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What's New - April 2018

Industry Update for Quarter One 2018


Kevin Stockslager, Vice President, Wray Executive Search During the latter part of 2017, positive same-store sales numbers had the restaurant industry filled with optimism. Even traffic numbers seemed to be improving in the closing months of 2017. However, those positive trends have not continued so far in 2018. Restaurant industry same-store sales were down in January (-0.3%) and February (-0.8%) and traffic numbers drastically declined during the first two months of the year (-3.0% in January; -3.1% in February), reversing much of the positive traction gained during the fourth quarter of 2018. Restaurant insiders pointed to several factors that could have contributed to the downturn, including several major winter storms and rainfall throughout the country, as well as the 2-week Winter Olympic Games keeping millions of families out of restaurants and at home watching each night. Two trends that did continue into 2018, however, include a bevy of executive movements and an active merger & acquisition market. In 2017, a series of high profile exec moves hit the restaurant industry, among them Ron Shaich stepping down as Panera CEO, Dan Harmon taking over as Smoothie King COO, Chipotle naming Scott Boatright as Chief Restaurant Officer, and Sally Smith retiring as President and CEO of Buffalo Wild Wings. During the 2017 calendar year, JAB Holding was particularly active in adding Panera Bread ($7.5 billion) and Bruegger’s Bagels to its already impressive portfolio of restaurant brands. Other notable M&As throughout the industry included Darden acquiring Cheddar’s for $780 million, Restaurant Brands International adding Popeyes to their portfolio for $1.8 billion, Arby’s and Roark Capital buying Buffalo Wild Wings for $2.9 billion and creating Inspire Brands, NRD Capital buying Ruby Tuesday for $335 million, Golden Gate Capital purchasing Bob Evans Restaurants for $565 million, and FAT Brands adding Homestyle Dining ($10.5 million) and Hurricane Grill & Wings ($12.5 million) to their portfolio in what Franchise Times Magazine called the “Deal of the Year.” Several big announcements hit during the first quarter of 2018 with regards to executive movements, including Patrick Doyle announcing his departure from Domino’s after eight years as President and CEO, Ray Blanchette joining Ruby Tuesday as CEO, Toni Bianco moving to Fatburger as President & COO, Clifton Rutledge abruptly resigning as CEO of Bojangles’, and of course, Brian Niccol joining Chipotle from Taco Bell. The merger & acquisition market continued to be active in the early months of 2018 as well, including Sentinel Partners selling off Huddle House, Spice Private Equity acquiring Bravo Brio, Rhone Capital buying Fogo de Chao, Juice It Up! being bought by SJB Brands, CIC selling off Taco Mac, and Jack in the Box completing their sale of Qdoba to Apollo Global Management for $305 million. Look for these trends of an active executive movement and merger & acquisition market to continue throughout 2018. Additionally, restaurant industry experts hope to continue the solid job growth rates and reverse the same-store sales trends of the first quarter. Economic experts have stated that consumer confidence remains high and remain hopeful that the recent tax cuts and wage increase trends will result in increased sales and activity in the coming months.

Kevin Stockslager | Vice 863-5562 ——

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