Popeyes goes in a different direction
At a time when everyone else is trying to shrink their restaurants, Popeyes is opting for a larger format. New stores will typically feature 60 seats, instead of the 48 that were standard two years ago, president Ralph Bower told investors. “In some of our company markets, we're looking at building restaurants even larger than that,” Bower said. “And that's front-of-house. Back-of-house, we're adding fryers to keep up with the capacity and we're pretty excited about what we're seeing.” The larger footprint is needed to meet the chain’s heightened sales volume, he explained.
During the same conference call with analysts, executives noted that Popeyes’ Chicken Waffle Tenders were the concept’s most successful limited-time promotional offer since the onset of the Great Recession. The finger foods were marketed as a portable version of chicken and waffles. Popeyes’ same-store sales for the third quarter increased 5.1 percent year-over-year and 12.4 percent on a two-year basis, said Cheryl Bachelder, CEO of parent company AFC Enterprises.
Activists get more active
Rough second and third quarters were all the prompting activist shareholders needed to start pushing for dramatic changes in restaurant companies’ direction.
Bob Evans is feeling pressure from Swedish investment banker and REIT specialist Tom Sandell to sell and lease back the real estate under its restaurants, a financial tactic the chain has avoided since its inception.
At the recent Global Best Practices Conference in Dallas, Darden Restaurants President and COO Gene Lee began his keynote remarks by saying he wasn’t going to talk at all that day about his company. He knew the crowd was keenly curious about the demand from a major stakeholder to break the corporation in two. Lee rose to his new post after heading Darden’s specialty-restaurant groups, which shareholder Barrington Capital wants to be spun off as a business separate from Red Lobster and Olive Garden, the operator’s mature chains.
Meanwhile, avid market watchers are wondering what Sardar Biglari will do after losing his gambit to land seats on the board of Cracker Barrel, the family restaurant chain in which he holds a sizeable stake. Biglari, whose activism at Steak ‘n Shake ultimately led to taking control of the company, has been denied a seat three times by Cracker Barrel’s shareholders. His three-year effort to commander the company’s direction has failed thus far, but dumping his stock would do nothing but depress the value of his holding. What’s a takeover artist to do?
Big-cap companies aren’t the only ones drawing pointed suggestions from shareholders. During Cosi’s most recent quarterly call with financial analysts, an unidentified individual investor asked CEO Steven Edwards why he was traveling to visit stores when the company was losing money. “Two trips per month, fully expense, paid and so forth,” the investor was quoted as saying in a transcript provided by SeekingAlpha.com. “I mean why don't we just use Skype?”
Window into short memories?
Himalayan monks living in a cave have probably read by now that McDonald’s plans to add a third window to its drive-thru configuration as a way of cutting transaction times and improving service overall. What they (and apparently the rest of the world) have apparently forgotten is that McDonald’s had recently shifted its drive-thrus in another direction to achieve the same end. It was only about two years ago that Big Mac revealed its new “zipper” configuration, where patrons order at one of two stand-alone booths similar to what you see on a toll road. The lines then merge into a single pick-up line.
Derek Jeter know about this?
Papa John’s is now the official pizza of the New York Yankees, the home team of pizza’s global epicenter. Wait until New York pizza defender John Stewart finds out that a chain headquartered in Louisville, Ky., is the pie affiliated with the Bronx pin stripers.