Friday, August 27, 2010

Set your TiVos for this one

A dandy takeover skirmish has slipped past almost unnoticed, despite the eleventh-hour victory of a restaurant veteran whose last turn in the spotlight still has observers telling war stories. They paint Bill Foley as a wheeler-dealer with the guile of a car salesman and the won’t-take-no tenacity of an insurance peddler.

Indeed, insurance was how Foley made his first fortune. Then he used the money and a sixth sense for opportunity to become the controlling investor in the parent of Carl’s Jr.—after he was brought in to keep the brand from being wrested away from its iconic founder, Carl Karcher. Karcher kept his job as the brand’s front man but lost financial control to Foley. Yet by all outward appearances, Karcher appeared grateful, not resentful.

Now Foley’s American Blue Ribbon Holdings has emerged as the winning bidder for Max & Erma’s, the Midwestern string of bar-and-grills that slipped into bankruptcy late last year. Blue Ribbon and its investment partners aren’t expected to close on the roughly $28 million purchase until Tuesday, but Foley is already sketching out his plans for the casual chain.

“We’re not in there to do anything crazy,” he told Business First of Columbus, a newspaper serving Max & Erma’s hometown. But Foley indicated that up to 10 of the chain’s 77-or-so restaurants will be shut to stem the chain’s bleeding before it starts growing again.

It’s hardly standard for a restaurant buyer to announce closings before the staffs of the doomed restaurants have been given the bitter news. At the very least, the places usually know their plug will be pulled. Otherwise employees will worry their units are in the crosshairs.

He also disclosed that Max & Erma’s will likely start selling pies from his two other sizeable restaurant chains, Village Inn and Bakers Square.

Foley, an attorney by training, definitely follows his own playbook. Some questioned his reasoning when a company he controls bought Village and Bakers, two of the earliest casualties of the economic downturn. The family dining greybeards hadn’t exactly kicked up their heels for ages. Why would Foley bother to turn around two stalwarts of a segment that’s been shrinking for eons? No one else seemed to want it.

Max & Erma’s, on the other hand, could’ve been a rock star fending off groupies. Two other suitors had declared they’d bagged the brand before Blue Ribbon slipped in with the actual winning bid.

Among them was a consortium that included investors in the Red Mango and Furr’s chains.That shopper, Dallas-based Concept Development Partners, had been identified as the buyer of Max & Erma’s as early as mid-July. But its reported bid of $26.4 million was topped, apparently afterward and with no fanfare, by Foley’s group.

Max & Erma’s, then operating or holding the franchise rights to 107 stores, was sold for about $10.2 million to Pittsburgh restaurateur Gary Reinert in early 2008. It was under his tutelage that the company filed for bankruptcy.

Reinert generated recent headlines by asserting he and Cantor Fitzgerald, the New York financial giant, were teaming up to buy Max & Erma’s for $32 million. But Nation’s Restaurant News reported the offer was never actually tendered to the bankruptcy court.

Reinert had apparently opened his mouth but not his checkbook.

Tuesday, August 24, 2010

A marketplace ripple worth noting

When a concept creator says he’s launching a New Age deli concept to fill a void in the lunch market, you make a mental note to see if his read proves correct. After he points out that virtually no mainstream deli currently roasts its slicing meats on-premise, as virtually every one once did, you might even put “check back frequently” on the to-do list.

After all, isn’t the burger echo-boom merely a back-to-the-basics improvement on a common menu staple? Isn’t this in the same vein? Might this be a trend about to boom?

Then you hear the same sentiment voiced about two weeks later, by a second chef with concept-shaping experience. He notes that some of the restaurant rivals to arise during the Great Recession, like supermarkets, have an opportunity to out-class streetside places that lack the space, staff and time to roast meats onsite. Retailers, he notes, could be just a few ovens away from seizing an advantage that the current generation of delis, never mind fast-food sandwich outlets, would be hardpressed to counter.

Of course, both stressed that they’re in the early stages of fostering what might or might not prove a trend. What’s a trend-watching journalist to do in the meantime.

How about put it in a blog?

Wednesday, August 18, 2010

New York City, the new fast-food capital

Once upon a time, New York City set the fine-dining fashions for the rest of the country, if not much of the world. But someone swapped its toque for a baseball cap and replaced the starched linen napkins with paper disposables. Much of the city’s restaurant innovation these days is coming in fast food.

The city has been a hotbed of quick-service innovation, giving rise to such on-the-fringe concepts as Otarian, a health-oriented, all-natural start-up from an Australian billionaire. It may be the first grab-and-go operation in the country to provide the carbon footprint of each item offered.

A start-up in the same vein, 4Food, will begin serving all-natural doughnut-shaped burgers in September from a midtown location. The proprietor, who lists Bill Niman of natural-pork-supplier Niman Ranch as an investor, said the hole in the middle of the burger ring will be filled with mushroom, reducing a sandwich’s caloric content. Hence the signature’s name: The W(hole)burger.

Servers will use iPads to take orders, and customers can place their selections from their home computers and pick up the food. Patrons will be encouraged to invent new variations and tweet the names to friends. If those pals order the item, the inventor can amass points for rewards.

But those are only two in a torrent of new quick-service places sprouting in the Big Apple. As previously reported here, the city is the U.S. port of entry for a new pasta place, Nooi, as well as a European upstart with some American ties, called Hello Pasta!

But not all the innovation is coming in the form of new concepts. Burger King announced yesterday that it’ll try a new product called the NY Pizza Burger at its newest Manhattan outlet, a riff called the Whopper Bar. It’s apparently a bunch of Whoppers served together in the shape of a pizza, which is cut into slices for sharing.

This is pretty heady stuff for a city who’s earlier contributions to fast-food were largely limited to soup concepts, thanks to the Soup Nazi episode on “Seinfeld,” and the Cosi flatbread sandwich chain.

Of course we largely did relay to the world such quick-service staples as pizza, bagels, hot dogs and Chinese food. But how can those compare to a doughnut-shaped burger?

Friday, August 13, 2010

A change in asylum control?

Let it be recorded for posterity that British medical authorities officially lost their senses, to the likely amusement of restaurants, on Aug. 4, 2010.

That was the day a proposal was put forth in a scholarly medical journal to combat cardiovascular disease by changing the standard condiments of fast-food restaurants. If those places would stock free artery-opening statins alongside the complimentary packets of salt and ketchup, the article asserted, any ill effects of the food would be counterbalanced.

This smacked so much of a ruse that I tracked down an on-line abstract of the article, which is in the August 15 issue of The American Journal of Cardiology. A quick check of the journal’s website showed that it’s not an offshoot of The Onion, Mad magazine, or Ripley’s Believe It Or Not.

Here is exactly what the authors, each with a long string of degrees after his or her name, are proposing:
Routine accessibility of statins in establishments providing unhealthy food might be a rational modern means to offset the cardiovascular risk. Fast food outlets already offer free condiments to supplement meals. A free statin-containing accompaniment would offer cardiovascular benefits, opposite to the effects of equally available salt, sugar, and high-fat condiments
Statins are drugs that lower cholesterol. Here in the United States, they have to be prescribed by a physician. Across the pond, they may someday be included in Happy Meals.

If this is indeed a joke, stuff me and mount me on a wall, because I’m falling for it hook, line and sinker.

Tuesday, August 10, 2010

'Sorry about the pennies.'

If recent restaurant valuations aren’t a fluke, gas stations will soon be giving away a casual-dining place with each fill-up, 200-seat grills will be awarded for good report cards, and the keys to sandwich joints will be used as stocking stuffers—“Collect all 20.”

Those situations are more plausible than the prices restaurants have recently been fetching. Consider, for instance, that Applebee’s parent agreed last month to sell 63 restaurants to a franchisee for $32 million, or about $508,000 per establishment. Sales would cover that figure in a matter of months. And these units were in Minnesota and Wisconsin, not Detroit, Port-au-Prince or Siberia.

Still, those dollars sound sweet compared with the outlay for the 10 remaining outlets of the bankrupt Ham’s Restaurant chain. A local concern bought the Carolinas-based brand and the restaurants for $360,000—on a per-unit basis, about what a family would pay for a decent sedan.

In a buyer’s market like the current one, it shouldn’t be a surprise that Max & Erma’s was set to be sold for $24.8 million. It’s unclear how many units of the venerable Midwestern grill-and-bar chain are still in operation, but official reports pegged the tally at the end of last year at 68 company stores and 28 franchises.

Sure, the chain is bankrupt. But that price prompted the current owner to join forces with another financier to tender a bid of $32 million. The court overseeing the chain has yet to say publicly if that offer will bump the prior bid, or if there are complications.

Maybe it’s just waiting for someone to return some bottles and pose a sweeter offer.

Thursday, August 5, 2010

Absurd news roundup

Robbers, it seems, have lost their minds in the heat.

By now you’ve probably heard of the knucklehead who robbed a Wendy’s at gunpoint of $586, then called the restaurant to complain about the low take. Twice.

Each time, he advised the restaurant that it better have more cash in the till the next time he held it up.
But he’s not the only degenerate who’s giving criminals an even worse name.

A Florida man convinced a woman to join him for dinner at an Olive Garden. Meet me in the parking lot, he informed her.
The guy showed—with a gun. He robbed the woman of $90, then went inside the restaurant and ate alone.
Amazingly, he was unable to elude the police.

At least the restaurant industry isn’t alone in drawing bird-brained criminals. When a Dallas convenience store was robbed a few days ago, one of the culprits decided to climb onto the counter and dance for awhile—right in front of the camera.
She, too, proved less than a mastermind in outfoxing the police, though her two accomplices are still at large, no doubt watching, “Dancing with the Stars.”

I don’t mean to make light of such serious situations. The crews of those establishments were put in danger, and that’s hardly a funny matter. But there’s a strange comfort in knowing the desperados probably had the IQ of a quesadilla.

Wednesday, August 4, 2010

Denny's by the numbers, ouch and all

Results being what they are, many public restaurant companies try to turn the spotlight off their numbers when conferring with investors. Not Denny’s, despite the bitterness of the figures it shared during Tuesday’s conference call with Wall Street analysts.

Management noted, for instance, that fending off an attempt by dissident shareholders to seize control of the board cost the company $1.5 million.

Although the executives didn’t say as much, that unsuccessful raid precipitated the departure of longtime CEO Nelson Marchioli, leaving Denny’s with a $1.8-million “exit restructuring cost,” as CFO Mark Wolfinger put it. The number could climb appreciably. It includes an $800,000 payment to Marchioli, apparently as severance pay. But Wolfinger noted that Marchioli is contesting the amount. Arbitration could raise the exit payment to as much as $3.2 million, Wolfinger noted.

Call participants learned that Denny’s has already transformed 21 Flying J truck stop restaurants into Denny’s outlets, at a cost of roughly $565,000 per store. But those conversions will only contribute about $1 million to Denny’s coffers during fiscal 2010, executives revealed.

But not all the numbers were a splash of cold water. Acting CEO Debra Smithart-Oglesby disclosed that Denny’s is embarking on a refurbishment drive. The cost, she said, will be about $50,000 per store, “versus a full remodel of $250,000,” she said.

In tests, the facelift yielded another positive number, a 2-percent lift in guest counts, the former Chili’s exec noted.