Yet another fine dining establishment is struggling

[samhexum]

Beloved restaurant chain files for bankruptcy protection as struggles continue

Restaurant chain TGI Fridays filed for bankruptcy protection Saturday, saying it is looking for ways to “ensure the long-term viability” of the casual dining brand after closing many of its branches this year.

[+ DynamicUno]

Once again, a chain is decimated by private equity.  The usual MO is to saddle the company with the debt from their acquisition, high management fees, and strip the company of assets like real estate to pay the equity firm. The company is left vulnerable to higher interest rates, increasing rents, and unfavorable contracts imposed by the owners.  They'll use the bankruptcy to offload the chain to another buyer and stiff the lenders holding the debts 

[+ PhileasFogg]

“Fine Dining”

🤔

[+ PhileasFogg]

3 hours ago, DynamicUno said:

Once again, a chain is decimated by private equity.  The usual MO is to saddle the company with the debt from their acquisition, high management fees, and strip the company of assets like real estate to pay the equity firm. The company is left vulnerable to higher interest rates, increasing rents, and unfavorable contracts imposed by the owners.  They'll use the bankruptcy to offload the chain to another buyer and stiff the lenders holding the debts 

Wait…huh?   Private equity isn’t the problem, debt is. The debt was used to buyout the owners and give them back value on their investment.  The lenders can take care of themselves.   I should know, I used to be one.  It one of many in a bucket of high yield loans.  Some win, some lose, in aggregate it’s still profitable activity.  I’ve not followed this one closely, but I did know one of the lead investors.   I think there’s a number of contributing factors.     

1) high leverage taken on before the pandemic

2) the death of a meaningful shareholder a couple years ago (Michael Price) may have contributed to a change in shareholder bias

3) there was never a lot of fixed assets as you suggest.  Five years ago, the company had no tangible assets and a $h!t ton of debt.   No restaurant should be in the business of owning real estate.  They should be users of assets, not managers of them. Their revenue cycle is short and their asset mix should conform accordingly.  

[+ FrankR]

8 hours ago, PhileasFogg said:

Wait…huh?   Private equity isn’t the problem, debt is. The debt was used to buyout the owners and give them back value on their investment.  The lenders can take care of themselves.   I should know, I used to be one.  It one of many in a bucket of high yield loans.  Some win, some lose, in aggregate it’s still profitable activity.  I’ve not followed this one closely, but I did know one of the lead investors.   I think there’s a number of contributing factors.     

1) high leverage taken on before the pandemic

2) the death of a meaningful shareholder a couple years ago (Michael Price) may have contributed to a change in shareholder bias

3) there was never a lot of fixed assets as you suggest.  Five years ago, the company had no tangible assets and a $h!t ton of debt.   No restaurant should be in the business of owning real estate.  They should be users of assets, not managers of them. Their revenue cycle is short and their asset mix should conform accordingly.  

Really? You should read McDonald’s 10-K. In 2023, 38% of company income was from real estate holdings.  Private equity is the common cause of a great many business failures, be is restaurants or hospitals. 

[+ PhileasFogg]

1 hour ago, FrankR said:

Really? You should read McDonald’s 10-K. In 2023, 38% of company income was from real estate holdings.  Private equity is the common cause of a great many business failures, be is restaurants or hospitals. 

McDonald’s corporate is a franchisor.  Corporate owns the real estate (often just land) and leases it to a franchisee who owns the operating assets.  This is another means of controlling the franchisee.  McDonald’s is a different beast and one can’t compare a QSR to an FSR  

So you think Private Equity is one of the great evils?   Who’s the victim?  While a business is treated like a person under law, it’s not a living breathing creature. 

Edited to add:   Sorry, I'm veering into the Money and Investing realm.   But, I'd do draw exception with characterizing any "chain" restaurant as "fine dining"😕

Edited November 3, 2024 by PhileasFogg

[samhexum]

3 hours ago, PhileasFogg said:

Sorry, I'm veering into the Money and Investing realm.   But, I'd do draw exception with characterizing any "chain" restaurant as "fine dining"😕

You've obviously never eaten at Applebees.

Edited November 3, 2024 by samhexum
just for the hell of it

[+ PhileasFogg]

17 minutes ago, samhexum said:

You've obviously never eaten at Applebees.

[+ PhileasFogg]

Just now, PhileasFogg said:

17 minutes ago, samhexum said:

You've obviously never eaten at Applebees.

You already know me soooo well 😂

[KrisParr]

 

 

A number of years ago, I traveled on business to a midwestern city of about 40K people, and home of a large university. I wanted to take my client out to dinner so I asked around for the names of a few “fine dining” recommendations. The unanimous response? Applebees.  The restaurant indeed was new, and my client was pleased. My first and last time.

[Ali Gator]

I would never call TGIFriday's 'fine dining' - but, to each his own.

The TGIFridays in my area (RI and southeastern MA) have been abruptly closing their restaurants over the past few months. I've read the one in Times Square has also shuttered without warning.

On another note, in my area, Pizzeria Uno is starting to close down locations. Their official excuse is they never 'bounced back' from the Pandemic four years ago, so they are shutting down underperforming locations as leases come up. 

[+ jeezopete]

14 hours ago, PhileasFogg said:

Sorry, I'm veering into the Money and Investing realm.   But, I'd do draw exception with characterizing any "chain" restaurant as "fine dining"😕

 

11 hours ago, samhexum said:

You've obviously never eaten at Applebees.

 

 

 

[+ PhileasFogg]

17 minutes ago, jeezopete said:

 

 

 

 

God Bless America!

[Ali Gator]

If Walker Hayes asked me to go on a date with him to Applebee's, I wouldn't refuse. But since that won't ever happen , I won't be going to Applebee's any time soon. 

[viewing ownly]

My sanity regarding eating establishments can hold steady until the day McDonald's serves onion rings. 

My last TGI Fridays experience was my last comped meal, several years ago. My server quit her job after taking my party's order but before submitting it, so we were sitting for what felt like HOURS - because it was. I'd never been so angry but felt so lucky (langry?) at the same time. 

[+ ApexNomad]

6 minutes ago, viewing ownly said:

My sanity regarding eating establishments can hold steady until the day McDonald's serves onion rings. 

My last TGI Fridays experience was my last comped meal, several years ago. My server quit her job after taking my party's order but before submitting it, so we were sitting for what felt like HOURS - because it was. I'd never been so angry but felt so lucky (langry?) at the same time. 

Or until McDonald’s stops serving E. coli?

[samhexum]

7 minutes ago, ApexNomad said:

Or until McDonald’s stops serving E. coli?

For years, every time I've seen a commercial for Ricola, in my head I substitute "E-coli!"  for  "Ri-cola!"

[+ PhileasFogg]

5 hours ago, ApexNomad said:

Or until McDonald’s stops serving E. coli?

I didn’t know E. coli survived the salt

[jeezifonly]

MTV killed the radio star.

Grindr killed gay bars.

Tinder killed straight  happy-hour meat racks.

Or… the cost of refurbishing stores out of the 1980’s into the 21stC has been too much. 

[Ali Gator]

In more devastating news for those who define this as 'fine dining',  WENDY'S has announced it is shuttering 140 stores nationwide by the end of this year.  These are 'under-performing stores' which have not bounced back from 2020. They have not identified* the locations as of this week.

 

*Probably because these restaurants close them at the end of a day, when the Regional Manager unexpectedly shows up right before closing and lets the restaurant manager know everyone is out of a job as of the following day. They don't announce the closing in advance, in fear of the staff and management will not show up for future shifts. 

[Lotus-eater]

5 hours ago, Ali Gator said:

In more devastating news for those who define this as 'fine dining',  WENDY'S has announced it is shuttering 140 stores nationwide by the end of this year.  These are 'under-performing stores' which have not bounced back from 2020. They have not identified* the locations as of this week.

Wendy's has about 6,000 stores in the U.S., and claims to be opening more stores to offset the closures.

[samhexum]

5 hours ago, Ali Gator said:

In more devastating news for those who define this as 'fine dining',  WENDY'S has announced it is shuttering 140 stores nationwide by the end of this year. 

But they are going to open an equal number of new locations so overall levels of fine dining availability won't change, thank Michellin.

[samhexum]

3 minutes ago, Lotus-eater said:

Wendy's has about 6,000 stores in the U.S., and claims to be opening more stores to offset the closures.

 

Just now, samhexum said:

But they are going to open an equal number of new locations so overall levels of fine dining availability won't change, thank Michellin.

GREAT MINDS, @Lotus-eater, GREAT MINDS...

[robberbaron4u]

On 11/3/2024 at 10:42 AM, DynamicUno said:

Once again, a chain is decimated by private equity.  The usual MO is to saddle the company with the debt from their acquisition, high management fees, and strip the company of assets like real estate to pay the equity firm. The company is left vulnerable to higher interest rates, increasing rents, and unfavorable contracts imposed by the owners.  They'll use the bankruptcy to offload the chain to another buyer and stiff the lenders holding the debts 

It's the American Way. . .Political comment redacted.

[Ali Gator]

So Wendy's isn't growing the chain by opening 140 new locations - it will stay stagnant. That's not good news for chain of burger restaurants, certainly not for their shareholders. They want growth and competition - not staying stagnant.