So Long, Farewell, Auf Wiedersehen, Good-Bye
On Friday, October 31, 2014, I will turn in my security pass, shut down my computer, and walk out of Chain Store Guide’s offices for the final time. I turned 50 here, I turned 60 here, and now at 66, I’ve decided it’s time to move on to the next big adventure.
I look back with much fondness and some nostalgia at my 16+ years here. I think about all the wonderful people it’s been my privilege and pleasure to work with and for. I miss many of those who have moved on, and I have enjoyed the present merry band of co-workers with whom I’ve shared so much. Impressively, Chain Store Guide’s current staff has nearly three centuries of experience with the company, 291+ cumulative years to be precise, and the company recently celebrated its 80th anniversary. I’ve always been proud to say that CSG provides the best information, bar none, in the B2B data business, and our people are among the best at what they do.
That being said, I won’t miss the monthly deadlines that required me to produce compelling and insightful articles for our customers, although I always enjoyed hearing from anyone who read them. I sure won’t miss sifting through hundreds of emails daily to keep track of all of the changes in this vibrant industry. I won’t miss the hours spent researching and documenting new restaurant locations to add to our already robust 200,000+ locations database. I definitely won’t miss the crush at the end of the annual update cycle when hundreds of public companies release their year-end results seemingly within just a few days, requiring me to update all their vitals prior to the actual publication of the directory to ensure that even our print customers receive the most accurate and current information possible.
I will miss the many conversations I’ve had over the past 16 years with folks who work in and report on the industry, the customers who called in with a simple question and who provided me with so much insight into their world. I’ll miss the trade shows where I had the privilege of seeing the disrupters in action, those who developed new products and new technology that continue to influence the way things are done. I’ll miss the challenge of trying to stay on top of the most dynamic industry in the economy, the foodservice marketplace.
The restaurant industry is ever changing, and I’ve had a front-row seat to this evolution for many years. Back when I started in 1998, brew pubs and eatertainment were the next big ideas. Pepsico had spun off its KFC, Pizza Hut, and Taco Bell chains to form Tricon Global Restaurants. CKE acquired Hardee’s to add to its existing Carl’s Jr. chain and expand its reach into the Midwest and East Coast. The CSG chain restaurant database comprised more than 4,300 listings with 17,000+ personnel.
In 1999, AFC Enterprises added Cinnabon to its existing Churchs Chicken, Popeyes Chicken & Biscuits, Chesapeake Bagel, and Seattle’s Best concepts. The CSG database grew by 200 new listings. In 2000, we added a new type of business called Nontraditional Foodservice Operators to distinguish companies such as Walmart and Barnes & Noble from the “pure” foodservice operators such as McDonald’s and Burger King. Among the notable acquisitions that year was McDonald’s purchase of Donato’s Pizza and Chipotle Mexican Grill along with its proposed takeover of Boston Market (which was finalized the following year).
In 2001, CSG redefined its chain restaurant criteria, moving more than 800 two-unit operators from the High Volume Independent Restaurant database to the larger Chain Restaurant Operators database, giving our customers more access to small but potentially growing companies. The database that year reflected that Ruby Tuesday sold its Tia’s and American Café concepts, and Rainforest Café was acquired by Landry’s Restaurants, the first of what would turn out to be a decade-long buying spree by entities owned and/or controlled by Tilman Fertitta. In 2002 Chain Store Guide became the first (and only) company to provide its customers with detailed information about foodservice offered inside convenience stores. That same information is still available today for more than 650 c-store operators for customers of our online Plus database.
Our 2003 directory reflected the sale of Burger King to a consortium of investors headed by Texas Pacific Group. Tricon Global Restaurants acquired the Long John Silver’s and A&W chains and subsequently changed its corporate name to Yum! Brands Inc. Landry’s Restaurants acquired the C.A. Muer Corp. in addition to the Chart House concept and Saltgrass Steakhouse chain. For the first time, Fast Casual was introduced as a type of foodservice, acknowledging the growing importance of this new service format that combined the convenience of QSR ordering with the more relaxed ambience of a casual-dining restaurant. Our 2004 database contained more than 5,850 listings and provided over 26,600 individual contact names and titles, including the newly formed Heartland Food Corp. that acquired nearly 200 Burger King restaurants from a dying Ameriking Inc. During that same time frame, Starbucks acquired the Seattle’s Best Coffee chain from AFC Enterprises.
In 2005 Chain Store Guide introduced its innovative online interactive databases, accessible anyplace in the world with an internet connection and refreshed weekly. We also added three new types of business — Foodservice Operations – Bowling Alley, Foodservice Operations – Movie Theatre, and Foodservice Operations – Theme Parks — allowing our customers even more targeted search options. The 2006 database reflected the growing focus of U.S.-based restaurant companies looking overseas for continued expansion, as issues related to hurricanes, avian flu and mad cow disease, higher energy prices, and soaring real estate costs all contributed to stymy rapid growth stateside. In spite of the turmoil, the NRA projected total industry sales of $511 billion. Tilman Fertitta’s company acquired Poster Financial Group, giving it the Golden Nugget casinos to add to its growing portfolio.
For 2007, the NRA projected a 5% increase in industry sales. The previous year was a particularly active one for acquisitions, with more than 50 such transactions reported between March 2006 and March 2007. That year saw some of the biggest companies disposing of their ancillary businesses so they could more closely focus on their core operations. Wendy’s sold the Tim Hortons and Baja Fresh chains, McDonald’s spun off its Chipotle Mexican Grill operations into a new publicly-held company, and CBRL Group (now known as Cracker Barrel Old Country Stores Inc.) disposed of Logan’s Roadhouse. The fast-casual segment (e.g., Panera Bread, Chipotle Mexican Grill) registered a systemwide sales increase over five years of 84.4% and unit growth of 51.6%.
At the end of the first quarter of 2008, the experts were debating if we were in a recession, heading into a recession, or just dealing with a temporary slowdown in the economy due to record high energy prices and the continuing aftermath of the subprime mortgage debacle. Many restaurant operators responded to this slowdown by looking overseas, pinning their hopes on the still-strong economies of Asia and the Middle East. Others reduced development plans, focusing more on remodeling and increasing same-store sales instead of expanding into new markets. In addition, financially strong companies were seeking acquisitions to reach different markets and customers. This latter approach is exemplified by IHOP Corporation’s takeover of casual dining giant Applebee’s International and by Darden Restaurants’ purchase of RARE Hospitality. Private equity groups also stepped in to inject capital into the operations of struggling companies. In 2007 alone, Sun Capital Partners acquired Restaurants Unlimited, Boston Market, Friendly Ice Cream Corp. and Smokey Bones. During 2008, Chain Store Guide entered the restaurant locations business by creating a database of more than 165,000 individual locations, representing every domestic restaurant operated by the 100 largest companies in the U.S.
When the 2009 directory rolled off the presses, it was clear that the U.S. economy was in fact in the deepest recession it had seen in decades. As consumers tightened their grips on their purse strings and fretted about losing their jobs, the foodservice industry took a hard hit. Particularly among the companies that operated in the fine- and casual-dining environments, comparable store sales declines of 10% or more were not uncommon. Companies that had been on the brink finally fell over. Most notably, Metromedia Restaurant Group abruptly and with no notice to even their restaurant managers shut down all company-operated Bennigan’s and Steak and Ale locations, followed a few months later by the closure of company-operated Bonanza and Ponderosa Steakhouses. Also joining the unemployment lines were employees of Roadhouse Grill, La Shish, R.J. Gator’s, and most of the Shell’s Seafood Restaurants among others. Fewer than 30 mergers/acquisitions occurred during the previous 12 months, although this was the year that Triarc Companies bought the Wendy’s chain and merged it into its Arby’s operations, creating The Wendy’s/Arby’s Group Inc.
By 2010, the CSG basic database had grown to more than 5,900 listings containing the names and titles of nearly 28,000 employees. That year we introduced the Pro Plus version of our online database that included another 1,100 companies (convenience stores with in-store foodservice and individual casino properties with on-site restaurants) and an additional 4,000 personnel names. Personal emails were also included for almost 40% of the personnel names in that premium product. According to the NRA, the restaurant industry’s share of the family food dollar was at 49%, indicating that regardless of the economic woes the country was experiencing, consumers were not going to give up eating outside the home, they were just going to substitute fast casual for casual dining and quick-serve food for a fast-casual experience.
Going into 2011, the NRA projected growth in food and drink sales for the first time in several years, topping a record $600 billion. The number of locations was also projected to start increasing. The economy was beginning to pick up steam, and restaurateurs were starting to experience some optimism about their futures. CSG data from that year reflected those expectations — sales from all U.S. headquarter companies rose 2.6% and the top 100 restaurant operators experienced a sales increase of 4%, after declining nearly 3% the year before. Hamburgers, sandwiches, and pizza were revealed as the most prevalent menu type, accounting for nearly 60% of the total restaurants. In 2010 and recorded in the 2011 database, Landry’s Restaurants was privatized when it was acquired by a company wholly owned by Tilman Fertitta; Landry’s also acquired the Oceanaire, Bubba Gump, and Claim Jumper restaurants during that year. Burger King was sold again, this time to 3G Capital, an investment company with offices in New York and Brazil.
For 2012, the NRA projected a promising year, with food and drink sales expected to rise $21 billion during the year. Merging and acquiring regained momentum, most notably when The Wendy’s/Arby’s Group sold its Arby’s brand to a private equity firm and renamed itself The Wendy’s Company. Yum! Brands sold its two smallest chains, Long John Silver’s and A&W All American Food, to private equity groups headed by long-time franchisees of the brands. And Mr. Fertitta bolstered his portfolio through the acquisition of Trump Marina Hotel and Casino, McCormick & Schmick’s Seafood Restaurants, and Morton’s Steakhouse companies.
The year 2013 was a highlight for those of us who work at Chain Store Guide, as it marked the 80th anniversary since the first chain restaurant database was published in 1933. If you haven’t read my summary of the decades in foodservice that was released last spring, I invite you to click on this link and take a look. CSG’s 2013 Online Plus version of the database of chain restaurant operators had swollen to more than 7,800 listings and over 36,000 personnel names, 62% of which had exportable personal email addresses. Included among those listings were the rapidly growing merchants of so-called “better burgers.” Five Guys Burgers & Fries initiated the widespread growth of this sensation, growing from just five locations at the beginning of the decade to more than 1,100 by the end of 2012. Climbing on the bandwagon were such would-be competitors as BGR The Burger Joint, Cheeseburger Bobby’s, The Counter Burger, Smashburger, and Square One. Red Robin Gourmet Burgers Inc. introduced its Burger Works concept, and celebrity chef Bobby Flay debuted Bobby’s Burger Palace.
And here we are back at 2014. As I noted in my introduction to the 2014 Chain Restaurant Operators directory, “… the foodservice industry continues to grow and evolve. New companies and concepts are emerging in every type of foodservice and every corner of the country, in spite of what some still consider a problematic economic environment. Venture capitalists and private equity groups still find restaurant operators desirable investments, and restaurant companies themselves are buying out competitors or complementary brands. The global economy beckons foodservice operators who have the mettle and wherewithal to venture into the unknown markets in South America, Asia, and the Middle East.” As the end of 2014 looms, nothing I wrote earlier this year has changed. Red Lobster was acquired from troubled Darden Restaurants Inc. by Golden Gate Capital, Roark Capital bought CKE Restaurants (Carl’s Jr. and Hardee’s), Centre Partners purchased the Captain D’s seafood chain, and Sentinel Capital finalized its acquisition of Checkers Restaurants. Cinemark Holdings acquired Rave Cinemas, Bow Tie Cinemas took over Clearview Cinemas, and Carmike Cinemas bought out Muvico Theatres. Pending as I write this is the proposed controversial merger of Burger King and Canada’s iconic doughnut-and-coffee chain Tim Hortons. India continues to heat up as a major overseas development market, and fast-casual pizza is the next big idea as witnessed by the explosive growth of Blaze Fast-Fire’d Pizza, Pie Five (from industry stalwart Pizza Inn), Project Pie, and many other out-of-the-gate starters.
I know I leave my responsibilities in capable hands, and I’m sure that everyone who is reading this will enjoy insights from our newest research editor, Loren McCollom. I wish you continued success in your business and hope that you will continue to trust Chain Store Guide to be your source of the best information on the planet.