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Carrols to acquire 221 Burger King, Popeyes units

Feb 20, 2019

Carrols Restaurant Group Inc., already the largest U.S. Burger King franchisee, has agreed to buy 166 more Burger King units and 55 Popeyes Louisiana Kitchen restaurants in a $238 million merger deal with Cambridge Franchise Holdings LLC, the companies said Wednesday.

Syracuse, N.Y.-based Carrols’s proposed deal with Cambridge of Memphis, Tenn., would bring its total restaurants to about 1,070. The targeted Burger King and Popeyes units are in 10 Southeastern and Southern states. 

Carrols Restaurant Group Inc., already the largest U.S. Burger King franchisee, has agreed to buy 166 more Burger King units and 55 Popeyes Louisiana Kitchen restaurants in a $238 million merger deal with Cambridge Franchise Holdings LLC, the companies said Wednesday.

Syracuse, N.Y.-based Carrols’s proposed deal with Cambridge of Memphis, Tenn., would bring its total restaurants to about 1,070. The targeted Burger King and Popeyes units are in 10 Southeastern and Southern states.

Related: Burger King’s owner buys Popeyes for $1.8B

“This is a transformational transaction for our company,” said Dan Accordino, Carrols’ chairman and CEO, in a statement. “It further strengthens our position in the Burger King system and provides us the opportunity to continue executing our Burger King acquisition and expansion strategy.”

Accordino said the deal would expand Carrols’ restaurant platforms with the addition of the Popeyes concept. Burger King owner Restaurant Brands International Inc. of Oakville, Ontario, bought the Popeyes brand in 2017. 

Carrols Restaurant Group Inc., already the largest U.S. Burger King franchisee, has agreed to buy 166 more Burger King units and 55 Popeyes Louisiana Kitchen restaurants in a $238 million merger deal with Cambridge Franchise Holdings LLC, the companies said Wednesday.

Syracuse, N.Y.-based Carrols’s proposed deal with Cambridge of Memphis, Tenn., would bring its total restaurants to about 1,070. The targeted Burger King and Popeyes units are in 10 Southeastern and Southern states.

Related: Burger King’s owner buys Popeyes for $1.8B

“This is a transformational transaction for our company,” said Dan Accordino, Carrols’ chairman and CEO, in a statement. “It further strengthens our position in the Burger King system and provides us the opportunity to continue executing our Burger King acquisition and expansion strategy.”

“All shares issued to Cambridge are subject to a two-year restriction on sale or transfer subject to certain limited exceptions,” Carrols said. “As part of the transaction, Cambridge will have the right to designate up to two director nominees and Perelman and Sloane will join the Carrols board of directors upon completion of the merger.”

Carrols said that when the transaction closes it expects to refinance about $100 million in debt it will assume from Cambridge along with Carrols existing debt into a new senior secured credit facility.

Under Carrols’ existing agreement with Burger King’s parent, it is pre-approved for expansion and holds first right of refusal for development in 20 states until it reaches 1,000 restaurants. In conjunction with the merger, Carrols has entered into a new area development and remodeling agreement with Burger King that will become effective when the Cambridge transaction closes.

As part of the deal, Carrols has also agreed to develop 200 new Burger King restaurants over the next six years and to remodel or upgrade some restaurants to the “Burger King of Tomorrow” image.

Perelman of Garnett Station said: “Carrols has an incredible track record of operating Burger King restaurants over more than four decades. We are excited to partner with the Carrols management team and look forward to adding value to the combined company as engaged board members focused on effective capital allocation and continued growth.”

The agreement calls for the successor public company to be named Carrols Restaurant Group Inc., and its shares, registered on Nasdaq, would trade under Carrols’ existing symbol “TAST.”

Along with the merger announcement, Carrols released preliminary 2018 financial results, saying same-store sales in the fourth quarter ended Dec. 30 increased 2.7 percent compared to 8.9 percent in the prior-year period.

As of Dec. 30, Carrols operated 849 Burger King restaurants. It has operated Burger King units since 1976.

McDonald’s drops Uber Eats sole partnership with new DoorDash deal

Our intent is to clearly expand with DoorDash,’ brand leader says

JULY 16TH 2019

McDonald’s Corp.’s exclusive partnership with Uber Eats is over as the chain announced plans Tuesday to add a second third-party delivery operator, DoorDash, to its McDelivery program.

The Chicago-based chain, which launched nationwide delivery with Uber Eats in 2017, said it will begin testing DoorDash delivery at 200 Houston-area restaurants in late July. Uber Eats, which serves about 9,100 McDonald’s restaurants, will remain a partner in the Texas region and across the U.S.

McDonald’s said the move to add an additional third-party delivery provider was made to expand the chain’s reach. DoorDash provides delivery in all 50 states. 

“Our intent is to clearly expand with DoorDash beyond Houston for sure,” Bill Garrett, senior vice president of operations, told Nation’s Restaurant News in a phone interview.

In May, DoorDash logged a 189% year-over-year jump in sales, compared to 32% at Uber Eats and 6% at Grubhub, according to Second Measure, a firm that analyzes U.S. consumer spending. DoorDash says it reaches 80% of Americans nationwide.

Garrett said adding DoorDash is not a reflection on Uber Eats’ performance in Houston or in the U.S.

 “This is about the customers. We want to be where the customers are,” he said.  When McDonald’s was renegotiating its Uber Eats delivery contract earlier this year, reports surfaced that the chain was demanding lower commission fees and looking to get out of its exclusive partnership. Franchisees have also asked to add new delivery partners. McDonald’s has since renewed its contract with Uber Eats, where delivery times hover well under 30 minutes, Garrett said. He declined to discuss terms of contracts with suppliers, only stating that the brand plans to keep working with Uber Eats.  

“We are really happy with our partnership with the folks at Uber,” he said.

McDonald’s working with DoorDash comes as the race for dominance in the delivery space heats up among the top four players: DoorDash, Uber Eats, Grubhub and Postmates. Each is experiencing a rollercoaster year. The initial public offering this spring of Uber Eats parent Uber was considered a flop by Wall Street. DoorDash emerged in May as the market-share leader, edging out Grubhub for the first time. In recent weeks, New York City officials and restaurants have waged a battle with Chicago-based Grubhub, questioning the company’s pricing tactics. Last week, Recode, citing unnamed sources, said Postmates – which previously filed its intent to go public -- was exploring a sale to Uber or DoorDash. Second Measure said DoorDash is currently the clear leader in sales growth rates.

“No other meal-delivery service comes close,” Second Measure said. “In May, sales for the industry as a whole rose 52% year-over-year, as more Americans realize how much they like eating restaurant meals at home.”

 McDonald’s test in Houston begins July 29.  Like Uber Eats, DoorDash will be directly integrated with each restaurant’s point-of-sale system. Integration is the desired next step for brands because it increases speed and order accuracy. Taco Bell, Chipotle Mexican Grill and Del Taco have POS integration with their delivery partners.

McDonald’s will be a part of DashPass, a DoorDash subscription service where members get delivery fees waived on orders of $12 or more.

“Our leading U.S. market share and best-in-class operations paired with McDonald’s scale makes this an attractive, win-win partnership,” said Christopher Payne, chief operating officer at DoorDash, in a statement.

Once the DoorDash pilot phase is under way, Garrett said the company will “get some learning” done before rolling out to more cities. The brand wants to ensure that a second delivery partner won’t “add additional complexity to teams.”

“If it is smooth, we expect to move quickly,” Garrett said of the DoorDash expansion. 

McDonald’s has about 14,000 restaurants in the U.S.  

David Chang's fried chicken restaurant Fuku set to open in Seaport

October 23-2918 Prepare your taste buds — well-known chef David Chang's fried chicken restaurant opens in Boston's Seaport on Saturday.

Fuku, a fast-casual restaurant serving up spicy fried chicken, sandwiches and fried squash rings, opens at 11 a.m. on Oct. 20. The Northern Avenue spot is Chang's first Fuku standalone location outside of New York City. (There are also small Fuku outposts at various sports stadiums and venues throughout the country. 

Fuku features an array of chicken dishes, including five-spice wings and fried chicken sandwiches. Restaurant-goers can also pick up bacon and cheese-loaded french fries and blood orange slushies.

For this location, Fuku added a special sandwich called the BOS featuring spicy fried chicken, squash rings and a ranch drizzle. 

"We wanted to create something unique and Boston specific," chef Stephanie Abrams said of the BOS sandwich. "We did a pop up last month with Boston favorite Little Donkey, and some of the ingredients that they were working with in their kitchen, we were also already playing around with ourselves, including ranch, hot sauce and squash. I thought the combination would be the perfect nod to Boston, and something special to celebrate."

A sampling platter called the B.F.C. will also be available exclusively for Boston customers. First-day diners can purchase the spicy fried chicken sandwich with a habanero chicken thigh, pickle and butter on a potato roll for $5. 

Chang is best known for his New York restaurant Momofuku and has discussed his cuisine and culinary preferences on television shows like "Top Chef," "The Mind of A Chef" and his Netflix series, "Ugly Delicious." Altogether, Chang's restaurant group includes more than a dozen businesses.

Representatives for Chang said he chose the Seaport location because of its ongoing growth and proximity to other casual dining restaurants and Boston's Financial District. Fuku's two other standalone sites are located in New York's Financial District.

Fuku opens at 11 a.m. on Oct. 20, and will be open seven days a week from 11 a.m. to 9 p.m.

Why Hattie B’s Hot Chicken is One to Watch

October 19th 20018 - For a brand that started just six years ago, Hattie B’s Hot Chicken has emerged as an icon in Nashville—a status that is quickly spreading throughout the South. With six locations to its name and more in the pipeline—including a Las Vegas outpost—father-son team Nick Bishop Sr. and Jr. are ready for whatever opportunities come their way.

Hattie B’s didn’t invent hot chicken—that’s been a Nashville specialty at restaurants like Prince’s Hot Chicken Shack for nearly a century—but the brand did concoct its own recipe and has ultimately helped serve the dish to the masses.

After 30 years in the restaurant industry working in different capacities with Morrison’s Restaurants Inc.—the owner of Ruby Tuesday for a time and parent company of Morrison’s Cafeteria—Bishop Sr. opened his own cafeteria-style concept in Franklin, Tennessee. In 2007, the single-unit, 40-seat Bishop’s Meat & Three began serving up Southern-style plates with hearty meats. Once his son joined the family business, Bishop started thinking about his next venture. “I wanted to test the waters with something else,” he says.

Hot chicken was that something else. The Bishops started working with their own spice blends to develop a hot chicken recipe for the line at Bishop’s Meat & Three. The chicken quickly dominated sales, reaching 35 percent in just a few short months. All the while, Bishop was perfecting the recipe and soliciting feedback from patrons on the mild and hot versions.

McDonald's Quietly Removes Happy Meals from Value Menu

October 22nd 2018 - McDonald's Quietly Removes Happy Meals from Value Menu. On the value menu, which McDonald’s debuted earlier this year, Happy Meals were discounted around 25 percent from the original price, meaning families could get a Happy Meal for only $3. It also marked the first time Happy Meals were included on a nationwide value menu. McDonald’s confirmed to Food & Wine that Happy Meals were no longer a part of the offer nationwide. However, as with all of its promotions, participation may vary among different locations.

“The $1 $2 $3 Dollar Menu was created to bring our customers better value with the intent to flexibly rotate menu items on and off over time,” a spokesperson told Food & Wine in an email. “Some markets may even offer slight variations to the menu that best fit the preferences of their local customers. While the Happy Meal is no longer part of the nationally advertised $1 $2 $3 Dollar Menu, it is still available for $3 at some U.S. restaurants.”

Brand Eating found McDonald’s in the Los Angeles area are offering a Hamburger Happy Meal for $3.99, and a 4-piece Chicken Nugget will set you back $4.59. The average value drop while the Happy Meals were on the value menu was about 25 percent. Because the pricing of menu items varies across the country, in less expensive markets it’s not entirely impossible to get a $3 Happy Meal. Food & Wine reported a McDonald’s in St. Louis still offers a Happy Meal for $3.

Even though the Value Menu is performing the way McDonald's hoped it would since its reintroduction, McDonald's is still experimenting with the menu items and promotions included at the $1, $2, and $3 price point. Eliminating the Happy Meal from the Value Menu might be another experiment for the fast-food chain. 

"We know that we need to be more aggressive to compete effectively,” said Kevin Ozan, chief financial officer. “While our $1 $2 $3 Dollar Menu is driving incremental sales and guest counts with our budget-basic value customers, we need to do more to attract other customer groups.”

Back in June, McDonald's revised the Happy Meal offerings allowing customers to choose from only the following entrée choices: Hamburger, 4-piece, and 6-piece Chicken McNuggets. Guests can still special order cheeseburgers if they want; it just won’t be on the board. These changes came as McDonald's strived to meet a goal of cutting Happy Meals to be no more than 600 calories.

Schnatter Wants Papa John's to Ditch 'Wolfpack' Provision

  • The founder and former CEO asks the company to amend its "poison pill" provision.

October 20th 2008 - Papa John’s founder John Schnatter wants to can the poison pill. He’s also been contacted by “several third parties” in regards to a possible strategic transaction or investment in the 5,000-plus unit pizza chain, according to a Securities and Exchange Commission filing released Monday morning.  

In the filing, a letter from Schnatter to Papa John’s board of directors, dated October 18, asks the company’s fellow directors to respond by the close of business on October 23. If they do not, Schnatter said he reserves “all rights to take any action to ensure the company permits the shareholders to exercise their rights.” At the heart of his complaint was the desire to “promptly amend the Poison Pill or otherwise render inapplicable the ‘Acting in Concert’ provisions of the Poison Pill.” In July, Papa John’s board of directors enacted a stockholders rights plan that was seen by some as a veiled attempt to block an acquisition by Schnatter. The so-called poison pill lays out conditions that will dilute the value of Papa John’s stocks should any party attempt to acquire 15 percent or more of common shares. Such an action would open the door for shareholders to purchase additional stocks at a discount, thus decreasing each individual share’s value. 

A Papa John's spokesman shared the following statement via email with QSR, saying the plan prevents any potential investor or investors from taking control of the company without paying an appropriate premium:

"The independent directors of the Papa John’s Board continue to believe the Rights Plan is in the best interests of the company and all Papa John’s stockholders," the statement said. "As detailed when it was adopted, the Rights Plan does not prevent the Board from considering any offer that it considers to be in the best interest of Papa John’s stockholders. The plan also reduces the likelihood that any person or group gains control of Papa John’s without paying an appropriate control premium to all of the Company’s stockholders.”

Schnatter and his affiliates, according to the filing, own about 30.9 percent of the shares in the namesake brand and are therefore grandfathered into the stockholder rights plan. If Schnatter’s shares bump up to 31 percent or greater, he forfeits that exemption.

“As you know, no Delaware court ever has found that this type of ‘wolfpack’ provision in a poison pill is consistent with Delaware law. In fact, this provision goes far beyond Delaware law by unreasonably curtailing the rights and legitimate interests of shareholders,” Schnatter wrote. “Among other things, it precludes shareholders from holding any substantive discussions about the company because of the threat of crippling dilution of their ownership interest in the company.”

Bankrupt Bertucci's to be acquired by Planet Hollywood owner for $20M

June 16th 2018 Northborough-based Bertucci’s will be acquired by the corporate parent of Planet Hollywood for around $20 million, according to legal filings in the restaurant chain's bankruptcy case. Bertucci's, which filed for Chapter 11 bankruptcy last month amid $119 million in debt, is expected to be acquired by Earl Enterprises. The Orlando-based firm owns Planet Hollywood, Buca di Beppo, and Earl of Sandwich, among other brands. The deal disclosed on Tuesday includes $13 million in debt, $4 million in credit and $3 million in cash, according to an asset purchase agreement that was filed in federal court in Delaware.

Bertucci's, known for its brick-oven pizzas and appetizer rolls, has struggled for years to compete against fast-casual restaurants that offer customers quicker service at an often cheaper price. When the sit-down chain announced the bankruptcy filing, it also disclosed plans to close 15 locations immediately. An affiliate of Chicago-based Right Lane Capital initially had agreed to acquire Bertucci’s in a deal worth up to about $20 million, but Tuesday's court filings show that a new buyer emerged in Earl Enterprises, through an entity called PHL Holdings that is affiliated with Planet Hollywood. Bertucci’s was previously owned by an affiliate of Levine Leichtman Capital Partners, a Los Angeles-based private equity firm. In a statement announcing the deal, Bertucci's CEO Brian Wright called it "a great day" for the company. "Through the restructuring process, Bertucci’s Holdings clearly saw our vision and wants to build upon the foundation our team has worked so hard to establish,” he said, referring to the company's new name following the bankruptcy case. The purchase was first reported by the Boston Globe.

From Coffee House to President?

June 6 2018

Donald Trump proved that a lifelong businessperson can become president. Howard Schultz may now attempt to show that a Democrat can do it, just as a Republican can.

On June 4, Schultz stepped down as chairman of Starbucks, the company he built and ran for 31 years. Schultz is a politically active Democrat who supported Hillary Clinton’s 2016 presidential campaign, and almost immediately upon resigning, he began to sound like a politician himself. Schultz told the New York Times his future “could include public service.” He went on CNBC to proclaim himself “living proof … of the American Dream.” And he bashed President Trump’s policies on immigration and tax cuts, a possible preview of the 2020 presidential campaign if Trump runs for reelection and Schultz emerges as a challenger. Would he have a chance? Could the former CEO of a pricey coffee chain win over heartland voters? “He’s clean. He’s serious. He believes in America,” says Harvard Business School historian Nancy Koehn, who has studied Starbucks’s business model and co-authored a Harvard case study on Schultz’s leadership at the company. “He understands how to speak in a voice that a lot of people can relate to. Is that the same thing as being able to galvanize people to his vision?

 

That’s a much more open question.” If Schultz runs, here are some of the credentials voters are likely to hear about: Blue-collar upbringing. Schultz grew up in public-housing projects in Brooklyn, New York, with a father he described in his biography “Onward” as “an uneducated war veteran [who] never really found his spot in the world, [and] held a series of really rough blue-collar jobs to support our family.” Schultz put himself through college and went to work for Starbucks, then a small Seattle coffee chain, as head of marketing in 1982.

Business innovator. Schultz bought the small Starbucks chain with some other investors in 1987, well before coffee culture was a thing in the United States. One key insight was his desire to turn an otherwise dull counter operation into a community portal where people would linger and socialize, as he had noticed people do in Italian coffee shops in the 1980s.

Genius for marketing. Schultz describes himself as an entrepreneur fascinated by the “magic of the merchant’s art,” as Koehn and colleagues write in their Harvard case study of Starbucks. Schultz made baristas the performers in his stores and encouraged employees to connect with customers. As Starbucks CEO, he insisted the company couldn’t just sell coffee; it needed a compelling narrative that would draw people in and keep them coming back (and persuade them to spend $5 for a cup of coffee). It worked: Schultz built Starbucks from a local chain with 11 outlets into a global giant with more than 28,000 stores in 77 countries, 300,000 employees, nearly $25 billion in revenue and $3.5 billion in profits. Familiarity with health policy. Unlike many companies, Starbucks offers health coverage to both full- and part-time workers, “at a considerable cost to the company,” Schultz acknowledges in his book. Schultz is motivated by recollections of his father, who got hurt on the job in 1960, without health insurance, and was simply fired. “Everyone deserved more respect than my parents received,” he wrote. Knowledge of the global economy. Starbucks earns 21% of its revenue in foreign markets, with more than 1,500 stores in China, 1,200 in Japan and 1,000 in Canada. Those nations have been direct targets of new trade barriers under the Trump administration, making Starbucks a potential target of retaliation. Political ambition. Schultz has been one of the most politically active CEOs in the United States. In 2011, he persuaded more than 140 other CEOs to join him in penning an open letter urging Congress to end a budget standoff that threatened a default on US debt. In 2015, Schultz launched the controversial “Race Together” campaign meant to encourage more open discussion of racial-justice issues, which Starbucks suspended after a rash of criticism.

Schultz was a confidante of Clinton during her 2016 presidential campaign, and private advice he gave to the candidate leaked when hackers published hundreds of emails from the account of John Podesta, who was chairman of Clinton’s campaign. “The campaign feels ‘yesterday,’” Schultz wrote in one email to a top Clinton aide. “It’s too packaged and prescribed. … Her inner circle and the powers to be need to … understand how brands (and she is a brand) in the world we now live in are built. It requires a vision for the future that is steeped in truth and authenticity and builds an enduring emotional connection with the voters.” In another email, Schultz wrote to a Clinton aide, “We are seeing a seismic shift in consumer behavior and in the attitudes of the American people. We’ve seen it … in our core Starbucks business … and, it certainly is acutely present in this political presidential primary season.” How right he was. Now he must decide whether to do something about it.

Watertown Is Getting a Shake Shack

The burger chain will expand to the Arsenal Yards development

Oct 25th 2018 Watertown is officially getting a Shake Shack, as announced today by Boylston Properties and the Wilder Companies, the firms behind the Arsenal Yards development, where the burger chain will open. By 2020, Arsenal Yards is expected to span more than one million square feet and, in addition to the forthcoming Shake Shack, will include retail and office space as well as a hotel and apartments. City Works Eatery & Pour House, a small national chain of pubs, is also slated to open there.

This will be Shake Shack’s sixth location in Massachusetts. The chain crossed the 100-location threshold back in the summer of 2016 when it opened its Seaport District location, three years after making its Massachusetts debut in Chestnut Hill. It’s also open on Boston’s Newbury Street, in Cambridge’s Harvard Square, and at Legacy Place in Dedham.

Upon opening the Seaport location, Shake Shack founder Danny Meyer gushed about his love for the Boston dining scene.

“I’ve eaten in Chinatown and been very happy,” Meyer told Eater at the time. “I love Eastern Standard — it’s one of my favorite restaurants anywhere. What a great guy Garrett Harker is. I will tell you, he’s one of my inspirations in this entire industry. I love Barbara Lynch’s restaurants; Sportello is one of my favorites. And I just had a fantastic BLT this afternoon at Flour Bakery.”

All of that fondness made expanding his business to Boston a no-brainer.

“Shake Shack has always looked for cities outside of New York where we love to be,” said Meyer. “And cities that care about food. We don’t need another burger in any city. Every city we’ve ever met already has its fair share of burgers, so we want to go to a city that says, ‘Yes, but we don’t have Shake Shack.’ That’s what we were hearing from Boston.”

The Watertown location will feature all of the favorites from Shake Shack’s other locations — that classic burger, and those crinkle-cut fries, for example — and will also feature frozen custards made in conjunction with local businesses. A cut of the proceeds from the custards will go to local Watertown charities.

“We’re thrilled to bring Shake Shack to Arsenal Yards,” said Andrew McCaughan, vice president of development at Shake Shack, via press release. “East End Watertown is a unique, culturally rich community that holds tremendous potential for continued growth. We couldn’t be more excited to move into the neighborhood.”

Expect to see Shake Shack open in Watertown sometime in 2019.