAN MAY, who is preparing to resign as Arby's chairman.
EDNA MORRIS, former Red Lobster president, was named a director of sandwich chain COSI, the company announced.
B. KENDZIOR, Vice President of International Marketing and Retail Concepts, was named to the Board of Directors of BASKIN-ROBBINS-JAPAN, a publicly traded company on the Nikkei exchange. Baskin-Robins-Japan is the only publicly traded company in the Allied-Domecq PLC other than the company's own stock which is traded in both New York and London. Baskin-Robins-Japan operates and franchises stores under the Baskin-Robbins brand name and is celebrating its 31st Anniversary this year with over 500 stores in the country.
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| NEWS
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Franchisor of the popular southwestern-inspired Buffalo's Southwest Cafe, BUFFALO's FRANCHISE CONCEPTS INC. (BFCI) has helped its metro-Atlanta franchise business partners form a new business and market co-operative for the metro-Atlanta market. BFCI's largest concentration of restaurants is in metro Atlanta, with a total of 25 units and at least one more expected to open by the end of 2004. Atlanta franchise business partners, with eight company-owned restaurants and 17 franchise-owned restaurants in this market, along with the corporate headquarters, decided that a co-op would enable the 25 restaurants to act as one business unit and generate greater efficiencies, especially in marketing. Says Mike Johnson, newly named president of the Atlanta co-op and owner of five Buffalo's restaurants, "Instead of acting as a group of independent operators we wanted to become one voice in this market."
Coral Springs, Fla. is home to a new BUFFALO's SOUTHWEST CAFe, marking the company's second restaurant in the state of Florida. BFCI franchise business partner and co-owner of the restaurant, Bob Mattis, said "By being in the new Shoppes of Heron Lakes complex and near Sawgrass Expressway, we're in a definite "Hot" spot of development and growth for Coral Springs. We think residents of Coral Springs are going to love this concept." Paul Taraboulos, a 13-year veteran of the restaurant industry, is a managing partner in the restaurant and also serves as its general manager.
The Atlanta Journal-Constitution reported eight black plaintiffs from Greater Atlanta joined in a federal racial-discrimination lawsuit filed against WAFFLE HOUSE INC. According to the report, in the complaint against the Norcross, Ga.-based operator and franchisor of the 1,420-unit chain, the plaintiffs allege bias during a four-year period at Waffle House units in Atlanta and nearby communities. Waffle House spokesman PAT WARNER defended the company's diversity training and anti-discrimination policies, which he said include mystery-shopping visits to all restaurants at least three times a year. In recent years, Waffle House and its franchise operators have been the target of numerous civil-rights-related complaints.
SUDESH SOOD and BEN NEMATZADEH, Jack in the Box franchisees, said they plan to develop 20 QDOBA MEXICAN GRILL locations in the Greater Los Angeles area, anticipating the first unit opening next February. In related news, Qdoba franchisee CHAIR 5 RESTAURANTS LLC, based in Wellesley, Mass., said it planned to open the 100th franchised Qdoba unit in Boston.
In Dallas, FOOD, FRIENDS AND CO., a new firm created by Canyon Cafe chain founder JACK BAUM, acquired the 15-unit COZY MEL'S COASTAL GRILL chain from BRINKER INTERNATIONAL INC. Baum sold the Canyon Cafe chain in 1998 and is in the process of revamping Cozymel's. Brinker had said Cozymel 's no longer fit into the company's casual-dining portfolio, which includes the Chili's Grill & Bar chain and 150 On The Border Mexican units. "I want to use this as a launching pad to other concepts, but obviously we are very focused on Cozymel's," said Baum, who also owns Mexico: Cantina and Veracruz Cooking in downtown Seattle. According to Baum, his company has already introduced separate lunch and dinner menus and new food items.
According to parent BRINKER INTERNATIONAL INC., CHILI's has signed a franchise pact to build 15 restaurants in South Carolina and Southern Georgia.
In recently published reports, it was stated that DEN FUJITA, legendary founder and former leader of MCDONALD'S HOLDINGS CO. (JAPAN), which is 50-percent owned by MCDONALD'S CORP. of Oak Brook, Ill., died earlier in the month, apparently of heart failure. He was 78. McDonald's in Japan was launched by Fujita in 1971 as a joint venture with McDonald's Corp. He is credited with guiding the establishment of the brand in Japan and building it over 30 years into the chain's largest national group outside the United States, currently with more than 3,500 units.
Also, MCDONALD'S chief executive, JIM CANTALUPO, died of a heart attack April 20th. COO CHARLIE BELL was quickly named as his successor. According to McDonald's, Cantalupo was attending a franchisee convention on Orlando, FL at the time of his death.
BOJANGLES' RESTAURANTS INC., parent of nearly 127 quick-service chicken units, garnered two franchise development deals for 12 locations in Tennessee. Three-unit Schlotzsky's Deli franchisee, HENSON MOORE, agreed to open eight new restaurants over the next five years in Nashville, Tenn. A Dairy Queen and Prime Sirloin franchisee, DAYNE MILLER, signed a pact to open four units, with the first location scheduled to open later this year. Bojangles' said its chain has eight Tennessee locations and is planning to add 20 to 30 new units in the state over the next five years.
A ban on smoking in bars, restaurants and other public buildings in Lexington-Fayette County that was adopted last July by an 11-3 vote of the Lexington-Fayette Urban County Council was upheld by the KENTUCKY SUPREME COURT. The nonsmoking measure had met with opposition from local restaurateurs and suppliers.
The New York-based parent of 13 upscale restaurants, B.R. GUEST RESTAURANTS, said it plans to enter the Chicago market with BLUE WATER, a restaurant that will occupy the space vacated by Spago. A spokesman said B.R Blue Water's concept and opening date have not been finalized. Guest began expanding nationwide last year, with Fiamma Trattoria at the MGM Grand resort in Las Vegas.
WENDY'S INTERNATIONAL said its TIM HORTONS subsidiary won tentative bankruptcy court approval for its $41.6 million bid to buy the real estate and assets of BESS EATON DONUT FLOUR CO., a 42-unit doughnut chain operating in Rhode Island, Connecticut and Massachusetts. Also, a group of DUNKIN' DONUTS franchisees were bidding for Bess Eaton, which had filed for Chapter 11 bankruptcy protection in early March. An automatic 10-day appeal period had begun that would delay any closing of a purchase deal said Wendy's. The company indicated that it plans to convert the Bess Eaton units to the Canadian-based Tim Hortons doughnuts and coffee concept, which now has 184 U.S. units and 2,358 in Canada.
Citing the recent death of ARTHUR HO, the principal operating partner in the YAN CAN FRESH ASIAN COOKING joint venture, YUM! BRANDS INC., said it had dissolved its 2-year-old partnership in the once seven-unit chain of fast-casual restaurants and would "liquidate the business." Calls to the restaurants indicated that all three of the chain's Southern California units had been closed, as had a unit in El Cerrito, near San Francisco. Three Yan Can units in the Bay Area remained open following the announcement. The Yan Can concept was a collaboration between Yum, parent of KFC, Pizza Hut and Taco Bell; television cooking show host, author and fledgling restaurateur MARTIN YAN; and FAVORITE RESTAURANT GROUP of Hong Kong, a KFC franchisee that holds the rights to Yan-created concepts.
A real estate investment trust located in Dallas, U.S. RESTAURANT PROPERTIES INC., said it bid $6.5 million in federal bankruptcy court for franchisor rights to 73 GROUND ROUND restaurants. A group of Ground Round franchisees and METRO MEDIA RESTAURANT GROUP of Plano, Texas also bid, however, those offers were apparently lower. The court was scheduled to review the bids at a hearing and challenges were likely to delay a decision. AMERICAN HOSPITALITY CONCEPTS of Braintree, Mass., closed about 60 company-owned Ground Round units Feb. 13 and filed for Chapter 11 bankruptcy protection a week later.
The first KFC unit, located in Salt Lake City and owned by Los Altos, Calif.-based HARMAN MANAGEMENT CO., was demolished in late April to make way for a larger store that will be filled with memorabilia from the chicken chain. According to JAMES JACKSON, chief financial officer of Harman, which operates some 330 KFC stores, the new store is slated to open in August to coincide with the chain's 52nd anniversary. Prominent artifacts will include old menus and pictures of the chain's late founder, COLONEL HARLAND SANDERS, as well as of LEON "PETE" HARMAN, who built his namesake company after becoming the first operator to sell the Original Recipe fried-chicken.
STARBUCKS COFFEE CO. is slated to debut five new Frappuccinos. The new flavors include Java Chip, Double Chocolate Chip, Strawberries & Creme, Caffe Vanilla and Vanilla Bean and are priced from $2.65 to $4.75.
CHARLIE HARMON, president and founder of the Arby's franchisee FX4 LLC, purchased 38 Arby's units in Phoenix from the Arby's chain's largest franchisee, Atlanta-based RTM RESTAURANT GROUP.
According to JACK IN THE BOX INC., they received the highest corporate governance rating among its industry peers from INSTITUTIONAL SHAREHOLDER SERVICES, a provider of proxy voting and corporate governance advisory services. Also, the company said it had outperformed all companies in the Standard & Poor's "Hotels Restaurants & Leisure" group, and topped 99.7 percent of all companies in the S&P 600 Index. Says ROBERT J. NUGENT, Jack in the Box's chairman and chief executive "The reputation of a corporation is becoming increasingly important to all of its stakeholders".
Recently, IHOP CORP., parent of the 1,164-unit family dining chain, signed seven multiunit development deals with existing franchisees for the openings of 26 new locations. The units are slated to open over the next three to eight years in Alaska, Arkansas, California, Delaware, Maryland, New York, Pennsylvania and Texas.
Including a possible sale of the 617-store subsidiary, AFC ENTERPRISES INC. said it would "explore strategic alternatives" for its Cinnabon chain. AFC, which also owns and franchises Popeye's Chicken & Biscuits and Church's Chicken, said the move was part of efforts to "sharpen its strategic focus and maximize shareholder value." AFC acquired the Cinnabon World Famous Bakery & Coffee brand in 1998 and has more than 10,000 licensed points of sales in addition to its corporate-owned and franchised outlets. Cinnabon also owns the international franchise rights for Seattle's Best Coffee in 11 countries, Hawaii and at U.S. military bases.
Signing a development deal with franchisee ROJO CALIENTE RESTAURANTES INC., QDOBA MEXICAN GRILL will add five new restaurants in Lake Tahoe, Calif., and Reno, Sparks and Carson City, Nev. Franchisee MICHAEL BLADOW and his partners OLIVER MARTIN and ADAM GONZALES are slated to open their first Qdoba location by September, in Sparks.
WHATABURGER INC., franchisor and operator of a chain of 600 burger units, acquired 92 locations in Texas, New Mexico, Oklahoma, Louisiana and Mexico from its largest franchisee, WHATACO INC. of Midland, Texas. Whataco, whose majority owner is a Houston investment firm, THE REDSTONE COS., and has been a franchisee since 1995. Corpus Christi-based Whataburger now owns more than half of all the chain's outlets with the purchase.
The franchisor of 55 smoothie and juice shops, JUICE IT UP !, opened a new prototype in Santa Ana, Calif. The company said it features a motion-driven design of concentric circles, a curved counter and display space, and a muted color scheme of orange, green and purple. Irvine, Calif.-based Juice It Up said the prototype would be used at new units, but did not state plans for remodeling existing stores. Juice It Up enlisted designer JOE CACHERO and architect KEITH SMITH, principal of SMITH CO. in Seattle, for the makeover.
The owners of ROCCO'S ON 22ND STREET were battling for control of the high-visibility Italian restaurant as the second season of the reality series "The Restaurant" kicked on NBC. Celebrity chef ROCCO DISPIRITO — responding recently to a lawsuit filed against him by JEFFREY CHODOROW's 22-unit CHINA GRILL MANAGEMENT, his partner in the venture — struck back with a countersuit in New York State Supreme Court in Manhattan.
DOUG and SANDRA DAY, franchisees of BURGER KING, filed for Chapter 11 bankruptcy owing more than $1.7 million to creditors. They own 19 restaurants in Kansas. The Days, who intend to file a reorganization plan with the court, continue to operate their restaurants. According to court papers quoted by the Wichita Eagle, the couple, who reportedly tried but failed to reach an agreement with creditors, owe more than $1 million in royalties, advertising fees, taxes and rent to Miami-based BURGER KING CORP., their largest creditor.
Garnaring a 12-year contract, worth $170 million, ANTON AIRFOOD INC. will open and operate 11 restaurants at MEMPHIS INTERNATIONAL AIRPORT. Chairman WILLIAM ANTON said his firm would open five full-service restaurants, five quick-service units and a specialty coffee bar. Anton said the units will feature a mix of Anton's brands and those of chains, such as Edy's Grand Ice Cream and Back Yard Burgers.
The Randolph-based parent of DUNKIN' DONUTS, ALLIED DOMECQ QUICK SERVICE RESTAURANTS, asked the RHODE ISLAND ECONOMIC DEVELOPMENT CORP. not to grant TIM HORTONS INC. a sales-tax break in its attempt to purchase the BESS EATON doughnut chain. Both Dunkin' Donuts and Tim Hortons are rivals in the battle to buy Westerly, R.I.-based Bess Eaton out of Chapter 11 bankruptcy. Saying it needs to renovate the Bess Eaton outlets, Tim Hortons, a division of WENDY'S INTERNATIONAL INC., requested the sales-tax exemption. Dunkin'Donuts, which has yet to make its bid, has said that its franchisees also plan to renovate the Bess Eaton outlets, but would not ask the state for a sales-tax exemption.
According to the company, IHOP CORP. signed new franchisees in Colorado, Texas and Wisconsin to deals for expansion of the 1,164-unit chain. IHOP president and chief executive JULIA STEWART said that since IHOP changed its franchising business model from franchisor-financed turnkey units to franchisee-financed development about a year ago, the company had signed expansion pacts only with existing franchisees, until the new agreements. ROBERT KUSENBERGER JR., a convenience store operator and Subway franchisee, agreed to open at least three IHOPs over four years in the Texas counties of Val Verde, Maverick, Uvalde and Webb. Real-estate investor FRED JONES agreed to a three-unit, five-year contract for Milwaukee. Former IHOP executive DON MILBRAITH signed an eight-unit, five-year deal for Colorado.
After a judge in Denver, Col. approved a class-action settlement related to the sandwich chain's share price when it went private in 2001, the parent of QUIZNOS SUB may have to pay a group of dissident former shareholders and their counsel nearly $2 million. The former shareholders in the class-action case would receive $5.87 above the $8.50 per share they originally received in 2001 pending possible appeals, and the final valuation of the stock's "fair value" as determined by a separate lawsuit,. After accounting for nearly $473,000 in attorneys costs and fees, the former minority shareholders, about 300 members in the class, could see a payment closer to $4.40 per share above the original payment.
COLD STONE CREAMERY, parent of a chain of 639 ice-cream units, is re-acquiring its area development rights in the states of Alabama, Florida and Georgia from NUTS ON TOP INC. According to a Cold Stone spokesman, the company had retained rights for that Southeastern region and is providing operational support and seeking new investment groups.
LARRY HARRIS, franchisee of BUFFALO WILD WINGS, opened a unit last month in Corpus Christi, Texas. The new restaurant is part of a 42-unit development deal Harris signed last year to build restaurants in Texas and New Mexico. Harris said that as part of the deal, he plans to open four or more units per year, developing simultaneously in both states.
BUFFALO WILD WINGS, operator of 255 restaurants in 30 states has increased prices due to the soaring chicken wing prices.
Marking the company's first foray into the state or Texas, HUDDLE HOUSE INC., operator and franchisor of a chain of nearly 400 family units, signed a deal with CORSICANA RESTAURANTS INC. to add 11 units in the state. The first unit is slated to open this summer in Gun Barrel City. Corsicana said it also is planning to open in Cleburne, Midlothian, Corsicana and Ennis.
Marking its first new locations since 1999, LA MADELEINE BAKERY, CAFe & BISTRO, operator of a chain of 62 units, said it would open two new restaurants in Houston. According to WALLACE B. DOOLIN, CEO, it had halted expansion to devote time to enhancing the guest experience. The company also added Bistro to its name as part of a push to emphasize new dinner menu items, including Herb-Crusted Pork Tenderloin and Beef Tenders en Merlot.
According to a filing with securities regulators, SBARRO INC., parent of a chain of 915 quick-service pizza units, cut during the first quarter of 2004 approximately 35 corporate employees, including five senior-level executives. The company said it would record severance and other related costs of approximately $700,000 in the first quarter of 2004 for the workforce reduction.
In early May, RAVING BRANDS announced that it had signed multiple franchisee groups in Southern California to open 10 Moe's Southwest Grills and four Mama Fu's Noodle Houses throughout the state. Currently, Moe's Southwest Grill operates 127 restaurants nationwide and has plans to exceed 300 by year-end. Moe's is the fastest growing fast casual concept in the country. Launched in June 2003, Mama Fu's Noodle House has eight locations with 50 locations scheduled to open by the end of 2004. In Michigan, Raving Brands signed a franchise deal with STEVE SMITH that will see the development of 30 Moe's Southwest Grills and 20 Mama Fu's Noodle Houses in Michigan. Smith was once the largest Arby's franchisee in the country and now operates six Damon's Grill locations in Michigan.
Parent BRINKER INTERNATIONAL recently said that MACARONI GRILL is a great brand that is "vastly unappreciated" by consumers. The company also indicated that it has downgraded its Mexican brand, ON THE BORDER, to "emerging" concept status.
In response to guest's demand in several studies, STEAK AND ALE recently introduced new low carb menus for both lunch and dinner in all 65 Steak and Ale restaurants. These low carb menus allow health conscious guests choose from ten low carbohydrate and high protein entrees. According to JAY WILLOUGHBY, President of Steak and Ale, "We have always offered low carb items on our menu, we just decided to help the guest make their decisions easier by providing information on some changes to existing and some new items. Our Chefs were able to combine the flavors and tastes of some current low carb menu items which we re-engineered and combined them with new entree offerings in order to satisfy the requests of our guests."
According to parent CEC ENTERTAINMENT, CHUCK E. CHEESE is testing higher menu prices in some 50 to 60 of its stores.
CLIFF HUDSON, CEO of SONIC CORP. said that the rising use of digital recording boxes like Tivo is worrying to Sonic Corp. because consumers can skip over the company's ads.
In an effort to recover retirement and workers' compensation plan benefits, RUBY TUESDAY INC. filed a bankruptcy-court claim for $6.2 million against PICCADILLY CAFETERIAS INC. of Baton Rouge, La.
According to FAMOUS DAVES's OF AMERICA INC., operator and franchisor of a chain of 92 casual-dining restaurants, the company signed two new franchise deals to add eight locations.
The largest Applebee's franchisee, APPLE AMERICAN GROUP, acquired 13 Pittsburgh-area Applebee's from B. T. Woodlipp Inc., raising Apple American's total unit count to 100.
COSI INC. recently announced two new strategic initiatives, a partnership with Federated Department Stores Inc. for in-store restaurant development at select Macy's department stores and an unrelated franchise program.
To compete with Mexican QSRS, fast casual concepts, TACO JOHN's redesigns their units with Taco Tuesdays, with customers lining up seven or eight deep at the cash registers.
In China, the demand for Western-style conveniences is rising. In 2003, sales from franchised stores increased 44% from the previous year. However, franchising is very new in China. The country passed its first franchise law in 1998. Additional laws should pass this year that will provide better protection for a franchiser's intellectual property according to the U.S.-China Consulting Group. Interesting to note, the late Colonel Sanders is the most recognized commercial icon in China. He is so popular that when managers of a KFC restaurant in Guiyang, in southwestern China, replaced the old-fashioned glasses on his plastic statue with the kind worn by retired president Jiang Zemin, the event made the front pages of the China Daily newspaper.
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| FINANCIALS
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CKE RESTAURANTS INC. said samestore sales for the four weeks ended April 19 increased 13.4 percent at Carl's Jr. units and 16 percent at Hardee's restaurants.
ALLIED DOMECQ QUICK SERVICE RESTAURANTS, parent of the Dunkin' Donuts, Baskin-Robbins and Togo 's brands, said systemwide sales for the six months ended Feb. 29 grew 8 percent.
After adjusting for several special items, FRIENDLY ICE CREAM CORP., widened its first-quarter net loss and reported 16-percent-lower operating income on 1.6-percent-higher revenue. For the quarter ended March 28, Friendly's net loss was $5.1 million, or 68 cents per diluted share, versus a loss of $1.5 million, or 20 cents a share, for the year-ago period. Revenues of $130.8 million included a 1.6-percent increase in restaurant sales to $104.4 million. Same-store sales rose 4.2 percent at company stores and 6.5 percent at franchised units of the 530-unit chain.
Parent of 222 Checkers and Rally's, CHECKERS DRIVE-IN RESTAURANTS INC., posted higher first-quarter operating income but reported lower net earnings after booking a deferred-income tax expense. Revenues were down slightly, reflecting a same-store sales increase of 8.1 percent on 20 fewer company-operated restaurants. For the quarter ended March 22, Checkers' net income was $2.5 million, or 19 cents per diluted share versus $3.3 million, or 25 cents a share, in the previous first quarter. Revenues were $43 million, versus $43.1 million the year before.
Crediting strong cost controls, BUFFALO WILD WINGS INC. more than doubled its first-quarter earnings on a 36-percent increase in revenues. The parent of the 255-unit casual chain had net income of $2.3 million, or 27 cents per diluted share, for the quarter ended March 28, versus $1.1 million, or 22 cents a share, a year earlier. Revenues of $40.2 million reflected average weekly sales for company-owned restaurants of $32,289, up 12 percent from the year ago quarter. Systemwide same-store sales increased 12 percent.
Earnings for the first quarter at IHOP CORP., parent of 1,164 family-dining units, had risen 7.4 percent, excluding a special charge in the year-ago quarter, on 16-percent-higher revenues. IHOP reported net income for the quarter ended March 31, of $10.9 million, or 50 cents per diluted share, versus $6 million, or 28 cents a share, in the year-ago period.
For the first quarter ended March 28, WENDY'S INTERNATIONAL INC. reported net income increased 20 percent to $57.8 million, or 45 cents per diluted share, versus $8.9 million, or 38 cents a share, in the year-ago period. According to company officials, revenues reached $834.8 million, reflecting strong sales at Wendy's and Tim Hortons and a 4.9-percent drop at Baja Fresh,.
As the cost of sales, labor and operating expenses all rose as a percentage of sales, CALIFORNIA PIZZA KITCHEN reported flat earnings and 19-percent-higher revenues for the first quarter. CPK reported net income of $4 million, or 21 cents a share, for the quarter ended March 28, versus the same numbers in the year-ago quarter. Revenues of $98.6 million reflected average weekly sales of $54,982 for the company's full-service restaurants, which was 1.5 percent higher than the year before.
STARBUCKS COFFEE CO. said that net earnings for the second quarter ended March 28 had jumped 52.8 percent to $79.5 million, or 19 cents per diluted share, versus $52 million, or 13 cents per diluted share, in the prior-year period. Same-store sales at company-operated units increased 12 percent and revenues rose 30 percent to $1.2 billion.
For the first quarter ended March 31, RYAN'S FAMILYSTEAK HOUSES INC., parent of 349 casual-dining units, reported a 27-percent rise in net income to $15.4 million, or 35 cents per diluted share, versus $12.1 million, or 28 cents a share, in the previous first quarter. Restaurant sales jumped 9.6 percent to $211.7 million, as same-store sales increased 4.8 percent. Ryan's said the conversion of restaurants to lower-cost, lodge-style Fire Mountain units resulted in average same-store sales gains of more than 15 percent. Seven more of those conversions are expected during the second quarter, the company said.
For the quarter ended March 30, THE CHEESECAKE FACTORY INC. reported a 32-percent increase in net income to $16.6 million, or 32 cents per diluted share, , versus $12.6 million, or 25 cents a share, in the year-ago quarter. Revenues jumped 27.6 percent to $220.5 million. Same-store sales increased 6.1 percent.
For the quarter ended March 31, OUTBACK STEAKHOUSE INC., parent of casual-dining chains totaling 1,079 units, earned $48.3 million, or 62 cents per diluted share versus $42.6 million, or 54 cents a share, in the year-ago period. The consensus by Analysts estimated that Outback would earn 64 cents a share. GOLDMAN SACHS analyst, CORALIE TOURNIER WITTER, attributed the earnings miss to an increase in expenses for "elimination of minority partners' interest," which jumped along with higher interest expense to $4.4 million, from $1.3 million in the previous year. In March, Outback said it had acquired a 36-percent minority ownership of its partners in nine Carrabba's Italian Grills in Texas for $3.7 million. Also, the company said it had changed its accounting practices to consolidate variable-interest entities, which included 29 Carrabba's, two Outbacks, one Roy's and one Bonefish Grill that previously were accounted for as joint ventures. The accounting action helped boost revenues 25 percent from the previous quarter.
Burger King's biggest franchisee, CARROLS CORP., said certain unspecified provisions in some sale-leaseback transactions would cause it to restate financial results for 2003, lowering net earnings by nearly 41 percent. The revision, however, will raise earnings before interest, taxes, depreciation and amortization, the operator of 351 BK units said. Also, Carrolls will delay the filing of its 10-K annual report to federal securities regulators. The restatement will trim 2003 net income to $2.3 million, from the $3.9 million previously reported.
First quarter earnings according to CEC ENTERTAINMENT INC. jumped 18 percent on higher revenues and increased same-store sales at its 470-unit Chuck E. Cheese's chain, despite higher cheese costs. CEC said food costs will impact negatively by $5 million through 2004 and will reduce pre-tax profit by $6 million, adding that earnings per diluted share for the year nonetheless are expected to increase by 20 percent. CEC reported net income of $32 million, or 82 cents a share, for the quarter ended March 28, versus $27 million, or 66 cents a share, in the same quarter last year.
Systemwide same-store sales at BENIHANA INC. for the fourth quarter ended March 28 had increased 2.6 percent. Samestore sales at the company's namesake restaurants increased 1.2 percent, while its Haru concept recorded an increase of 10 percent and samestore sales at RASushi jumped 10.7 percent. The company said total sales increased 9 percent to $50.3 million, brining full-year sales to $201.3 million, a 7-percent increase from the previous year.
According to the company, MCDONALD'S systemwide same-store sales for March rose 5 percent over year-earlier levels at namesake restaurants. In the Asia-Pacific-Middle East-Africa region, same-store sales at U.S. units climbed 9.9 percent and were up 2.7 percent, however, in Europe they fell 2.9 percent. McDonald's said it expects to report earnings of 40 cents a share for the first quarter, up 38 percent from the year-ago period, before the effect of an accounting change.
For the fourth quarter ended Jan. 26, CKE RESTAURANTS INC. reported a loss of $51.2 million, or 86 cents per diluted share, versus a loss of $7.7 million, or 13 cents a share, in the year ago quarter. Excluding charges totaling $50.7 million in the fourth quarter and $200,000 in the year-ago quarter, the parent of Hardee's and Carl's J r. chains said it would have operated at a loss of $500,000, or 1 cent per share, versus a loss of $7.5 million, or 13 cents a share, the year earlier. The charges accounted for the closings of 28 Hardee's and the value write-down of its La Salsa Fresh Mexican Grills concept.
PAPA JOHN'S INTERNATIONAL INC. lowered its 2004 earnings estimate, owing to a sharp increase in the cost of cheese, and said domestic systemwide same-store sales for the five weeks ended March 28 dropped 3.7 but rose 0.5 for the first quarter. Total systemwide international sales fell 1.8 percent for the five-week period, but increased 5.1 percent for the quarter on a constant dollar basis. Papa John's said a significant increase in the price of cheese would reduce operating income by $1.5 million to $1.8 million for the first quarter.
For the third quarter ended March 7, FRISCH'S RESTAURANTS INC. said net income jumped nearly 40 percent to $2.2 million, or 43 cents per diluted share, versus $1.6 million, or 32 cents a share, in the year-ago period. Revenues rose 15 percent to $59.6 million. Same-store sales increased 7.3 percent at Big Boy units and dropped 0.8 percent at Golden Corral restaurants.
Based on declining operating performance and very limited liquidity, ratings on NEW WORLD RESTAURANT GROUP INC. was lowered by STANDARD & POOR'S RATINGS SERVICES to "CCC+", from "B-". The ratings agency said an intensely competitive restaurant environment and consumer preferences to low-carbohydrate diets had pressured performance at the bagel restaurant parent.
According to the company, earnings for the first quarter for LANDRY'S RESTAURANTS INC. rose 40 percent as a result of better control of labor and advertising expense and lower food costs as a percentage of sales after a menu price increase. Landry's reported net income for the quarter ended March 31 of $11.4 million, or 40 cents per diluted share, versus $8.1 million, or 29 cents a share, in the previous first quarter. LANDRY'S RESTAURANTS INC. doubled its quarterly cash dividend to 5 cents per share and said first-quarter earnings were "above expectations." "Even with the dividend increase, we are confident in our ability to continue to generate sufficient cash flow to meet our operating needs and growth initiatives," said TILMAN J. FERTITTA, Landry's chairman and CEO. For the first quarter ended March 31, analysts had expected the seafood restaurant operator to earn 33 cents per share, according to Thomson First Call.
GOLDEN CORRAL said systemwide sales for the first quarter ended March 24 climbed 10.4 percent to $301.2 million, while same-store sales increased 5.5 percent.
DARDEN RESTAURANTS INC. said samestores sales at Olive Garden jumped at least 7 percent for the five weeks ended March 28, but that Red Lobster was unable to continue its positive gains from February, as same-store sales fell 6 percent.
According to STARBUCKS CORP., same-store sales for the five weeks ended March 28 at company-operated units had increased 12 percent. Net revenue jumped 30 percent to $494 million, versus $380 million in the year-ago period.
Same-store sales for the four weeks ended March 20 at PANERA BREAD CO. had increased 3.8 percent. Company-owned units jumped 4.7 percent, while franchised stores increased 3.4 percent. The bakery-cafe operator said systemwide annualized average-unit volumes for the 52 weeks ended March 20 rose 1.6 percent, to $1.86 million.
Profits at BRINKER INTERNATIONAL nose-dived in the quarter ended March 24, the result of $66.5 million in charges related to 30 store closings and asset impairments. Brinker is closing six Chili's, five Macaroni Grills, six On The Borders, six Corner Bakery Cafes and seven Big Bowl Locations - a third of that Asian brand's total store base. The company insisted it wouldn't dump Big Bowl the way it discarded another under performing asset, Eatzi's.
FRESH CHOICE reported that revenue increased 1.9% to $18.0 million, driven by a 1.2% increase in comps for the quarter.
According to the company, DAVE & BUSTER'S INC., operator of a chain of 33 casual-dining and entertainment units, more than doubled its net income for the fourth quarter ended Feb. 1, on a slight increase in revenue despite declining same-store sales. The company reported a net income of $7 million, or 46 cents per diluted share, versus $3.2 million, or 24 cents a share, in the year-ago quarter. For the fiscal year net income reached $11 million, or 80 cents per diluted share, versus a loss $1.7 million, or 13 cents a share, the year earlier. An accounting change during fiscal 2002 resulted in a $7.1 million charge for goodwill and other intangible assets that year said Dave & Buster's. Excluding those charges, the company said it would have reported a profit of $5.3 million.
A 15.2% increase in revenue for the quarter was reported by LONESTAR partly due to the impact from the recent Texas Land & Cattle acquisition. Comps rose 5.6% for Lone Star, 12.2% for Sullivan's, 27.4% for Del Frisco's and 12.8% for Texas Land & Cattle for the quarter.
CHICAGO PIZZA & BREWERY announced that sales were up 21.8% for the quarter, driven by 7.7% comps at BJ's.
TOTAL ENTERTAINMENT increased revenue by 25.5% and net income by 18.0%. For the quarter, comps were up 1.8% and new units continued to generate sales 33% above the system average.
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KIMPTON HOTELS announced the Grand Opening of its latest gem - The ONYX HOTEL in downtown Boston. To celebrate they offered a special rate for a limited time of only $149. The luxurious and new hip Onyx Hotel has all you could ever wish for in a hotel. They offer complimentary high-speed Internet access and WiFi capabilities in richly decorated rooms, or guests can relax at an evening Wine Reception. Room Service and the Fitness Center are available 24 hours a day.
Even if you are on a low-carbohydrate diet, dessert lovers across American can have their cake and eat it, too. Since 2000, LOEWS HOTELS has offered low-carb and no-carb desserts at its 20 units in the United States and Canada. Its no-carb champagne panna cotta is made with powdered gelatin, cold water, champagne, heavy cream, sugar substitute and vanilla. Pastry chefs and entrepreneurs nationwide are busy rolling out low-carb versions of everything from ice cream to cheesecake to after-dinner drinks, tapping into the low-carb explosion.
According to a regulatory filing, HILTON HOTELS CORP. paid its top executive a $2 million bonus for 2003; double his bonus from the previous year. According to the board's compensation-committee report, President and Chief Executive Officer, STEPHEN F. BOLLENBACH was awarded the maximum bonus available to him under his employment agreement. Hilton Hotels, Beverly Hills, Calif., runs more than 2,000 hotels under its namesake brand and others, including Hampton Inn and Embassy Suites.
Chief Executive BARRY S. STERNLICHT was paid $5.3 million in total compensation for 2003, including restricted stock valued at $1.5 million and a bonus of $2.7 million, some of which was deferred or used to buy options by STARWOOD HOTELS & RESORTS WORLDWIDE INC. Mr. Sternlicht plans to step down from his post as soon as a successor is found.
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