Week of Sept. 7, 2010

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Burger King Holdings Sold for US$4B — Going Private
Publicly-traded Burger King Holdings Inc. has been acquired by New York-based private-investment firm 3G Capital Management Inc. for US$24 a share, or some US$4 billion. The deal is expected to close before year-end and the company to be privatized. Burger King’s shares closed at US$16.45 on Aug. 31, with the sale price representing a 46 per cent premium before rumours of the impending deal surfaced. A Burger King press release also indicated the QSR chain is permitted to solicit better offers through mid-October. Despite the pending change, the Burger King focus won’t waiver. “We are committed to maintaining the superior guest experience [for which] the Burger King system is known for around the world as we transition ownership,” John W. Chidsey, the QSR’s chairman and CEO, said in a press release. Chidsey will remain in his current position during the transition period before assuming the role of co-chairman of the Board, a job he will share with Alex Behring, managing partner of 3G Capital, once the deal is complete.

Couche-Tard Raises Bid for Casey’s to US$2B
The Quebec-based Alimentation Couche-Tard Inc. has raised its bid for a second time for the Iowa-based Casey’s General Stores Inc., now offering US$2 billion, up from US$1.9 billion, for the U.S. 1,468-unit convenience store chain. Couche-Tard made its initial US$36-a-share, or US$1.85-billion, bid on April 9. Casey’s sells a wide variety of prepared foods, groceries, beverages, dairy and bakery products as well as beer and fountain drinks. “We remain ready, willing and able to complete a transaction with Casey’s expeditiously and urge the Casey’s Board of Directors to begin discussions with Couche-Tard immediately to maximize value for the Casey’s shareholders and make this combination a reality,” said president and CEO Alain Bouchard in a statement last Thursday. Casey’s responded by advising shareholders to refrain from taking any action while the Board reviews the revised tender offer and makes a recommendation.

Tim Hortons Franchisee War Heats Up — Maclean’s
“Tim Hortons’ move from fresh to frozen is threatening to rip apart Canada’s favourite company,” according to the cover of the Sept. 13 issue of Maclean’s magazine. Titled “The Donut War,” and sub-titled “Extra-Large Trouble Trouble,” the feature explains the $1.95 billion class-action lawsuit pitting dissident franchisees — led by Burlington, Ont’s Archibald Jollymore — against the company. The dissents claim the move to par-boiled frozen dough, initiated in March 2001, raised the cost of the average donut from the former six to nine cents to between 17 cents and 20 cents (17.9 cents, according to the company). One of the dissident franchisees, Cyril Garland, of Brampton, Ont., told Maclean’s the profit at one of his stores dropped by $57,000 per year. Interestingly, both Jollymore and Garland were previously senior officers of Tim Hortons (respectively executive vice-president and vice-president of finance) under a previous regime. They were hired by co-founder Ronald V. Joyce before he sold his interest in the company to Wendy’s in 1995. A hearing is scheduled for November. While much of this story has been reported in previous issues of TheWhat’sOnReport and in Foodservice and Hospitality magazine, the Maclean’s review offers a good summary of events.

F&B Sales Up 0.3 per cent in June, to $4.1B
There’s cause for optimism with news of modest sales growth at Canadian foodservice and drinking places. It turns out, F&B sales increased 0.3 per cent in June, seasonally adjusted compared to a month earlier, rising to $4.1 billion, according to Statistics Canada. Three of the four sectors reported gains with caterers, contractors and mobile-food operations up 2.3 per cent, limited-service restaurants up 0.7 per cent and drinking places up 0.7 per cent. The full-service restaurants group saw sales decline 0.7 per cent. Sales results by province were: Newfoundland and Labrador +1.3; Nova Scotia +1.2; New Brunswick -0.2; Quebec -1.6; Ontario +1.1; Manitoba +0.3; Saskatchewan +1.4; Alberta +0.7 and British Columbia -0.3. P.E.I. numbers were unchanged.

Starbucks VIA Sales Reach US$100M in First Year
The US$100-million boom in VIA coffee sales, expanding availability of Seattle’s Best Coffee and rapid remodel of traditional Starbucks’ coffee shops was discussed in a conference call last week with Howard Schultz, chairman and CEO of Starbucks. “VIA is performing like few consumer products ever have,” said Schultz, pointing out how sales increased rapidly since launch a year ago. Now, four new flavoured instant VIA coffees are being introduced at Starbucks stores and at retail. VIA is now available in some 37,000 distribution points throughout the U.S., Canada, U.K. and Japan.

Seattle’s Best Coffee availability is being extended “to ubiquitous points of distribution where the Starbucks brand has never lived and would not be compatible.” Available in about 3,000 locations just one year ago, Seattle’s Best is expected to extend to about 30,000 locations in the U.S. and Canada, including Subway restaurants, Burger King, AMC theatres and some 890 Canadian Mac’s Convenience Stores. There has also been discussion about adding the coffee to Taco Bell units.

The remodel of existing Starbucks units will accelerate in 2011, Schultz said. Plans were announced to remodel about 100 stores in 2010, and now another 1,000 have been targeted for next year. In the conference call, Schultz highlighted a “transformed” Starbucks unit on Spring Street in New York’s SoHo neighbourhood, where sales have improved due to faster service, an expanded menu with self-serve options and the availability of the Clover brewing system, acquired a few years ago.

An Inside Look at Hamburger University — CNN
“Inside Hamburger University” is short video made inside McDonald’s Corporation’s training facility where managers attend classes and develop their skills inside a simulated restaurant. Click here, to view the CNN clip, which aired Aug. 30.

George Weston Expands with US$185M Purchase
The Toronto-based George Weston Limited has announced an agreement to purchase — for US$185 million — Keystone Bakery, Belle Vernon, Pa., a manufacturer of frozen cupcakes, donuts and cookies sold to in-store bakeries and foodservice companies. The agreement was made through George Weston’s subsidiary, Maplehurst Bakeries, Brownsburg, Ind., which has facilities in Indiana, Georgia and Washington and operates a state-of-the-art frozen distribution network. Keystone Bakeries consists of three operating companies: Freed’s Bakery of Manchester, N.H., a leading supplier of frozen, fully finished cupcakes; Granny’s Kitchens of Frankfort, N.Y., a leading supplier of pre-fried and thaw-and-sell donuts; and Heartland Baking of DuQuoin, Ill., a specialty supplier of thaw-and-serve cookies. W. Galen Weston, the chairman and president of Weston, commented, “The combination of Keystone Bakery and Weston’s baking operations in the United States and Canada will allow us to better serve our customers in the North American sweet baked goods sector.”

Cruise Ship to Boost 24 “Cook-it-Yourself” Workstations
In an increasingly competitive cruise business, with 24,000 new beds this year and 17,000 next year, portsandbows.com reports that, starting Feb. 2011, the brand-new, 1,000 passenger, Marina — designed for the Vancouver to Alaska route — will feature a culinary learning centre with 24 workstations where passengers can work with a chef to create their own meals. And, for those who want to be served, the ship will have 10 restaurants.

Second Harvest Reaches Six-Million Milestone
Toronto’s Second Harvest charity reached a bittersweet milestone, delivering its six millionth pound of food this year — the first time in the organization’s 25-year history that such a high volume of food has been recovered in a fiscal year. “We are committed to feeding Toronto’s hungry, especially during difficult times,” says Melissa Dedic, a food raiser at Second Harvest. “This year, we responded to the dramatic increase in the demand for food by growing our food donations significantly. The food we recover and donate helps those most affected by the recession start rebuilding their lives.” In 2009, social-service agencies who received food from Second Harvest reported a 20 to 30 per cent influx of people in need. More specifically, there was a large increase of need from people affected by job loss or reduced work hours. All food items distributed by Second Harvest are perishable goods that would otherwise go to waste. Donations are supplied by restaurateurs, grocers, food manufacturers and distributors.

Panera Bread’s “Honour System” Paying Off
Panera Bread’s executive chairman Ronald M. Shaich told CNN last week that the company’s test “café of shared responsibility,” is a success. Here’s how it works: the customer is given a suggested retail price, the customer then anonymously pays what he or she feels the meal is worth by dropping the money in a canister. The national 1,399-unit bakery-café chain launched the new non-profit test store in Clayton, Mo., and it turns out 60 per cent of customers leave the amount owed, 20 per cent leave more and 20 per cent leave less — often much less. The pilot location is still branded as St. Louis Bread Co. Cares, the chain’s former name. The store is located in the upscale St. Louis suburb of Clayton and is run by a non-profit foundation. When asked by CNN “are you planning on opening mores stores like this,” Shaich replied, “We’re looking at it.” To watch the complete CNN interview, click here.

Barista Competition Returns to Vancouver
Baristas from Vancouver to Japan will get the chance to do their thing, competing in Blenz Coffee’s second annual That Barista Thing competition, to be held at the Vancouver Public Library Square on Sept. 18. This time around, the competitions are open for public viewing in the Free Pour Latte Art and Etching Latte Art category, with first-place cash prizes of $2,500 and $1,000, respectively, as well as second- and third-place prizes. On hand to judge the competition will be award-winning barista Sammy Piccolo, coffee expert Mark Prince, Scout magazine’s Andrew Morrison and co-host of Vancouver’s Urban Rush talk show, Fiona Forbes.  

SIAL 2010, Paris, Oct. 17 – 21
The European version of the international SIAL tradeshow, will be held from Oct. 17 to 21 at the Parc des Expositions de Paris Nord Villepinte, Paris. This year’s show will be themed “The Global Food Marketplace” and feature 5,500 exhibitors, 78 per cent of which are international exhibitors from 101 countries. Foodservice is the major interest for 37 per cent of the exhibitors, some 1,700 companies. Ten “theme trails” for foodservice will be offered at the show, including: Halal, Kosher, takeaway food, fair trade, responsibility and sustainability, organic products and private brands. SIAL’s Exposium Canada has offices in Montreal and Toronto. For more information, contact Tamar Kantarjiam at (514) 289- 9669 or visit sial.fr.

Chicago Marriott Brews Cherry Cola
Harvest restaurant, at the Chicago Marriott Downtown Magnificent Mile, is bringing back the old-fashioned soda-shop feel with its house-made cherry cola. Harvest produces its cola from fresh Michigan cherries cooked down to create that familiar sweet flavour. The Chicago Marriott culinary team works alongside Ron Filbert, who owns Filberts Root Beer Co., to combine carbonated water, sugar, natural cola flavour and other simple ingredients to make fresh local cherry cola. “Personally, I drink one almost every day, usually with a slice of lime over ice. It’s also a great mixer for an adult beverage when mixed with vanilla vodka or for dessert as a killer ice-cream float,” said executive chef Myk Banas who uses the fresh cherry cola in some of Harvest’s recipes, such as its Cola-glazed ham.

ClubLink to Acquire 7 Florida Golf Courses
ClubLink Corp., Mississauga, Ont., is in negotiations to buy seven golf courses located in the Sun City Center, a retirement community about 64 kilometres south of Tampa, Fla. Another Canadian group, Ottawa-based Minto Group Inc., has purchased a large block of building sites in the community from the U.S. developer WCI Communities Inc., a company, which recently emerged from bankruptcy. ClubLink currently owns 33 private courses.

Walter Keyser Retires from Holloway REIT
Halifax-based Holloway Lodging Real Estate Investment Trust has announced the retirement of Walter Keyser, 74, from his role as chair and trustee of the REIT. “Walter has been our chair since the inception of the REIT, and we thank him for his valuable contributions,” said Glenn Squires, CEO of the REIT. Holloway currently owns 22 hotels with 2,386 rooms.

Western Hotel Investment Conference, Oct. 18-19
The Western Canadian Hotel & Resort Investment Conference will be held at the Vancouver Convention Centre from Oct. 18 to Oct. 19. The event, hosted by CBRE Hotels Canada and HLT Advisory Inc., is designed for independent and multi-property developers/operators, hotel franchisors and recreational amenity providers. Topics of discussion will include: Financing Hospitality Projects In 2011 and Beyond; Condo Hotels, Timesharing and Other Approaches To Making The Project ‘Pencil,’ and Beyond The Boomers. For more information, click here.

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