Real Mex Restaurants Inc., the parent to the Chevys, El Torito and Acapulco brands, said the company has reached an agreement with lenders to waive and amend certain debt covenants as the company restructures.
After reporting first-quarter earnings in May, the company said it was negotiating with lenders to amend borrowing terms and agreements. At the time there was a possibility that notes and senior secured revolving credit facilities would not be met as of late June.
On Thursday, however, the company said it had made a $9.1 million interest payment, and that an affiliate of private-equity owner Sun Capital Partners had provided additional liquidity as part of the ongoing restructuring process. The amount was not disclosed.
In a statement, the company said all financial stakeholders are working together on a revised capital structure that recognizes the economic realities and addresses future needs.
“Our core business continues to improve and the operating performance of our restaurant brands is making strong progress under new leadership,” said David Goronkin, Real Mex chair and chief executive, who joined the Cypress, Calif.-based company in June.
“Although our company continues to generate substantial earnings, the current capital structure, certain above-market leases and the soft economy slow our headway,” he said. “By addressing these issues now, we’ll be able to move forward more quickly.”
However, the company on Friday said it could offer no further detail on plans ahead, except to add in a separate statement, “We are working hard to maximize the value of our company, which continues to generate substantial earnings, and build a strong platform for the future.”
Goronkin, who was previously president and chief executive of Bennigan’s Franchising Co., replaced Richard Rivera, who stepped down in April after two years as chair and chief executive of Real Mex.
Real Mex operates 177 domestic restaurants under the Chevys Fresh Mex, El Torito, Sinigual and Acapulco Mexican Restaurants Y Cantina brands, and another 22 Chevys are franchised or licensed. Additionally, the company licenses eight international El Torito locations.
Also among Real Mex restaurants are small regional brands or one-unit locations under the Las Brisas, Casa Gallardo, El Paso Cantina and Who-Song & Larry’s brands.
The company also owns Real Mex Foods Inc., a manufacturing subsidiary that makes branded products for its restaurants and other brands.
In recent years, Real Mex has struggled against economic headwinds, especially in the chains’ core market of California where the majority of the company’s restaurants are located.
For the March 27-ended quarter, Real Mex reported a loss of $5.4 million, compared with a loss of $4.6 million in the same quarter a year ago.
Revenue declined by 3.5 percent to $116.2 million for the quarter, which was primarily due to a $4 million drop in restaurant sales. The company had five fewer restaurants open in the first quarter compared with the same time a year ago.
First quarter same-store sales across all brands fell 1.6 percent, which was blamed primarily on a 3.8-percent reduction in guest counts that was partially offset by a 2.3-percent increase in average check.
According to the St. Louis Post-Dispatch, the franchise owner of seven Chevys locations filed Chapter 11 bankruptcy protection on July 21.
O’Fallon, Ill.-based T&J Restaurants reportedly planned to close two locations, one of which closed earlier this week, leaving six for which the company would seek lease negotiations and continue operations.
Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout
McDonald’s news, from the debut of a more healthful Happy Meal to a strong second quarter, proved to be most popular this week on NRN.com. The industry’s largest chain said its traffic held up this summer even after two small price increases were taken.
Readers also clicked on big news in the coffee and snack segment. On Wednesday, Dunkin’ Brands Inc. sold 22.25 million shares in its initial public offering, bringing in about $423 million. Its stock jumped more than 46 percent on its first day of trading. And while Dunkin’ was thriving, Seattle’s Best Coffee, a secondary brand owned by Starbucks Corp., took a hit as a result of Borders liquidation. Seattle’s Best shuttered 248 cafés, all located in Borders Superstores.
NRN also offered an exclusive look at Subway’s effort to open restaurants in non-traditional locations, from churches to construction sites.
Click through NRN’s Weekly Wrap slide show for the top 10 stories for the week of July 25, including Red Mango’s new CEO, the sale of quick-service chicken chain Bojangles’ and P.F. Chang’s strategy to turnaround sinking sales.
Subscribe to the NRN Weekly Wrap, a Friday newsletter with the week’s most popular stories delivered to you.
HVS Executive Search and Nation’s Restaurant News have joined forces once again to produce an in-depth executive compensation study for senior level executives in the U.S. restaurant industry.
The study will look at total rewards and provide benchmarking and best-practice analysis related to chain restaurant industry compensation trends.
“Talent management continues to be an extremely important issue,” said David Mansbach, partner of HVS Executive Search and an advisory board member for the study. “Understanding and setting compensation strategies for senior leadership will be critical for all high performance restaurant companies.”
Mike Speck, vice president, human resources and training for Qdoba, and an advisory board member adds, “Benchmarking compensation data is most valid and useable when combined with the industry best practice analysis to make the information timely and relevant. Data alone never accounts for the many stages of business development.”
Participate in the survey today.
Participation is free of charge, and all responses are strictly confidential. Those who participate will receive a copy of the final report, which will include a deep dive into the data via segment, company size, position and other metrics. Nation’s Restaurant News will cover top line trends in a special report in October.
The deadline for participation is August 31.
For more information or any question, please contact:
David Mansbach
Partner – North America
HVS Executive Search
369 Willis Ave.
Mineola, NY 11501
Tel : +1 516 248-8828 ext. 262
Mobile: +1 516 286-0150
Email: dmansbach@hvs.com
With traffic and same-store sales improving, more restaurateurs are making capital expenditures and feeling optimistic about their prospects, the National Restaurant Association reported Friday.
The NRA’s Restaurant Performance Index rose to 100.6 in June after dipping to 99.9 in May. RPI values above 100 indicate that key industry indicators are expanding, while figures below 100 indicate contraction.
“The RPI’s solid improvement in June was due in large part to stronger same-store sales and customer traffic performances,” said Hudson Riehle, senior vice president of the Research and Knowledge Group for the association. “In addition, restaurant operators are optimistic that their sales environment will improve in the months ahead, while their outlook for capital spending also remains strong.”
The RPI is comprised of a Current Situation Index and an Expectations Index.
The Current Situation Index measures same-store sales, traffic, labor and capital expenditures, and jumped to 100.5 in June after hitting 99.2 in May. That index was above 100 in March and April, showing that those indicators are expanding.
The Expectations Index, which measures operators’ six-month outlook for same-store sales, employees, capital expenditures and business conditions, crept up to 100.7 in June from 100.6 in May. June was the 11th consecutive month the Expectations Index was over 100, but it had been declining the three months prior.
A slight majority of operators, 51 percent, reported improved year-on-year same-store sales in June, up from 39 percent in May.
Fewer operators reported declining same-store sales in June than in May — 31 percent, down from 40 percent.
Improved traffic levels were reported by 44 percent of restaurateurs, up from 33 percent in May, while 33 percent said traffic was down, compared to 41 percent in May.
Regarding capital expenditures for equipment, expansion or remodeling during the past three months, 48 percent of operators said they were making such investments, up from 44 percent in May.
Operators were about as optimistic for future prospects in June as they were in May, with 40 percent saying they expected higher sales in six months in June, compared to 41 percent in May.
Sixteen percent said they thought sales would be down in six months, compared to 20 percent in May.
Restaurateurs are feeling less optimistic about the overall economy, with 26 percent saying they expect economic conditions to improve. That’s up from the 24 percent who reported similarly in May.
But 20 percent said they expected economic conditions to improve, down from 21 percent last month.
Half of the restaurateurs reported plans to make capital expenditures in the months ahead, the same as last month’s figures.
The RPI is based on responses to the NRA’s monthly tracking survey. The full report is available online.
Watch a video of Riehle analyzing the results
Contact Bret Thorn at bret.thorn@penton.com.
Follow him on Twitter: @foodwriterdiary
Houston-based Ignite Restaurant Group Inc., parent company of the 117-unit Joe’s Crab Shack chain, filed with securities regulators its intent to hold an initial public offering of stock, hoping to raise $100 million.
Ignite did not reveal in its Friday filing how many shares it would sell or what the initial share price would be, but the company did express its intent to use proceeds from the sale to pay down debt. As of March 28, Ignite had $120 million in outstanding debt under a secured credit facility.
The company reported net income of $11.6 million for fiscal 2010, an improvement from the $3.2 million net loss recorded for fiscal 2007. In its most recent fiscal quarter, same-store sales increased 9.4 percent, the company reported.
The company changed its name to Ignite Restaurant Group in 2009. Prior to that, it had been named JCS Holdings, resulting from the 2006 sale of 120 Joe’s Crab Shack restaurants to private-equity firm J.H. Whitney Capital Partners from former parent Landry’s Restaurants Inc. The move signaled Ignite’s plan to develop not only the Joe’s casual-dining brand but also its proprietary concept, Brick House Tavern + Tap. There are now 17 locations of Brick House, which first debuted in 2008.
Ignite’s expansion plans detailed in its filing call for 10 Joe’s Crab Shack restaurants and four Brick House units to open in fiscal 2011.
Over the past three fiscal years, Ignite has grown by seven net restaurants, including 14 openings, seven closures and the conversion of three Joe’s Crab Shack units to Brick House locations. As of this month, Joe’s Crab Shack had opened six locations of its new prototype.
Ignite said in its filing with the U.S. Securities and Exchange Commission that Credit Suisse, Baird and Piper Jaffray would underwrite the IPO.
The company is led by chief executive Ray Blanchette, former president and chief operating officer of the Pick Up Stix fast-casual chain.
Contact Mark Brandau at mark.brandau@penton.com.
Follow him on Twitter: @Mark_from_NRN
China has said that it will build credit files for all food companies and ingredient manufacturers in the country in order to better regulate against incidence of bad food quality.
