LTOs, pizza sales and technology made news on restaurant earnings calls this week. And in a development that should surprise no one, Fat Brands is eyeing more acquisitions as asking prices come down.
Fat Brands sees some buying opportunities
Restaurant chain collector Fat Brands might start shopping again. CEO Andy Wiederhorn told investors in the owner of Johnny Rockets and Fatburger that more acquisition opportunities could come available as sellers’ asking prices start to come down.
He specifically said the company is targeting salad, sandwich or coffee brands. “We continue to look for brands with a proven track record of long-term sustainable and profitable operating performance,” Wiederhorn said this week, according to a transcript on the financial services site Sentieo. “We are seeing a number of opportunities in the current environment and expect to see more in the coming months as valuations continue to come down.”
The comments differ from those Wiederhorn made in January, when he suggested that valuations remain too high and that he would instead focus on smaller deals. Fat Brands went on a buying spree in 2020 and 2021, acquiring Johnny Rockets, Fazoli’s, Global Franchise Group and Twin Peaks, representing nearly $1 billion in deals. Fat Brands now operates 17 concepts.
Fat Brands generated $103.8 million in revenue in the fourth quarter and a net loss of $70.8 million, or $4.29 per share.
PFG’s indie business rises, but pizzerias take a slice out
Increased orders from independent restaurants lifted the profits of distributor Performance Food Group (PFG) during the second quarter ended Dec. 31, but sales were shaved by a slowdown in purchases from chain pizza restaurants, according to company executives.
Sales to independents are more profitable than transactions with chain restaurants because the former don’t enjoy as much of a volume discount.
CEO George Holm attributed the drop-off in sales to pizzerias to “pizza fatigue,” or customers ordering other types of foods after gorging on pizza during the pandemic.
Overall, the distribution company posted a net profit of $71.1 million, a leap of 746%, on revenues of $13.9 billion, up 8.2%.
Homegrown tech helps Ruth’s Chris cut costs
The steakhouse chain developed a system that predicts demand and tied it into its labor management system to help with scheduling. The result: a 10% improvement in hours per entree, or 200 basis points of labor.
This came even as the chain raised wages and added more managers to its restaurants.
And the chain expects the system to have other cost benefits as well. “I think our opportunities are much more in the cost of goods line and food and beverage line than they are in the labor line,” said COO Kristy Chipman.
Ruth's same-store sales rose 4.5% in the fourth quarter, or 5.5% compared to 2019.
US Foods’ profits climb after renegotiating vendors’ prices
The distributor hit its stretch goal for 2022 of renegotiating prices with vendors who receive 40% of US Foods’ purchasing dollars, buoying the company’s net income for the year to $265 million, a jump of 61.6%, the company told investors.
Executives said they expect to continue the renegotiations this year with suppliers who receive 20% of the company’s purchases.
Sales for the year topped $31 billion, a rise of 15.5%.
For the fourth quarter, the company generated a net income of $93 million, for a year-over-year increase of 34.8%, on revenues of $8.51 billion, up 11.5%
Chuy’s first-ever LTOs are a hit
Chuy’s has hit on a new traffic driver: limited-time offers. The Tex-Mex chain in October launched the first edition of its Chuy’s Knockouts menu, which drove incremental traffic and accounted for 2.5% of all orders during the six weeks it was offered.
“Importantly, we did not see consumer demand trail off in the latter weeks of the CKO period as you do with many limited-time offers,” said CEO Steve Hislop. He did not detail what was on the special menu.
However, Chuy’s traffic overall was down 2.7% for the quarter ended Dec. 25. Same-store sales rose 3.4%, mostly from higher prices.
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