http://www.bluemaumau.org/frontpagestories en Little Caesars Launches App Ordering and Automated Dispensers to Speed Up Carry Outs http://www.bluemaumau.org/16027/little_caesars_launches_app_ordering_automated_dispensers_speed_carry_outs <!-- google_ad_section_start --><p><img alt="Automated pick-up station" src="http://www.bluemaumau.org/sites/default/files/resize/Little_Caesars_Pizza_Portal_lobby-320x180.jpg" style="width: 320px; height: 180px; margin-left: 5px; margin-right: 5px; float: right;" width="320" height="180" />Little Caesars announced Monday that it is introducing a streamlined, faster way for customers to grab a pizza. It is launching a self-service mobile order pick-up station, which it claims is the first of its kind in the quick service restaurant industry.</p> <!--break--><!--break--><p>Customers place an order and pre-pay via the Little Caesars mobile app. The app will notify the customer when the order is ready. When the customer arrives at the store, they skip the line and go directly to the Pizza Portal and punch in a 3-digit pin or scan a QR code. Then&nbsp;the door on the customer&#39;s secured compartment opens&nbsp;and they take their hot, fresh order.</p> <p>Although it is being tested for now, Little Caesars plans to expand the fast service to other markets later this year and&nbsp;launch it nationally in 2018. The technology was co-developed by a provider of automated dispensing systems, Apex Supply Chain Technologies.</p> <p>&quot;The genuine purpose behind integrating advanced technology into our stores is all about improving the customer experience, and building on our convenience and quality,&quot; said David Scrivano, president and CEO of Little Caesars. &quot;We changed the pizza game when we introduced HOT-N-READY. We think RESERVE-N-READY featuring our breakthrough Pizza Portal has the potential to do it again.&quot;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16027/little_caesars_launches_app_ordering_automated_dispensers_speed_carry_outs#comments Foodservice Tue, 08 Aug 2017 02:48:48 +0000 Don Sniegowski 16027 at http://www.bluemaumau.org Potbelly Considers Selling the Firm as Q2 Shop Comps Drop http://www.bluemaumau.org/16025/potbelly_q2_comps_drop_considers_selling_firm <!-- google_ad_section_start --><p><img alt="Potbelly shop front window" src="https://c2.staticflickr.com/4/3718/11591456855_b1a0f58cd9_n.jpg" style="width: 320px; height: 320px; float: right; margin-left: 5px; margin-right: 5px;" />Potbelly Corporation [NASDAQ:PBPB) reported a poor showing on Friday in its second quarter financial results of 2017, which ended June 25. Amidst the earning miss, it also reported that it is looking for a strategic sale of the company.</p> <!--break--><!--break--><p>&quot;While the overall restaurant operating environment remains challenging,&rdquo; said Mike Coyne, Potbelly&rsquo;s chief financial officer and interim chief executive officer, &ldquo;we do not contemplate an improvement in industry trends in our outlook for 2017.&rdquo;</p> <p>Company-operated same-restaurant sales decreased by 4.9 percent during the quarter. For the half-year, company same-restaurant sales dropped by 4 percent. However, company-owned restaurants delivered store-level EBITDA profit margins of 19.2 percent.</p> <p>The result of the weakness at the sandwich shops was that Potbelly&rsquo;s EBITDA decreased by 41.3 percent from the $11.1 million of 2016&rsquo;s second quarter.</p> <p>The company managed to grow revenue by growing the number of its stores. Chicago-based Potbelly operates over 400 sandwich shops in the United States and franchises 40 domestic shops. Although sagging in traffic and sales, those company-owned sandwich shops could pay off for Potbelly shareholders by selling the company shops to franchise owners who are willing to try their luck.</p> <p>&quot;We are undertaking a comprehensive review of our business strategy,&rdquo; said interim CEO Coyne. &ldquo;Over the next few months we will analyze every aspect of our business including, but not limited to, our capital structure and allocation, returns on invested capital, operational productivity, our marketing strategy, the pace of our company-owned unit growth, capital expenditures, and potential ways to accelerate franchising. In addition, we have engaged J.P. Morgan Securities, LLC as our financial advisor to assist with this review and development of strategic business alternatives. Potbelly remains open to all strategic options that would potentially significantly enhance shareholder value over the long term.&rdquo;</p> <p>For the full year, Potbelly plans to open 45 to 50 new sandwich shops, of which 30 to 35 will be company owned. It expects a drop for the year in store sales comps.</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16025/potbelly_q2_comps_drop_considers_selling_firm#comments Foodservice Mon, 07 Aug 2017 18:57:01 +0000 Don Sniegowski 16025 at http://www.bluemaumau.org Wyndham U.S. Hotel RevPAR Grows 2.8% in Q2 http://www.bluemaumau.org/16024/wyndham_us_hotel_revpar_grows_28_q2 <!-- google_ad_section_start --><p>Wyndham Worldwide Corporation (NYSE:WYN) announced its second quarter earnings results on August 2. Domestic same-store revenue per available room (RevPAR) increased 2.8 percent at Wyndham hotels compared to the second quarter of 2016. </p> <!--break--><!--break--><p> Worldwide, its same-store RevPAR increased 3.3 percent when adjusted in constant-dollars.</p> <p>In an earnings call* with stock analysts, Wyndham&#39;s chairman and CEO Stephen P. Holmes mentioned that franchise fees had increased. &ldquo;EBITDA increased 6% on a currency neutral basis and excluding acquisitions, reflecting higher franchise fees and growth in the Wyndham Rewards credit card program,&rdquo; said Holmes.</p> <p>The franchising firm of brands that range from Super 8 to Dolce Hotels and Resorts reported that its earnings before income tax depreciation and amortization (EBITDA) was down to $214 million in this quarter compared to $340 million the year before, influenced by the write-down of undeveloped land. For the six months ended June 30, 2017, net cash provided by operating activities was $663 million, compared with $706 million in the prior year period.</p> <p>There was little spoken about the firm&rsquo;s 8,100 franchises in the earnings call, other than fees.</p> <p>&quot;With summer closing in on the half-way point, all of our businesses are performing well,&quot; said chairman and CEO Holmes. &quot;Our hotel group is seeing constant currency RevPAR growth both domestically and internationally. Our vacation rentals business is benefiting from continued strong booking trends, and sales sharply accelerated at our vacation ownership business as we continue to execute on our new owner growth strategy. This strong top line momentum further reflects how these businesses are poised for continued success as stand-alone public companies.&quot;</p> <p>A day later, August 3, Wyndham announced that it would split into two separate publicly-traded firms &mdash; a hotel group and a time share group. The chairman and CEO said that he judged that splitting the firm into two would allow focus and the value of both firms to be more fully released.</p> <p>Moody&rsquo;s Investor Service announced the next day that it was placing the Wyndham&rsquo;s commercial paper rating under review for a downgrade. Its concern was a standalone timeshare company. &ldquo;Moody&#39;s estimates the remaining Wyndham Worldwide will derive a majority of its revenue from timeshare sales, and without the higher margin and more stable hotel group business Wyndham will be more exposed to the risks inherent in the timeshare business,&rdquo; stated Moody&rsquo;s.</p> <hr /> <p><span style="font-size:10px;">*Earnings Call transcript from SeekingAlpha.com</span></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16024/wyndham_us_hotel_revpar_grows_28_q2#comments Lodging & Travel Mon, 07 Aug 2017 17:30:39 +0000 Don Sniegowski 16024 at http://www.bluemaumau.org Hyatt Sees Softer 3rd Quarter; Will Expand through Franchising http://www.bluemaumau.org/16019/hyatt_sees_soft_3rd_quarter_will_expand_through_franchising <!-- google_ad_section_start --><div class="photoright"><img alt="Hyatt Louisville recently sold to franchisee" src="/sites/default/files/HyattLouisville.jpg" style="width: 670px; height: 357px;" width="670" height="357" /> <div class="caption">Company-owned Hyatt Regency Louisville was sold last month to a franchisee for $50M (photo/d sniegowski)</div> </div> <p>On Thursday Hyatt Hotels Corporation (NYSE:H) reported a long list of issues to shareholders&nbsp;that are also of interest to franchise owners &mdash; from resolution of its online travel agency (OTA)&nbsp;fight, expansion through franchising, to a&nbsp;softness in room revenue in the second half of the year.</p> <!--break--><!--break--><p>Hyatt itself reported stronger financial results than expected for its second quarter of 2017, with&nbsp;good news for Hyatt-branded hotel owners. Comparable RevPAR&nbsp;(hotel revenue per available room)&nbsp;in the quarter&nbsp;increased 1.4 percent over the&nbsp;same quarter last year&nbsp;for its U.S. hotels, while full service and select service hotel RevPAR increased 1.3 percent and 1.5 percent, respectively.</p> <p>Hyatt earns money through its company-owned hotels, by selling franchise owning rights to buyers, and from collecting fees for providing hotel management services to hotel owners. During the last quarter&nbsp;Hyatt added fourteen hotel properties to its portfolio in its Americas region, all franchised. Thirteen of those newly opened hotel properties were in the United States.</p> <h2><span style="color:#800000;"><strong>Is Hyatt pursuing more of an asset-light franchising model?</strong></span></h2> <p>&ldquo;We&#39;re well positioned to continue the strong growth of our managed and franchised footprint into the future,&rdquo; said Hyatt&rsquo;s president and chief executive officer Mark S. Hoplamazian in an earnings call* with stock analysts. He added, &ldquo;We are evolving our core business with a focus on the growth of our global base of managed and franchised hotels, which is allowing us to become more fee-based over time.&rdquo;</p> <p>That prompted an analyst to ask if Hyatt was changing strategy. In the past the franchisor&nbsp;had explained its need to have its own hotel properties to best understand, push and pioneer&nbsp;the business of running hotels. Was Hyatt now&nbsp;switching the 731 properties under its brands to a more asset-light franchising model where it refranchises its own hotel properties to franchisees and just collects fees from an almost pure franchise system such as&nbsp;some of its competitors have?</p> <p>&ldquo;You&rsquo;re reading a little too much into it,&rdquo; replied the CEO. He explained that the firm would invest its own money in markets, key destinations and gateway cities where it thinks the brand needs to obtain a better toehold. But he then commented about the benefits of using franchise investors&rsquo; money as opposed to Hyatt&rsquo;s own: &ldquo;One of the reasons why our CapEx&nbsp;[<a href="https://www.accountingtools.com/articles/2017/5/6/expenditure" target="_blank">capital expenditure</a>]&nbsp;outlook keeps coming down is because we&#39;re finding that those sites are really desirable to third-party developers, and we&#39;re partnering with them or selling them some of those projects, again releasing capital.&rdquo;</p> <p>Hoplamazian then came around to reaffirming Hyatt&rsquo;s commitment to owning and running its own hotels: &ldquo;If we find something that we find is meaningful and will have a big impact on our customer proposition and the portfolio, we will be aggressive about pursuing it, but we will self-fund.&rdquo;</p> <h2><span style="color:#800000;"><strong>Second quarter&rsquo;s solid results</strong></span></h2> <p>The franchising firm&rsquo;s net income increased by 30.5 percent for the quarter to $87 million and was up 56 percent for the first six months of the year.</p> <p>&rdquo;Our second quarter results reflect the strength of the Hyatt brands, demonstrating continued, upward momentum in our business,&rdquo; said Mark S. Hoplamazian. &ldquo;In the first six months of the year, net income increased 56 percent and adjusted EBITDA grew 9 percent, driven by comparable RevPAR growth of nearly 4 percent&nbsp;and the ongoing expansion of our portfolio.&nbsp;We continue to expand at a rapid pace, with hotel rooms up 7 percent&nbsp;versus prior year and a pipeline of signed deals representing 37 percent of our current rooms inventory.&rdquo;</p> <p>Hyatt also pointed out that comparable operating margins of its owned and leased Hyatt hotels decreased 120 basis points to 26.2 percent.</p> <p>Hoplamazian continued, &quot;With the second quarter sales of Hyatt Regency Grand Cypress and Hyatt Regency Louisville subject to long-term management and franchise agreements, respectively, we have made good progress toward our goal of being a net seller of assets in 2017 while sustaining solid earnings growth and returning meaningful capital to our shareholders.&nbsp;Given the strength of our first half operating results, we have increased our full-year outlook for RevPAR and Adjusted EBITDA.&nbsp;We remain focused on super-serving the needs of high-end travelers and are confident that we are taking the right steps to create long-term value for our customers and shareholders.&rdquo;</p> <h2><span style="color:#800000;"><strong>The future &mdash; RevPar, guest cancellation policies &amp; OTAs</strong></span></h2> <p><strong>No mandated cancelation fee</strong>:&nbsp;When asked whether the company will issue a guideline&nbsp;similar to the new Marriott policy in which late room cancelations, those under 48 hours,&nbsp;will not be refunded or will cost guests, Hoplamazian replied Hyatt&rsquo;s is to not have a general policy for the whole system, but to leave that decision up to hotel owners. He said that cancelation&nbsp;policies were managed&nbsp;at the hotel level &ldquo;with input from corporate.. but they have a final call.&rdquo;</p> <p><strong>Relationship with Expedia:</strong>&nbsp;In June it was reported that Hyatt had threatened to opt out of using online travel agent Expedia. It was not happy with the hefty fees of OTAs. Hyatt&rsquo;s CEO yesterday confirmed that it has worked things out with booking.com and Expedia.</p> <p>&ldquo;We recently agreed to build on our existing relationship with Booking.com by implementing new initiatives intended to increase efficiency and flexibility, while driving demand,&rdquo; said Hoplamazian. &ldquo;We expect that Hyatt Hotels will continue to be distributed on Expedia platforms without disruption while we&nbsp;finalize our agreement. We value these key partnerships with Expedia and Booking.com, and we remain focused on providing the best guest experience while we optimize outcomes for our hotel owners.&rdquo;</p> <p><strong>RevPar for 2017</strong>: Although for the first six months of this year RevPar for Hyatt hotels has been 4 percent, the company revised its projection down to be within 1 to 3 percent for the entire year. The third quarter is expected to be soft. When asked by a stock analyst if the comparable RevPAR figure would be negative in the third quarter, Hyatt&rsquo;s CEO answered: &ldquo;We are expecting [company-] owned and leased [hotels] to be weaker than system-wide, but not necessarily negative.&rdquo;</p> <hr /> <p><span style="font-size:10px;">*August 3, 2017 Earnings Call transcript provided by SeekingAlpha.com</span></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16019/hyatt_sees_soft_3rd_quarter_will_expand_through_franchising#comments Lodging & Travel Sat, 05 Aug 2017 15:34:43 +0000 Don Sniegowski 16019 at http://www.bluemaumau.org Franchise Hiring Strong in July with Gain of 26,600 Jobs http://www.bluemaumau.org/16018/franchise_hiring_strong_july_gain_26600_jobs <!-- google_ad_section_start --><p><img alt="" src="https://c2.staticflickr.com/8/7450/26810670814_a9dd125fe3_n.jpg" style="width: 320px; height: 320px; float: right; margin-left: 5px; margin-right: 5px;" />Employment from franchised establishments increased by a strong 26,600 jobs in July, according to ADP National Franchise Report. Hotels, auto dealers and restaurants made up the lion&rsquo;s share of the hiring.</p> <!--break--><!--break--><p>Restaurants increased by 18,200 hires while auto dealers hired 5,700 more in July.</p> <p>At the same time, small businesses, firms that are under 50 employees, created 50,000 jobs in July. Small businesses in the goods-producing sector dropped by 3,000 jobs but service-providing small businesses increased by 52,000. The difference was from other sectors.</p> <p>&ldquo;Job gains continued to be strong in the month of July,&rdquo; said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. &ldquo;However, as the labor market tightens employers may find it more difficult to recruit qualified workers.&rdquo;</p> <p>Private sector employment, not just franchise or small business, increased by 178,000 jobs in July.</p> <p>Mark Zandi, chief economist of Moody&rsquo;s Analytics, said, &ldquo;The American job machine continues to operate in high gear. Job gains are broad-based across industries and company sizes, with only manufacturers reducing their payrolls. At this pace of job growth, unemployment will continue to quickly decline.&rdquo;</p> <p>The employment reports are derived from ADP&rsquo;s actual payroll data.</p> <p class="rtecenter"><img alt=" U.S. Added 26,600 Franchise Jobs in July, According to ADP National Franchise Report " src="http://www.adpemploymentreport.com/2017/July/NFR/images/infographic/main/NFRJuly2017_infographic.gif" style="border-width: 0px; border-style: solid; width: 598px; height: 789px;" /></p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16018/franchise_hiring_strong_july_gain_26600_jobs#comments The Economy Thu, 03 Aug 2017 22:17:28 +0000 Don Sniegowski 16018 at http://www.bluemaumau.org Wyndham to Split Into Hotel and Timeshare Firms but Publicly Neglects Hotel Owners http://www.bluemaumau.org/16016/wyndham_split_publicly_traded_hotel_and_timeshare_firms_publicly_neglects_franchisees <!-- google_ad_section_start --><p>New Jersey-based hotel franchisor Wyndham Worldwide (WYN) announced this morning that it plans to split the company into two separate, publicly traded firms. Wyndham Hotel Group, with its headquarters in Parsippany, New Jersey, will be a pure-play hotel company with a portfolio of brands. </p> <!--break--><!--break--><p> Wyndham Vacation Ownership, headquartered in Orlando, Florida, will be joined with giant timeshare exchange broker RCI, currently part of Wyndham Worldwide.</p> <p>The transaction is expected to be completed in the first half of 2018.</p> <p>It is not particularly original or pioneering thinking. Wyndham&rsquo;s spinoff comes after hotel franchisors Marriott, Hilton and Starwood have spun off their times share operations. However, the split of the giant company is expected to sharpen the focus on each company&rsquo;s core business and growth opportunities, positioning each to be better able to make the changes necessary to respond to developments in its markets.</p> <p>The change is overdue.</p> <p>&quot;After a comprehensive review process, the board of directors has determined that a spin-off of the hotel business and the combination of Wyndham Vacation Ownership with RCI is the best structure to unlock shareholder value and enable strong growth across the businesses,&quot; said&nbsp;Stephen P. Holmes, chairman and CEO of Wyndham Worldwide.</p> <p>Wyndham plans to explore strategic alternatives for its current European rental brands. &rdquo;We will work with the leadership of our European rental organizations, which have outstanding brands in their regional markets, to explore options to fully realize their future growth potential,&rdquo; stated Holmes.</p> <p><strong>But where are the franchise owners?</strong></p> <p>What is surprising about Wyndham&rsquo;s announcement is the absence of any mention about the franchisees that own and operate the hotels, which fly the Wyndham flag. An argument can surely be made how franchise owners will be better off. But there isn&rsquo;t even a mention on what the split will do for Wyndham&rsquo;s franchise owners.</p> <p>&ldquo;The very fact that this important corporate decision makes no mention of franchisees, is a clear indication of how little regard the Wyndham Hotel Group has for them,&rdquo; says hotel consultant, author and award-winning hotel historian Stanley Turkel about the public announcement. &ldquo;The Wyndham &lsquo;hospitality powerhouse&rsquo; has more that 8,000 franchised hotels with over 697,000 rooms but doesn&rsquo;t think them important enough to warrant inclusion in this important structural change.&rdquo;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16016/wyndham_split_publicly_traded_hotel_and_timeshare_firms_publicly_neglects_franchisees#comments Lodging & Travel Thu, 03 Aug 2017 17:50:59 +0000 Don Sniegowski 16016 at http://www.bluemaumau.org CEO Praises Burger King Franchisees as They Post 3 Percent Same-Restaurant Growth in Q2 http://www.bluemaumau.org/16014/ceo_praises_burger_king_franchisees_they_post_3_percent_samerestaurant_growth_q2 <!-- google_ad_section_start --><p><img alt="Home of the Whopper" src="https://c2.staticflickr.com/8/7330/12166090324_7cb7a830fc_n.jpg" style="width: 320px; height: 320px; margin-left: 5px; margin-right: 5px; float: right;" />Restaurant Brands International Inc. (NYSE:QSR), parent company to quick service chains Burger King, Tim Hortons and Popeyes Louisiana Kitchen, announced robust comparable sales of 3.0 percent for its U.S. Burger King restaurants in the second quarter of this year versus the same period last year.</p> <!--break--><!--break--><p>Same-restaurant sales in constant currency&nbsp;for franchises in all countries&nbsp;grew by a whopper of 3.9 percent compared to the second quarter of last year.</p> <p>Daniel Schwartz, chief executive officer of Restaurant Brands International Inc. (RBI) commented to stock analysts during an earnings call this morning on the contribution of Burger King franchise owners to this quarter&rsquo;s success. &ldquo;If you look in the U.S., I think our restaurant owners have done a great job renovating, improving the image of the restaurants&nbsp;and improving the quality of our operations.&rdquo;</p> <p>Compare the 3.0 percent increase in U.S. same-restaurant sales with McDonald&rsquo;s U.S. stores, which had an even more sizzling increase in the second quarter of 3.9 percent compared to the same period last year. McDonald&#39;s launched a battery of new products &mdash; its Signature Crafted sandwiches and the $1 beverage.</p> <p>The Golden Arches also shone with luster from a 6.6 percent increase in global comparable restaurant sales. But Burger King also had strong rising numbers for the quarter.</p> <p>Traffic has been a stickler. Last year quick service restaurants as a whole had no increase in customer traffic, according to foodservice researcher NPD Group. Lunch visits actually declined by 2 percent at fast food restaurants in 2016.</p> <p>In combating that phenomenon, Burger King launched value products, such as the 89 cent pancakes stack, to entice more customer visits. It introduced its fun Mac n&rsquo; Cheetos. Like McDonald&#39;s, it has also employed a barbell marketing strategy&nbsp;of offering low-priced value items, but also expanding its premium items such as the Steakhouse King, Chicken Parmesan, and Mushroom &amp; Swiss King sandwiches.</p> <p><img alt="Burger King Q2 2017 Results" src="/sites/default/files/resize/BKQ22017.001-320x320.png" style="width: 320px; height: 320px; float: right; margin-left: 5px; margin-right: 5px;" width="320" height="320" />The CEO did not mention if Burger King restaurants had a positive uptick in traffic, but he did indicate that a balanced approach of value on one side of the barbell and premium sandwiches on the other, mixed with a bit of fun, was good for traffic, which was at the top of his mind. &quot;We will continue adhering to our strategy of maintaining a balanced menu architecture with operationally simple product launches to drive further sales and traffic in our restaurants for years to come,&quot; said Schwartz.</p> <p>When the system is balanced and in the zone, Schwartz has a lot of help. That is because Burger King is somewhat set apart. Burger King franchise owners have an advisory board that advises the brand&rsquo;s next moves, just like most other franchisors have set up. Corporate staff can decide whether or not they want to take franchisees&#39; advice.&nbsp;But Burger King franchise owners also have an active independent franchisee association, the National Franchisee Association, which has the responsibility of focusing on the interests of franchisees and their restaurants, and pushing for better results. In addition, Burger King franchisees also own a purchasing cooperative, Restaurant Services Inc., which sources, purchases and distributes all of the product supplies&nbsp;to the chain&rsquo;s restaurants. Burger King has a franchisee-supported system that is little understood or even heard of by&nbsp;shareholders, but which is quietly behind the scenes nonetheless, actively involved in leading, pulling and operating the brand &mdash; in short, making the brand run smoothly.</p> <p>There are now 16,000 Burger King restaurants around the world. The Canada-based franchisor oversaw system-wide sales rise by 10.6 percent. Its net count of franchised restaurants globally grew by 6 percent compared to the same period in 2016.</p> <p>All of that positive activity contributed to the bottom line. Its adjusted EBITDA was up 9.7 percent to $217 million over the previous&nbsp;year.</p> <p>&ldquo;We had notable strength at Burger King, with both strong comparable sales growth and net restaurant growth,&rdquo; announced the CEO. Schwartz continued, &ldquo;We appreciate all of the hard work from our franchisees and their teams to deliver a great guest experience, and we are confident in our ability to create further value for all of our stakeholders for many years to come.&rdquo;</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16014/ceo_praises_burger_king_franchisees_they_post_3_percent_samerestaurant_growth_q2#comments Foodservice National Franchisee Association Restaurant Brands International Restaurant Services Inc Wed, 02 Aug 2017 22:03:20 +0000 Don Sniegowski 16014 at http://www.bluemaumau.org Denny’s Outperforms Expectations, Franchisees Have Strong Second Quarter http://www.bluemaumau.org/16013/denny%E2%80%99s_outperforms_expectations_franchisees_have_strong_second_quarter <!-- google_ad_section_start --><p><img alt="" src="https://c2.staticflickr.com/6/5611/30473835180_d662bf8c7a_c.jpg" style="width: 670px; height: 400px;" />Denny&rsquo;s Corporation (NASDAQ:DENN), an operator and franchisor over a chain of 1,724 restaurants, reported on Tuesday a strong performance for its second quarter, which ended June 28, 2017. </p> <!--break--><!--break--><p> Those rising numbers are set against a general&nbsp;decline in traffic of nearly 4 percent in the casual dining sector, according to foodservice researcher The NPD Group. But where casual dining has&nbsp;had a steady erosion of restaurant comparable sales and traffic, Denny&rsquo;s has bucked&nbsp;the downward trend in a big way.</p> <p>Denny&rsquo;s same-restaurant sales in the United States increased 2.6 percent. Its U.S. company-owned restaurants grew by 2.7 percent, while domestic franchised restaurants rose in same-restaurant sales by 2.6 percent compared to the same period in 2016.</p> <p>Denny&rsquo;s tends to own larger and more established restaurants. With a 10-percent share of the system&rsquo;s restaurants, its 172 company-owned restaurants earned average unit sales for the quarter of $576,000.</p> <p>&ldquo;We remain committed to our 90-percent franchised business model,&rdquo; affirmed John Miller, Denny&rsquo;s president and CEO during an earnings call* to stock analysts yesterday. He also stated that 58 percent of the restaurants in the chain had remodeled to a more modern image that was the brand&rsquo;s new standard. &ldquo;We expect 75 percent of the system to be remodeled by the end of 2018.&rdquo;</p> <p><img alt="Denny&#039;s Q2 2017 results for its franchisees" src="/sites/default/files/resize/DENNQ22017.001_0-400x400.png" style="width: 400px; margin-left: 5px; margin-right: 5px; float: right; height: 400px;" width="400" height="400" />The chain&rsquo;s 1,552 franchisee-owned restaurants pulled in $400,000 in average unit volume for the second quarter, up $10,000 from the same time in 2016.</p> <p>Royalty rates are now on average 4.14 percent, but Miller expects these fees from franchisees to increase to 4.5 percent. He didn&rsquo;t say by when.</p> <p>Restaurant analyst for Nomura Securities, Mark Kalinowski, has long noted that casual dining is a tough section&nbsp;of the restaurant business. Early this morning he noted that Denny&rsquo;s was against an additional headwind of rising pork costs and minimum wage increases. However, those rising restaurant costs were offset by better-than-expected administrative cost cuts and increased revenues for the corporation. Writing to shareholders, the analyst cautioned that company-owned restaurant margins would be slightly less than expected for the full year,&nbsp;at a margin of 17.5 percent versus 18 percent. He also was concerned about the unanticipated loss of franchises in the chain and the subsequent lowering of its growth in franchises.</p> <p>&ldquo;Denny&#39;s also lowered its target range for net new restaurants for the full-year 2017 to 5-15, the previous target range had been 10-20,&rdquo; wrote Kalinowski. &ldquo;Management cited the unanticipated closing of eight franchised restaurants during the second quarter for the lowered target range.&rdquo;</p> <p>Operating margins for Denny&rsquo;s company-owned restaurants grew 1.7 percent to $16.7 million. The franchisor&rsquo;s operating margins, which are derived from franchise fees for consulting and supporting franchised restaurants, were up 1.8 percent to $24.8 million.</p> <p>Denny&#39;s chief executive officer mentioned that guest visits were increasing and explained the fruits of that trend. &ldquo;Our highly franchised business model, coupled with our efforts to further differentiate Denny&rsquo;s as a relevant and compelling brand, continues to generate strong cash flows which support ongoing investments in Denny&rsquo;s brand revitalization and company restaurants, and the return of capital to our shareholders,&quot; said Miller. &quot;As we continue to successfully execute our brand revitalization strategy, we remain committed to further elevating the guest experience, consistently growing same-store sales, and expanding our global reach, leading to value creation for all franchisees and shareholders.&quot;</p> <hr /> <p>*Transcript provided by SeekingAlpha.com</p> <!-- google_ad_section_end --> http://www.bluemaumau.org/16013/denny%E2%80%99s_outperforms_expectations_franchisees_have_strong_second_quarter#comments Foodservice Wed, 02 Aug 2017 17:44:46 +0000 Don Sniegowski 16013 at http://www.bluemaumau.org