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Hornius Emeritus

A farewell to Dairy Queens

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I assume Wendy's will have problems also. I recently read an article that stated a lot of franchises were downsizing the number of stores this year. The ones I remember off hand are Sbarros, Carrabbas, Hooters, Joe's Crab Shack, Papa Murphy's, Pizza Hut, QDoba, Subway, Applebees, Ruby Tuesday, Quiznos, Chilies, Cheddars

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DQ has changed a lot over the last 15 years. Their steak finger basket used to be my go-to but they've done something to the recipe to change it. They even got rid of the starkiss bars. I've only been able to find one store that had them and it was in Clinton, OK. Now all they have is the red white and blue ones. Just not the same.

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I assume Wendy's will have problems also. I recently read an article that stated a lot of franchises were downsizing the number of stores this year. The ones I remember off hand are Sbarros, Carrabbas, Hooters, Joe's Crab Shack, Papa Murphy's, Pizza Hut, QDoba, Subway, Applebees, Ruby Tuesday, Quiznos, Chilies, Cheddars

Boy....that’s a real murderers row of meh.

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2 hours ago, ImissWallyPryor said:

 Pig Stands invented Onion Rings, along with drive-ins and carhops.  The last two date back to it's beginning in 1921(?).  I'm not sure about the onion rings, but I remember reading that they had them in the 20s. How old was your pops?

Me and my buddies cruised the South Austin Pig Stand and the Barton Springs Holiday House on Friday nights in the early 1960s.

Straight out of American Graffiti.

 

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2 hours ago, Brisketexan said:

It's open and shameless theft that skims billions off of the country's GDP and value, and not only are we not supposed to be mad, we're supposed to ADMIRE them for being such clever thieves.

Meanwhile, thousands of people lose their jobs when the whole deal crumbles a few years later.  But hey, the investment bankers got $150 million in fees at closing, so they don't even care when the news of the bankruptcy crosses the screen of the 10th TV in the workout room of their 5th home (this one's in Aspen).  And those people who just lost their jobs?  Well, they just should have worked harder.  And if they need some cash to get them through, maybe they should sell one of their pieces of art or something.

KKR bought controlling interest in my family’s company back in the day and infused a bunch of needed capital to allow us to do major cap ex.  And in two years they flipped it and made major cash.  It was a great deal for them and our family.  They were such pros.  

My granddad took me to New York to meet Henry Kravis after the flip.  I was just out of college.  I think the man had $50 million in paintings in his office.  We had lunch off a printed menu in his office served on silver platters.  He has a very magnetic personality.  

So interesting how his firm works.  Very few employees considering the business they do.  Everyone there, including secretaries, shares in the profits.  

Read Barbarians at the Gate recently about their purchase of RJR Nabisco.  

Very interesting business.  

Edited by Johnny Sack

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34 minutes ago, Bevo&Pevo said:

We travel the same roads.  Alvin's is clean and good FYI.

Stay clear of Angleton’s. It’s only 2-3 years old but terrible. I gave them at least 25 chances (not much else there). 

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28 minutes ago, Brisketexan said:


Boy....that’s a real murderers row of meh.

Sbarro is probably dying due to loss of habitat. The mall food court is an endangered species. As for the others, I've never been to some, never heard of others, and haven't eaten at the rest in five years (Subway, under duress) or much, much longer than that. 

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Sbarro is probably dying due to loss of habitat. The mall food court is an endangered species. As for the others, I've never been to some, never heard of others, and haven't eaten at the rest in five years (Subway, under duress) or much, much longer than that. 

Sbarro...best place to get a real New York slice!

 

Confession - I always kinda liked Sbarro.

 

Oh....and there’s nothing sadder than experiencing a long flight delay at Boston Logan while you’re in the terminal where the best option is a goddamned Qdoba, but you can literally see through the glass partition the huge Legal Seafoods, with a full bar, the next terminal over.

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Just now, Brisketexan said:


Sbarro...best place to get a real New York slice!

Confession - I always kinda liked Sbarro.

No shame in that -- damn solid for a food court. It was about as good Italian as you could find in Nashville in the '80s. (Which is kinda like "best enchiladas mole in New Hampshire" but whatever.)

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5 hours ago, Brisketexan said:

It all just became a game of musical chairs.

Acquire business with borrowed money, rearrange things, cut costs, do whatever to make the numbers look good....unload it for a nifty profit (repay loans, pocket kajillions)....new buyer does the same, etc. etc. until someone is left holding the asset when the music stops, and the reality of "but now this is a shitty business that consumers no longer patronize" hits.  And, bankruptcy.  Last guy left gets the shaft, everyone beforehand pockets cash earned based on a fantasy that everyone wants to believe in.

Borrow money from whom? This is a PE firm so its not like they issue junk bonds to the public where people that invested are screwed. They'd have to borrow it from a bank, banks that know these restaurant businesses.  And  these banks don't just shell out money to businesses without collateral, especially restaurants. But even before they do that, they would have to put a sizable downpayment(25 to 40 percent) towards the business that's hard cash generally belonging to the investors. This isn't a pump and dump scheme, the investors are the ones that get screwed here along with everyone that's involved with the business because it is a shitty business indeed.  

You also cannot just rearrange things in these restaurants to make numbers look "good". There just aren't enough margins to do that. 

The problem with franchises is that they run on extremely thin margins. A free standing location like DQ must do over 1.2 million in revenue at a minimum to break even given the expenses. From that $1.2 million, 33 percent will go towards labor, 33 percent will go towards food cost, 10 percent will be occupancy costs, 20-30 percent to other miscellaneous costs. If there's any money leftover, its profit. The numbers look better once the volumes are higher because the unlike labor and food cost the occupancy and miscellaneous costs stay the same. I have actual P/L's of many many different concepts and I'd be happy to share if you'd like to see.

To make numbers look "good" like you suggest one would have to cut labor which is almost impossible given how tight these things are run. 

Source: I own and run multi unit franchises and know them inside out. 

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32 minutes ago, MaybeACoordinator said:

Sbarro is probably dying due to loss of habitat. The mall food court is an endangered species.

As long as there's turnpike gas stops, there will be Sbarro.

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3 minutes ago, hornhorn said:

Borrow money from whom? This is a PE firm so its not like they issue junk bonds to the public where people that invested are screwed. They'd have to borrow it from a bank, banks that know these restaurant businesses.  And  these banks don't just shell out money to businesses without collateral, especially restaurants. But even before they do that, they would have to put a sizable downpayment(25 to 40 percent) towards the business that's hard cash generally belonging to the investors. This isn't a pump and dump scheme, the investors are the ones that get screwed here along with everyone that's involved with the business because it is a shitty business indeed.  

You also cannot just rearrange things in these restaurants to make numbers look "good". There just aren't enough margins to do that. 

The problem with franchises is that they run on extremely thin margins. A free standing location like DQ must do over 1.2 million in revenue at a minimum to break even given the expenses. From that $1.2 million, 33 percent will go towards labor, 33 percent will go towards food cost, 10 percent will be occupancy costs, 20-30 percent to other miscellaneous costs. If there's any money leftover, its profit. The numbers look better once the volumes are higher because the unlike labor and food cost the occupancy and miscellaneous costs stay the same. I have actual P/L's of many many different concepts and I'd be happy to share if you'd like to see.

To make numbers look "good" like you suggest one would have to cut labor which is almost impossible given how tight these things are run. 

Source: I own and run multi unit franchises and know them inside out. 

Can't speak to any specific PE firm, and this apparently isn't how you run your franchises, but I can assure you that banks make/facilitate bad loans for restaurants all the time. I'm constantly collecting on SBA loans for them. Million dollar loans, and <$30k in collateral. Subway franchises are the most common ones that come across my desk and are simultaneously the biggest shit shows by far. Yet, banks still lend on them.

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13 minutes ago, SquishMitten said:

Can't speak to any specific PE firm, and this apparently isn't how you run your franchises, but I can assure you that banks make/facilitate bad loans for restaurants all the time. I'm constantly collecting on SBA loans for them. Million dollar loans, and <$30k in collateral. Subway franchises are the most common ones that come across my desk and are simultaneously the biggest shit shows by far. Yet, banks still lend on them.

 

But those bad loans are collateralized with real estate. 

Subways are much smaller however and most times do not include real estate, if your bank is allowing <$30K downpayment for a million dollar loan, sign me up.

Also Subways go on how much they do per week in revenue. Average unit volume for a Subway is $250,000/year which is $5,000/week and they range around 30 to 40 multiple for that. As in a $5000/week revenue Subway with a decent lease will cost around $200,000 all in. So if you're getting paperwork for million dollars, those Subways are extremely high revenue Subways and are making a lot of money on their own. I'm thinking typically around $30,000/week or more which indicates that there are problems with the operators and not stores.

And finally, its been a while for me but since you mentioned SBA loans, PE firms won't qualify for those as the maximum borrower net worth for SBA loans is $5,000,000. And asset net worth of $15,000,000. 

Edited by hornhorn

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Restaurants biz is generally a terrible industry - way too much capacity for a roughly stagnant diner base. The fast casual segment like Chipotle, Panera and Shake Shack has squeezed both fast food and low end dine-in options like Red Robin and Chilis. 

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1 hour ago, Armybrat said:

Me and my buddies cruised the South Austin Pig Stand and the Barton Springs Holiday House on Friday nights in the early 1960s.

Straight out of American Graffiti.

 

Where was it located?

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In the case I worked, the LBO money came from insurance companies as institutional lenders. And the buyer absolutely tried to trim costs like mad to make the outfit attractive for a buyer. He just wasn’t any good at it.

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7 hours ago, Lat22 said:

I had a Country Basket at the Odem DQ yesterday.  Hits close to home and such.

 

ive also stopped at that DQ, many times 

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4 minutes ago, Brisketexan said:

In the case I worked, the LBO money came from insurance companies as institutional lenders. And the buyer absolutely tried to trim costs like mad to make the outfit attractive for a buyer. He just wasn’t any good at it.

My experience is they both cut costs and spend on cap ex.  

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5 hours ago, El Diablo said:

The steak finger basket is one of the things I found so disappointing. Anyone remember "Grandy's"? The "home cookin'" restaurant that served up fresh from the freezer crap? Very similar quality. Pfft.

Grandy's steak biscuit with gravy and their cinnamon rolls should be in the breakfast hall of fame 

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7 hours ago, Lat22 said:

I had a Country Basket at the Odem DQ yesterday.  Hits close to home and such.

 

dairy burger steak  fingers are faaaaaaaaaaaaaaaaaaaaaaaaaar superior. #protip, dump your hot sauce in the gravy 

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My experience is they both cut costs and spend on cap ex.  

Well, he did the first, not the second. Except, you know, a company Ferrari and apartment in a NYC high rise.

Thus my involvement in the case, as a litigator.

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31 minutes ago, 6th Street said:

Restaurants biz is generally a terrible industry - way too much capacity for a roughly stagnant diner base. The fast casual segment like Chipotle, Panera and Shake Shack has squeezed both fast food and low end dine-in options like Red Robin and Chilis. 

Yep, pretty much. It has become a volume business and by volume I mean a single franchisee owns dozens if not hundreds of restaurants.

For e.g. all the Burger Kings, Popeyes, Krispy Kremes in Dallas and Miami are owned by one franchisee. He has the ROFR to any new BK locations coming up on sale west of Mississippi.

All the Jack in the Boxes in Dallas, and Northern California, about 250 of them are owned by one franchisee. 

All the Applebees in Dallas and East Texas are owned by one franchisee.

All the Wendy's in Dallas, all 100 some locations owned by one franchisee.

Although all of these are businesses created and or acquired by mom and pop, one generation franchisees, they have a large number of employees and obligations towards the franchisors and lenders. 

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4 minutes ago, Brisketexan said:


Well, he did the first, not the second. Except, you know, a company Ferrari and apartment in a NYC high rise.

Thus my involvement in the case, as a litigator.

That’s fair. I just have knowledge of our one deal.  Which probably doesn’t mean much. Just saying they made money and my family made money.  And the company that bought us would have made money but they were incompetent and fucked it up.  Didn’t matter to us or KKR because we cashed out long before the buyer’s shitty management mattered.  

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Had the taco basket at DQ in Lockhart a year or so back. Perfectly fine shitty hardshell gringo tacos. Would eat again.

I maintain that the DQ T-brand tacos are secretly the best thing on their menu. They’re arguably the definitive crispy gringo Texan taco.

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Was visiting the Empire State Building. Long line to get in. Hang out enjoying the view for a while. Finally get out. Had done a lot of walking and was really, really tired, it was hot. I just wanted the first place with some food and a drink. First place I see is Sbarro. I had never been in. Had to have food.

I should have known by the smell. It was like going to the buffet in a small town in Texas. Or the taqueria where where nobody cares. I ate the first bite and it was flat out gross. Just insanely bad. How can you fuck up pizza? How does the place even exist? Just astouningly bad. Got damn. #neveragain

That's my Sbarro story.

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But those bad loans are collateralized with real estate. 
Subways are much smaller however and most times do not include real estate, if your bank is allowing Also Subways go on how much they do per week in revenue. Average unit volume for a Subway is $250,000/year which is $5,000/week and they range around 30 to 40 multiple for that. As in a $5000/week revenue Subway with a decent lease will cost around $200,000 all in. So if you're getting paperwork for million dollars, those Subways are extremely high revenue Subways and are making a lot of money on their own. I'm thinking typically around $30,000/week or more which indicates that there are problems with the operators and not stores.
And finally, its been a while for me but since you mentioned SBA loans, PE firms won't qualify for those as the maximum borrower net worth for SBA loans is $5,000,000. And asset net worth of $15,000,000. 

SBA loves blue sky/goodwill in their programs.

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Just now, T’Boo Ted Marshall said:


SBA loves blue sky/goodwill in their programs.

True but even SBA, requires a mandated minimum 10 percent downpayment and typically since you go through a lender with SBA guarantee they'll require 25 to 30 percent. 

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Most of the time yes. They do have a newer “expansion” program that allows for 0% down, or so I’m told by some of the lenders we work with.
I’m trying this with one trucking firm that wants to buy another but I’ll believe it when I see the term sheet and commitment letter.

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26 minutes ago, Thetexashammer said:

Was visiting the Empire State Building. Long line to get in. Hang out enjoying the view for a while. Finally get out. Had done a lot of walking and was really, really tired, it was hot. I just wanted the first place with some food and a drink. First place I see is Sbarro. I had never been in. Had to have food.

I should have known by the smell. It was like going to the buffet in a small town in Texas. Or the taqueria where where nobody cares. I ate the first bite and it was flat out gross. Just insanely bad. How can you fuck up pizza? How does the place even exist? Just astouningly bad. Got damn. #neveragain

That's my Sbarro story.

You haven't had scraped the bottom of the barrel for pizza until you've been to CiCi's.

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You haven't had scraped the bottom of the barrel for pizza until you've been to CiCi's.

....in Lake Jackson...on a Saturday night...there were people there ON DATES.

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4 minutes ago, Brisketexan said:


....in Lake Jackson...on a Saturday night...there were people there ON DATES.

I remember when it was $3.99 with student ID and I'd make my date bring hers so we could get that deal. I guess you were too cool for that brisket.

Not me!!!

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33 minutes ago, T’Boo Ted Marshall said:

Most of the time yes. They do have a newer “expansion” program that allows for 0% down, or so I’m told by some of the lenders we work with.
I’m trying this with one trucking firm that wants to buy another but I’ll believe it when I see the term sheet and commitment letter.

Oh do they? Like I said, it been a while for me that I've looked for a SBA loan so unsure of their newer "expansion" programs.

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1 hour ago, Thetexashammer said:

That's my Sbarro story.

If you have to eat Sbarro get the stromboli. Easier to throw.

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1 hour ago, Thetexashammer said:

Was visiting the Empire State Building. Long line to get in. Hang out enjoying the view for a while. Finally get out. Had done a lot of walking and was really, really tired, it was hot. I just wanted the first place with some food and a drink. First place I see is Sbarro. I had never been in. Had to have food.

I should have known by the smell. It was like going to the buffet in a small town in Texas. Or the taqueria where where nobody cares. I ate the first bite and it was flat out gross. Just insanely bad. How can you fuck up pizza? How does the place even exist? Just astouningly bad. Got damn. #neveragain

That's my Sbarro story.

The Fat Boys disagree with  you 

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7 hours ago, T’Boo Ted Marshall said:

Also. Had a Dude at the Mt Vernon DQ last week. It slammed and went hard.

Was he on the HS football team?

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Who needs DQ when we've got...
  1. o.jpg


I like that their posted email address is something like mayfieldsdairyqueen@gmail.com. At least a few years ago, it still was that address. Same guy owns at least one DQ. Might as well replicate it and not pay any franchise fees.

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The one in Dripping Springs was usually pretty good.  Haven’t been there in a couple years though.


20 years ago at lunch, they had a small sand hour glass. When the register closed they turned it over. If your food wasn’t on the counter in 2 minutes it was free.

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8 hours ago, hornhorn said:

Yep, pretty much. It has become a volume business and by volume I mean a single franchisee owns dozens if not hundreds of restaurants.

For e.g. all the Burger Kings, Popeyes, Krispy Kremes in Dallas and Miami are owned by one franchisee. He has the ROFR to any new BK locations coming up on sale west of Mississippi.

All the Jack in the Boxes in Dallas, and Northern California, about 250 of them are owned by one franchisee. 

All the Applebees in Dallas and East Texas are owned by one franchisee.

All the Wendy's in Dallas, all 100 some locations owned by one franchisee.

Although all of these are businesses created and or acquired by mom and pop, one generation franchisees, they have a large number of employees and obligations towards the franchisors and lenders. 

Who is the Wendy's guy? I had a cousin in Columbus who just passed who at one time owned about 100 Wendy's in Texas. His business partner who ran day to day operations is still working, though.

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7 hours ago, hornhorn said:

I remember when it was $3.99 with student ID and I'd make my date bring hers so we could get that deal. I guess you were too cool for that brisket.

Not me!!!

Eh, we would go to Bananas and get potted. I don't remember who made the Pizza downstairs, but it didn't really matter after the buzz.

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8 hours ago, Brisketexan said:


....in Lake Jackson...on a Saturday night...there were people there ON DATES.

After Mr Gattis packed up and left in the mid-90’s, that CiCis was the best pizza in town. Hit the CiCis then the Academy in the same parking lot at least a million times growing up.  Ate there a year or two ago when I had to run into town to hit the Academy and it was f’n disgusting.  There’s at least 15 restaurants for date nights now, but when I was growing up it was Red Lobster or if you really wanted to deal the deal sneak her up to Pearland where the options were limitless (slightly better). 

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9 hours ago, ImissWallyPryor said:

Where was it located?

Live Oak & South Congress. (East side of the intersection next to the little triangular park)

It is now a Salad & wine bar called Viniagrette. Even the old covered drive-in parking cover is still there (the long “wavy” roof next to Post Road). Used to order burgers & shakes on the intercom, and the bumper jumpers (Travis High School chicks) would bring the food out and hook the trays on the drivers side window.

it was a good place to pick up South Austin’s grandma.

 

Edited by Armybrat

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1 hour ago, Armybrat said:

Live Oak & South Congress. (East side of the intersection next to the little triangular park)

It is now a Salad & wine bar called Viniagrette. Even the old covered drive-in parking cover is still there (the long “wavy” roof next to Post Road). Used to order burgers & shakes on the intercom, and the bumper jumpers (Travis High School chicks) would bring the food out and hook the trays on the drivers side window.

it was a good place to pick up South Austin’s grandma.

 

You probably ran into my Dad and his hoodlum Travis Heights friends.  I've heard more Pig Stand stories over the years than I could possibly remember.

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12 hours ago, Armybrat said:

Me and my buddies cruised the South Austin Pig Stand and the Barton Springs Holiday House on Friday nights in the early 1960s.

Straight out of American Graffiti.

 

*I and my buddies*

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