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Financials - December 2019







Muscle Maker Aims For $7 Million U.S. IPO


Nov. 30, 2019 7:03 AM ET

by Donovan Jones





Muscle Maker has filed initial information for its U.S. IPO.

The firm operates a network of corporate-owned and franchised fast casual restaurants located primarily in the U.S.

MMB hopes to use the IPO funds for expansion, but its financials indicate revenue contraction, continued operating losses and increasing cash use in operations.


Quick Take

Muscle Maker (MMB) has filed to raise $7 million in an IPO of its common stock, according to an S-1 registration statement.

The firm operates a network of fast casual dining restaurants located in 14 U.S. states and in Kuwait.

MMB is experiencing contracting revenue, continued operating losses, and increasing cash burn from operations.

Company & Technology

Burleson, Texas-based Muscle Maker was founded to create a corporate-owned and franchise concept network of restaurants, branded Muscle Maker Grill, providing what it calls 'healthy-inspired' food options for guests. Most of the meals are made-to-order lean, protein-based meals, including chicken, seafood, hamburgers, wraps and options include salads and protein shakes.

Management is headed by Chairman and Chief Investment Officer Kevin Mohan, who has been with the firm since April 2018 and was previously VP of Capital Markets for American Restaurant Holdings. In addition, Michael Roper is CEO, and was appointed to his position in May 2018. Mr. Roper has significant experience in the fast casual industry in senior positions.

Below is a brief overview video of Muscle Maker:

  1. Lunch

  2. Dinner

  3. Catering

  4. Breakfast in select locations

Muscle Maker has received at least approximately $23.3 million from investors, including John Feeney, Catalytic Holdings, and Thoroughbred Diagnostics.

Customer Acquisition & Market

The company seeks to increase its footprint in what it calls 'non-traditional locations such as universities, office buildings, military bases, and other locations and franchise growth by expanding in existing markets, especially in the Northeast region of the United States.'

MMB intends to open additional locations through a combination of corporate-owned properties and franchise-operated locations.

The company does not provide sales and marketing costs in detail, so there was no way to calculate the firm’s efficiency in this regard

According to a 2019 report by Skift Table, the fast casual and quick serve dining markets in the U.S. are forecast to reach $246.7 billion in 2019.

This represents a forecast 3.2% over the previous year's results.

The main drivers for this expected growth are increasing investment available for fast casual chains from private funding sources and legacy full-service chains experimenting with fast casual spinoffs.

Management says its concept is 'iconic and unique, aimed at fitness enthusiasts but with options for guests not so inclined.

View full version at Muscle Maker


El Torito Parent Buys 2 Brands

By Paul Hughes

Tuesday, November 26, 2019


Cypress-based Xperience Restaurant Group bought Newport Beach-based Sol Mexican Cocina and Solita Tacos & Margaritas, sister brands with a total of six locations.

XRG emerged from the mid-2018 bankruptcy of the former Real Mex Restaurants and is owned by Z Capital Group in New York. Its other brands include Acapulco, Chevys Fresh Mex, El Torito, Las Brisas, Who Song and Larry’s, and Sinigual. With the acquisition it has 62 locations. Z Capital separately owns and operates L.A.-based Pink Taco.

Sol has four locations, in Newport Beach, Scottsdale, Playa Vista and Denver, and Solita has two, in Huntington Beach and Valencia, Calif.

XRG Chief Executive Randy Sharpe and Z Capital Chief Executive James Zenni both suggested in a press release on the deal that more acquisitions are likely.

XRG was the No. 11-ranked OC-based restaurant chain according to the Business Journal’s most recent research.

View source version at El Torito


Luby's Reports Fourth Quarter and Fiscal Year 2019 Results



Nov 26, 2019, 08:00 ET



HOUSTON, Nov. 26, 2019 /PRNewswire/ -- Luby's, Inc. (NYSE: LUB) ("Luby's") today announced financial results for its fifty-two week fiscal year 2019 and its twelve-week fourth quarter fiscal 2019, which ended on August 28, 2019.  Comparisons in this press release for the fourth quarter fiscal 2019 are referred to as "fourth quarter". Comparisons to the fourth quarter fiscal 2018 are to the twelve-week period that ended August 29, 2018.

Fiscal Fourth Quarter Summary:

  1. Same-store sales decreased 3.7%; total sales decreased 14.9% to $71.4 million due in large part to operating 22 fewer stores.

  2. Net loss was $9.1 million compared to a net loss of $1.9 million in the fourth quarter fiscal 2018 due primarily to store level profit declines and gains on the sale of assets in the prior year.

Chris Pappas, President and CEO, commented, "We are not pleased with our shareholder value, same-store sales, guest traffic results, or corporate overhead.  The Special Committee of the Board continues its focus on developing shareholder value initiatives.  Operationally, we made strategic personnel changes in fiscal 2019, including appointment of a new Chief Operating Officer, VP of Marketing, and VP of Information Technology.  Our whole team is working diligently and we are making progress on our turnaround efforts.  Already in fiscal 2020, we have realized improved guest traffic and sales trends.  Additionally, we are transitioning portions of our accounting, payroll, operational reporting, and other back-office functions to a leading multi-unit restaurant outsourcing firm.  We anticipate completing the transition in the first calendar quarter of 2020 and expect to realize additional cost savings and enhanced capabilities from this transition.

"At the restaurant level, our managers and restaurant team members are working hard to maintain and build value by consistently delivering great guest experiences.  They are our greatest brand assets, and I applaud their hard work and dedication to showcasing our brand values."

View full version at Luby's


Jack in the Box Inc. Reports Fourth Quarter FY 2019 Earnings; Issues Fiscal 2020 Guidance; Announces Additional Share Repurchase Authorization; Declares Quarterly Cash Dividend


November 20, 2019 04:05 PM Eastern Standard Time


SAN DIEGO--(BUSINESS WIRE)--Jack in the Box Inc. (NASDAQ: JACK) today reported financial results for the fourth quarter and fiscal year ended September 29, 2019.

Increase in same-store sales:



12 Weeks Ended


52 Weeks Ended


September 29, 2019


September 30, 2018


September 29, 2019


September 30, 2018

Company

3.5%


0.8%


1.7%


0.6%

Franchise

3.0%


0.4%


1.3%


0.1%

System

3.0%


0.5%


1.3%


0.1%

Jack in the Box® system same-store sales increased 3.0 percent in the fourth quarter. Company same-store sales increased 3.5 percent, driven by average check growth of 2.8 percent and transaction growth of 0.7 percent.

Lenny Comma, chairman and chief executive officer, said, "Our 2019 operating results demonstrate the momentum in the Jack in the Box brand, with same-store sales improving to the strongest performance in four years. We have now achieved our ninth consecutive year of positive same-store sales.

"We plan to build on these results by improving the guest experience through operations consistency and reducing wait times, serving indulgent food our guests crave, and targeting investments designed to maximize our returns. With our refranchising initiative complete, we have a renewed focus on expanding unit growth. We look forward to sharing additional details about these initiatives on tomorrow morning's earnings call."

Earnings from continuing operations were $22.0 million, or $0.86 per diluted share, for the fourth quarter of fiscal 2019 compared with $18.3 million, or $0.68 per diluted share, for the fourth quarter of fiscal 2018. In connection with the refinancing of the company's senior credit facility, the company terminated its existing interest rate swaps in the third quarter, resulting in a pre-tax charge of $23.6 million, and wrote off unamortized deferred financing fees related to this credit facility in the fourth quarter, resulting in a loss of approximately $2.8 million. These are reflected in interest expense, net, and collectively have an impact of $0.08 per diluted share in the fourth quarter and $0.64 for fiscal 2019 after the associated tax benefits. Fiscal 2019 earnings from continuing operations totaled $91.7 million, or $3.52 per diluted share, compared with $104.3 million, or $3.62 per diluted share in fiscal 2018.

Operating Earnings Per Share(1), a non-GAAP measure, were $0.95 in the fourth quarter of fiscal 2019 compared with $0.77 in the prior year quarter. For fiscal year 2019, operating earnings per share were $4.35 compared with $3.79 last year. A reconciliation of non-GAAP Operating Earnings Per Share to GAAP results is provided below, with additional information included in the attachment to this release. Figures may not add due to rounding.

View full version at Jack in the Box



Apollo considers selling Qdoba for $550M





AUTHOR Julie Littman


Nov. 19, 2019




Dive Brief:

  1. Apollo Global Management is looking into selling Qdoba, which it bought for $305 million from Jack in the Box in March 2018, according to Bloomberg.

  2. The private equity firm is working with advisors for a sale that could be worth $550 million, including debt.

  3. Qdoba, which has about 750 units in the U.S. and Canada, generates annual earnings before interest, taxes and depreciation and amortization of $50 million.



Dive Insight:

While private equity firms tend to hold assets for five to seven years, quick sell-offs are not entirely unusual in the restaurant space, which has been in a very active merger and acquisition period this year. L Catterton bought Del Frisco's Restaurant Group in June and quickly sold off Del Frisco's Double Eagle Steakhouse and Del Frisco's Grille soon after closing the acquisition.

Restaurants are offering good returns too. Onex Group sold Jack's Family Restaurants earlier this year for $835 million, over three times its initial investment. Apollo's asking price for Qdoba is 80% higher than its sales price.

Apollo's reason for sale may have to do with a failed merger attempt between CEC Entertainment's parent company, Queso Holdings, where Apollo is a controlling stockholder. The merger would have made CEC Entertainment, which includes Chuck E. Cheese and Peter Piper Pizza, public. The proceeds of the merger would have paid down $300 million in debt.

Qdoba could be a good buy for another restaurant brand or private equity firm, especially as the second-largest fast casual Mexican chain. It reached sales of $835 million in 2018, an increase of 1.6%, according to Restaurant Business. The company has grown modestly over the past four years, and is up 12% compared to 2015 when sales were about $745 million, according to Technomic estimates.

The chain is not without its challenges, however. Jack in the Box sold it after it higher wages and avocado prices impacted earnings, with the fast casual chain’s same-store sales dropping 1.4% during the 2017 fiscal year, according to USA Today. Same-store sales are up 4% annually under Apollo's management, according to Bloomberg, so it is possible that the company is more financially sound.

View source version at Qdoba

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