Cendant officially splits, sells off travel services
Cendant officially split into four groups on August 1, as the conglomerate seeks to provide better value for shareholders.
Two publicly traded companies that have been spun out of Cendant are Realogy, which provides real estate services, and Wyndham Worldwide, which includes hotels and timeshare resorts. Realogy’s brands include Century 21 and Coldwell Banker. Wyndham Worldwide brands include Wyndham, Ramada, Howard Johnson, Travelodge, Days Inn and Super 8.
Stephen Holmes, CEO of Wyndham Worldwide, says the split allows the hospitality company to focus its human and financial capital on growing the business. He adds the company expects to see revenue growth during the next several years “in the 8 to 11 percent range.”
As part of the split, Cendant is expected to sell its Travelport unit, which provides travel distribution services, to an affiliate of the Blackstone Group for $4.3 billion in cash. Holmes reports that Wyndham Worldwide will receive roughly $700 million from the proceeds of that sale, which will allow the hospitality company to decrease its debt.
The remainder of Cendant will become its car rental business, Avis Budget Group, which provides car rentals through the Avis and Budget brands. Cendant shareholders voted on the name change of the car rental business during a meeting at the end of August.
Former Damon’s Grill CEO launches Rooster’s franchise
Former Damon’s Grill CEO Shannon Foust is now heading the new franchising arm of Rooster’s, a full-service restaurant that offers a full bar and menu with items such as chicken wings, pizza and burgers. Rooster’s, founded in Dayton, Ohio in 1989, currently has 11 corporate-owned locations in Dayton and Columbus. Foust joined Rooster’s founders Bob and Corin Frick and their partner Dan Pompton to fund Rooster’s Franchising LLC.
To keep costs down, Foust says, franchisees will be required to convert existing restaurants to the Rooster’s concept, rather than build new locations. Foust estimates that initial development costs for a Rooster’s ranges from $150,000 to $750,000, depending on the shape of the building.
Plus, in a move to keep corporate overhead low, no headquarters office is planned. Foust and other support personnel will work from home-based offices. “With the advances in telecommunications, there’s less need for a traditional corporate office, which is a big expense ultimately paid for by franchisees,” Foust says. He expects to sign the first franchise agreement for Rooster’s by this fall.
Roark Capital acquires DX Marketing
Roark Capital Group acquired DX Marketing, which provides market research, customer prospecting, data mapping and digital printing services to direct mail advertisers. Financial terms were not disclosed.
DX Marketing, which has facilities in Savannah, Ga., and Jacksonville, Fla., will become a subsidiary of Money Mailer Holding Corp., a company owned by Atlanta-based Roark Capital and Money Mailer’s management. Garden Grove, Calif.-based Money Mailer is a direct marketing company that mails 175 million envelopes to 21 million households on behalf of more than 30,000 local, regional and national advertisers.
Roark Capital Group is a private equity firm that acquires majority positions in franchise, direct marketing, financial services, niche manufacturing and service businesses. It has more than $560 million of equity capital under management and also owns Carvel, Seattle’s Best Coffee International, Cinnabon, Wood Structures Inc. and McAlister’s Deli.
Wendy’s cuts corporate staff
As part of a reorganization and cost-cutting plan, Wendy’s International Inc. cut 355 jobs and rearranged its management team. The plan, dubbed Next Chapter, is an attempt to reduce annual expenses by $100 million, the company said. In July, the company announced its second-quarter pretax loss was $26.0 million compared to pretax income of $106.7 million in 2005.
The reorganization at Wendy’s began in May when the company appointed Dave Near as its chief operations officer. Since then, four vice presidents have accepted voluntary early retirement and a fifth left Wendy’s in September to take a job with another company. In May, Wendy’s offered early retirement to about 175 employees but did not disclose the number that accepted.
Ace Hardware receives $60 million-plus in loans
National Cooperative Bank, a cooperative financer, provided more than $60 million in loans to Ace Hardware retailers across the country during the past five years. Thomas Cyr, vice president of small business services for the bank, said the loans were given to individual members of the Ace Hardware cooperative to use for refinancing existing debt, opening new locations or improving current stores.
Yum Brands to acquire U.K. Pizza Huts
Yum Brands Inc. plans to acquire the remaining shares of 541 Pizza Huts in the United Kingdom from joint-venture partner, Whitbread PLC. Yum Brands will purchase the shares for $183 million and will assume $25 million in debt and liabilities. The transaction is expected to close in the fourth quarter of 2006.
Whitbread’s decision to refocus its business to the hospitality and leisure industry provided Yum with the opportunity to acquire ownership of the company. During the next several years, Yum said it plans to reduce equity ownership of the 541 U.K. Pizza Huts by refranchising to new and existing franchisees. There currently are 125 U.K. Pizza Huts owned and operated by franchisees.
Business Women’s Network names new chair
Linda Burzynski was appointed chair of the Business Women’s Network, an international resource for women entrepreneurs. Burzynski also is president and chief executive officer of Liberty Fitness, a women’s health club franchise, which has 60 locations nationwide. At the Business Women’s Network, Burzynski will be responsible for business planning and development in relation to membership, sponsorships, events, publications and speakers.
7-Eleven purchases White Hen Pantry
7-Eleven Inc. purchased White Hen Pantry Inc., a Lombard, Ill.-based convenience store chain. Details of the sale were not disclosed. White Hen operates and franchises 206 stores in the Chicago-area and Northwest Indiana, as well as 55 units in Boston. 7-Eleven, a privately held Japanese-owned company, operates 161 stores in the Chicago-area.
In a released statement, 7-Eleven President and CEO Joseph DePinto called the purchase, “a strategic fit” that would “enhance market presence in the Chicago-land area.” With the acquisition of White Hen, 7-Eleven now operates nearly 400 stores in greater Chicago and more than 7,100 stores nationwide. According to the released statement, “White Hen stores will continue to operate for the near term as they have.”
Buffets and Ryan’s merge
In an $876 million transaction, Buffets Inc. will merge with Ryan’s Restaurant Group, making the combined company the nation’s largest buffet restaurant chain, operating around 675 restaurants in 42 states, with projected annual revenues of more than $1.7 billion.
The combined company, called Buffets Inc., will continue to operate Ryan’s brands, Ryan’s Grill, Buffet & Bakery and Fire Mountain, as well as Buffets’ restaurants, Old Country Buffet, Tahoe Joe’s Famous Steakhouse and HomeTown Buffet.
Ryan’s will operate as a separate division of Buffets and will remain headquartered in Greer, S.C.; Buffets will keep its headquarters in Eagan, Minn. Buffets currently franchises 18 buffet restaurants in seven states.