Max & Erma's sold
Ohio-based Max & Erma's has been sold. G&R Acquisition, Inc., a Pittsburgh-based company formed by Gary Reinert Sr., purchased the family chain for $10.2 million.
Under the deal, Reinert will pay $4 for every share of Max & Erma's, taking the company private.
Max & Erma's has been struggling in the last couple of years amid heavy debt and a difficult economy. Same-store sales fell 3.5 percent last year and another 4.5 percent in the first quarter of this year. Revenues fell last year and the 103-unit chain reported a $3.5 million loss. The declining revenues, sales and profits continued to fall in the first quarter.
The company acknowledged some customers stopped going there in 2006 because the chain used fewer coupons and, in 2007 cut TV advertising.
In December, the chain received a letter of deficiency from the Nasdaq stock exchange, saying it didn't meet the minimum market value.
In 2005 the chain introduced a new prototype – 6,300 square feet units with seats for 184 diners. It also started focusing on franchising – less than a quarter of its units are franchise owned, but eight of the nine stores under development are franchises.
"This transaction creates value and liquidity for our stockholders and a
recapitalization which will allow us to continue building the Max & Erma's brand," said Rob Lindeman, president and CEO of the chain who will remain with the company.
Reinert said in a press release that he would not be personally involved with the management.
Trufoods buys Ritter's
Trufoods, LLC added to its franchise lineup this spring, acquiring the Indianapolis-based Ritter's Frozen Custard. The new owner immediately promised to grow the franchise.
"We feel that Trufoods and Ritter's will make a great team moving forward," said Bob Ritter, Ritter's president and CEO. Ritter will stay with the company in a development role in which he will work with local franchisees on growing the brand.
The deal was Trufoods' first acquisition under its new chairman and CEO, Andy Unanue, who took over late last year. "We saw a lot of value and growth potential in Ritter's and thought it would be a great addition to our growing portfolio of brands," he said.
Under Trufoods, Ritter's will focus its attention on its home state of Indiana, concentrating on county seats, Ritter said.
Trufoods owns a handful of food franchises, including Arthur Treacher's Fish & Chips, Pudgie's Famous Chicken and Wall Street Deli. It specializes in revitalizing American brand names. Its brands remain small, with roughly 100 locations nationwide and system-wide sales of $40 million.
Unanue said his goal is to double or triple the company's units over the next five years, focusing first on expansion within existing geography where the brands already have strong name recognition.
DQ gets a new topping
Charles Mooty is handing the reins at International Dairy Queen to John Gainor.
The 47-year-old Mooty has been president and CEO of the Minnesota-based chain since January 2001 and has been with the company for 21 years. He announced in May that Gainor will take over as president and CEO on July 1. Mooty will remain as chairman of Dairy Queen until the end of the year.
Gainor, 51, joined the company in 2003 and was its chief supply chain officer. He has had several executive positions in the food-service industry, many of them with quick-service restaurant franchises. As head of the supply chain, Gainor has led an effort to reduce costs for franchisees by reducing the margins Dairy Queen earns on supply sales to storeowners.
"We have a highly respected group of employees across the globe who are truly committed to servicing and elevating our franchise community," Gainor said in a press release. "I look forward to the challenges and opportunities which we will face in this highly dynamic industry."
Dairy Queen has 5,600 units worldwide and is owned by the Warren Buffett-led Berkshire Hathaway. Under Mooty, the chain has seen same-store sales growth for seven straight years and, the company said, increases in franchisee profitability. But the chain has continued to face franchisee strife, notably its effort to move the brand toward either a food-centered DQ Grill & Chill or its treat concept, DQ/Orange Julius.
Franchisees recently sued the company over a requirement to change their units to one of those two brands, saying that there is no evidence such a change will be worth the cost to storeowners. Company officials, however, say that the change is required of stores by their franchise agreement.
Damico to lead Moe's
Paul Damico will lead Moe's Southwest Grill for Focus Brands.
As president of the 400-unit fast casual Tex-Mex chain, Damico will be counted upon to lead its growth over the rest of the year. Focus has plans to add 75 new Moe's locations this year.
Damico was previously the chief operating officer for 42 airport properties of SSP America, a restaurant concessions company. Before that, Damico was co-founder and vice president of operations for FoodBrand, LLC, a foodservice operator focused on restaurants and food courts.
"We were looking for the sort of leader whose experience reflected a strategic and long-term approach to operations and a sound grasp of concept development," said Focus Brands CEO Steve Romaniello. "Paul's extensive operational background and ability to lead people make him ideal for this role."
A news brief in the April edition of Franchise Times contained an error.
Precision Tune did not go private. It ceased filing financial reports with the SEC. The public can still purchase its shares through Pink Sheets.