Steak 'n Shake is off the market
Executives for struggling casual dining chain Steak n' Shake have taken the
company off the market, saying they didn't receive an offer they considered good
The company's board has instead decided to focus on improving unit economics and
turning around its brand. Among the efforts: Finding a new CEO. "We remain
confident in the long-term future of Steak n' Shake," said Alan Gilman, interim
CEO, who took over last year following the resignation of former CEO Peter Dunn.
The Indiana-based chain, known for its steakburger sandwiches and milkshakes,
has been fighting a significant downturn in business that it blames in part on
troubles with the casual-dining sector. The sector is struggling in an economy
that favors less expensive fare as diners wrestle with higher mortgage costs,
gas prices and other issues.
The 490-unit company lost $1.2 million in the fourth quarter of last year—down
from a $4.8 million profit in the same period a year earlier, according to its
most recent federal financial report. Revenues for that quarter fell 7 percent,
to $136.4 million—thanks to a 9.5-percent drop in same-store sales.
The reason for the falling sales: a 13.3-percent decline in guest counts.
The chain brought aboard two new board members, Sardar Biglari and Philip L.
Cooley. Biglari is CEO of The Lion Fund and the chairman of Western Sizzlin'
Corp. An activist investor who is seemingly involved in struggling restaurant
chains, he helped force the sale of Friendly's Ice Cream last year.
Precision Tune takes company private
Precision Auto Care has decided life would be easier as a private company. The
Virginia-based franchisor of Precision Tune has deregistered its common stock
and will no longer follow federal financial reporting requirements. The company
was able to do this because it had just 300 shareholders.
"The company's board of directors decided to take this action because it
believes that the burdens associated with operating as a registered public
company currently outweigh any advantage to (Precision Auto Care) and its
stockholders," said Robert Falconi, the company's president and chief executive.
He cited several reasons, including the cost of preparing and filing financial
reports and the legal requirements of being a public company.
In addition, stock trading is limited and no analysts cover it. Precision Auto
Care went public in 1997 following the merger of 10 companies and in subsequent
years its stock traded at more than $10 a share.
Yet the company quickly began bleeding cash and lost money for several years
while revenues fell. Precision Auto Care, which once oversaw several brands and
manufacturing companies, began selling off assets and pieces of the company to
get back to profitable territory.
Today the company, which in 2000 had 515 Precision Tune locations, now has 392
locations. The chain has nevertheless reached positive profit territory.
Revenues last year increased to $12.1 million from $11.7 million the year
before, though operating profit decreased to $699,000 from $1.2 million.
"Many small public companies are choosing to register because of the same
concerns," Falconi said. The company believes that deregistering will free
resources to use in other areas.
Sofitel goes green
Sofitel Hotels takes on clean, renewable, wind energy in all nine U.S. locations
after Accor North America announced its agreement in February with wind-energy
supplier Community Energy Inc. The hotel is the first chain to choose "green
power" for each of the brand's hotels.
The nine U.S. Sofitel properties will buy 1,527,000-kilowatt hours of renewable
energy, offsetting nearly 2 million pounds of carbon dioxide per year. With the
company's efforts to go green, Sofitel is the first hotel chain to become an EPA
Green Power Partner.
Domino's delivers 60 stores
Domino's Pizza last month announced that it has sold 60 stores in California and
Georgia to franchisees and employees for $20 million. The deal will provide the
pizza delivery company with cash for general uses. In addition, the Michigan-
based chain cut 55 positions in an effort to cut overall corporate costs.
Domino's is struggling with high costs and a decline in domestic sales. Same-
store sales in 2007 were down 1.7 percent—following a larger decline the year
before. That was offset by a 6.7-percent sales increase at international units,
and total revenues at the chain increased slightly last year to $1.46 billion.
Yet income from operations decreased nearly 10 percent, to $194 million.