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My colleague Joe Guszkowski wrote about Chili’s latest strong quarter, and the company’s plan to offer more performance-based incentives to its general managers.
And he also wrote about Ruby Tuesday, which was hit this month with a social media furor over the firing of a general manager on Christmas.
It’s worth pointing out that social media reactions can be well out of a company’s control—both for good or for ill—and any number of companies that make the wrong decision to the wrong person could end up in a similar boat.
But it’s also difficult to ignore the contrasting stories of two longtime competitors heading in two very different directions.
Chili’s is the It chain at the moment, a brand that is now in its third year of a wild sales run, a run fueled by a combination of operations improvements and marketing savvy.
It generates well over three times the average unit volumes of Ruby Tuesday, which has steadily closed stores over the past 15 years, has a bankruptcy in its history, and is now facing the wrath of the social media mob.
This week’s financial news
Fat Brands filed for bankruptcy. As it turns out, it was virtually inevitable from the day the company bought all those restaurant chains at high valuations with heavy and costly debt and with an overly-lender-friendly structure.
Starbucks reported its first real positive same-store sales number in two years, mostly from higher transactions. Why the company’s focus on dine-in service helped all its service modes. Brian Niccol earning that pay package.
Oh, and the chain is taking a big page out of airlines’ playbook with its latest loyalty program.
A lot of Subway franchisees think that the chain’s loyalty program is too generous.
Blackstone is not messing around.
Do not overlook this story on McDonald’s franchisees passing a “bill of rights.”
Number of the week
Chili’s two-year same-store sales are accelerating and hit 40% last quarter, which is all kinds of ridiculous.
Quote of the week
“The management fees do not cover the operating costs in ordinary business conditions. And, in recent years, industry conditions have been anything but ordinary due to inflation and persistent economic uncertainty.” -John DiDonato, chief restructuring officer for Fat Brands, on the company’s securitization structure.
On the blog
I wrote about Andy Wiederhorn, Starbucks and Chili’s. Check out all my blog posts on The Bottom Line.
On the podcasts
On A Deeper Dive I spoke with real estate attorney Stephen Cohen on the potential impact of the Saks Global bankruptcy. On The Week in Restaurants we talked Chili’s, Starbucks and, you guessed it, Fat Brands.
For questions, comments or story ideas, send me an email at jonathan.maze@informa.com. And follow me on Twitter at @jonathanmaze. And also LinkedIn. And TikTok.