Article Excerpt:
TWST: Michael, we've seen a lot of activity recently in this industry from a financial perspective. What has generated all of this hubbub?Mr. Smith: I think it probably got started with Chipotle (CMG) earlier this year. When you have an offering where a stock comes out at $22 and immediately doubles in price, that creates a certain interest in the sector. And of course, you have hedge funds that are applying similar pressures throughout the industry, whether it be with Wendy's (WEN), Cracker Barrel or Outback Steakhouse (OSI), to try and unleash some value from either breaking up the company or monetizing their real estate.
TWST: Why now? Is it because Chipotle showed some of the players that
there's value here that wasn't being realized, or was there some other
trigger?
Mr. Smith: I think the trigger is that the valuation for some of the
faster growth concepts is higher than it has been in the past. As a
result, people look at some of these concepts and say, 'You should be a
company on your own, as opposed to being part of something.' Also, many
restaurant companies have shunned the opportunity to own real estate,
and those with these assets on the books are likely to be carrying the
property at a value lower than its current market.
Tickers included in this excerpt: APPB, BUCA, CAKE, CBRL, CHUX, CMG, DRI, EAT, KONA, LNY, MCD, OSI, PFCB, PNRA, RRGB, WEN
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