By Mark Kalinowski
Published on February 12, 2019 at 12:00 AM
At the recent ICR Conference 2019, management of Darden Restaurants (DRI; Not Rated) — owner and operator of Olive Garden, LongHorn Steakhouse, and several other full-service restaurant concepts — stated that on the acquisition front, “$300 million in system sales is the lowest we’d look at,” while “$750 million to $1 billion would be better” as “we’d want any acquisition to matter.” Management also made clear that it would intend to be disciplined in terms of what it would pay for any potential acquisition: “a lot of things would have to line up… the right vehicle being available at the right price… we’re not going to chase something.” Given this context, what are some restaurant-concept possibilities that Darden might look at acquiring, if they were to become available to Darden at the right price? This report briefly examines some specific possibilities, including First Watch, Cooper’s Hawk Winery & Restaurants, and Black Bear Diner. Not coincidentally, these three privately-held concepts ranked #1, #2, and #3 in terms of their U.S. system sales growth rate during 2017 amongst all full-service restaurant concepts of size $200 million or larger. We note the following:
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By Mark Kalinowski
Published on December 6, 2018 at 12:00 AM
We recently met with Dine Brands (DIN; Buy) — including CEO Stephen Joyce, CFO Thomas Song, Controller Gregg Kalvin, and Executive Director, Investor Relations Ken Diptee — in Glendale, California. We thank these folks for their time! Topics of interest that we asked about include the ongoing success of Applebee’s “Neighborhood Drink of the Month” initiative and the issues with second-largest Applebee’s franchisee RMH. We reiterate our Buy rating on DIN and note the following:
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By Mark Kalinowski
Published on December 5, 2018 at 12:00 AM
Earlier today, Yum Brands (YUM; Buy) hosted an Analyst Meeting in New York City. The theme was “A World of Opportunities,” which highlights the global opportunities for the company’s KFC, Pizza Hut, and Taco Bell brands. Management says it wants all three brands to be distinctive, relevant, and easy brands. Going forward, management also indicates that collaboration amongst the brands will increase in importance, with management saying “our ability to collaborate will set us apart from our competitors.” This will be a positive if it can come to fruition, but for those on the Street — and we have been amongst them — who believe value can be unlocked by separating out one or more of Yum’s brands, management seems more dead set against that path than ever. Management states that there’s “simply no other restaurant company or retailer in the world like us,” and that “we’ve done from a mindset of being equity operators to being brand builders.” Management adds that “the four growth drivers drive same-store sales, they drive new unit growth, they drive system sales.” Those four growth drivers are: (1) distinctive, relevant, and easy brands, (2) unrivaled culture and talent, (3) bold restaurant development, and (4) unmatched franchise operating capability. We reiterate our Buy rating on YUM and note the following:
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