Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
March 9, 2010








Economic Report:
Sponsored by:
Henny Penny
January NRA Index Falls, But Expectations Rise
Wholesale Food Prices Up As Menu-Price Increases Moderate
Demographics Driving Drop In Restaurant Evening-Meal Visits, NPD Says
Revised FER 2010 E&S Forecast Available

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Virginia Ponders Tracking Grease Handlers
Starbucks Opts For Local Laws On Handguns
Grease Traps Spur Local Ordinances
Kentucky Implements New Food-Safety Code



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In This Section:
Hardee's Parent CKE To Be Acquired
Scotsman Issues Voluntary Cuber Recall
India Is New Focus For Yum!
Subway Tops 32,000 Stores, Eyes Boston Expansion
Carlson Taps New Leadership For T.G.I. Friday's
NAFEM Announces New Officers, Directors

This issue's Economic ReportSponsor: Henny Penny
Regulatory ReportSponsor: Manitowoc Foodservice

Industry Report Server Products

Hardee's Parent CKE To Be Acquired
In the first major restaurant acquisition deal of 2010, CKE Restaurants, owner of Carl's Jr. and Hardee's, has signed a definitive merger agreement with Thomas H. Lee Partners.

THL, one of the oldest private-equity investment firms in the United States, has previously had foodservice transactions with companies including Aramark and Dunkin' Brands. Pending approvals, THL will acquire CKE for approximately $928 million, including approximately $309 million of net debt.

In a statement, CKE CEO Andrew F. Puzder called the transaction an exciting opportunity to continue the company's growth and development. Although sales were down more than 6% at Hardee's in the most recent quarter—which Puzder attributed to severe winter weather in core markets—CKE has been expanding its franchise presence. It recently signed deals for 25 new Carl's Jr. outlets in Vietnam.

CKE plans to actively solicit other offers from third parties until April 6. Pending shareholder and regulatory approvals, the transaction is expected to close in the second quarter of '10. Headquartered in Carpinteria, Calif., CKE has a total of 3,147 franchised, licensed or company-operated restaurants in 42 states and in 14 countries, including 1,221 Carl's Jr. restaurants and 1,913 Hardee's restaurants.

 

Section sponsored by Server Products

Scotsman Issues Voluntary Cuber Recall
In an exercise of public transparency seldom seen in any industry, Scotsman Group LLC is voluntarily recalling some 43,000 ice-cube machines due to a possible fire hazard. The recalled machines, including some Prodigy models, are Scotsman Commercial Modular Cubers that were shipped from September 2006 through December '09.

Not involved in the recall are Scotsman commercial flake- and nugget-ice machines, commercial undercounter cube-ice machines, and residential ice machines.

After learning about issues with an electrical component in its modular cubers, the Vernon Hills, Ill., company immediately went to the Consumer Products Safety Commission. According to Scotsman, a solenoid in the unit can fail and create an electrical arc that can pose a fire hazard. The odds of an incident are slim: With 43,000 units sold, only 37 related component reports emerged, and only four involved replacement. No property damage, injuries or restaurant closures have occurred.

Scotsman took the unusual step of calling the CPSC, even though the commission has no direct authority over commercial appliances, because the agency has broad reach and experience in addressing safety issues—even for commercial products.

Scotsman has contacted dealers and alerted major chain customers that deal daily with product- and food-safety issues. The manufacturer has worked with engineering companies to identify a solution. A free service call to replace the solenoid takes 30 minutes. A dedicated recall hotline has been staffed and trained, and a new customer-support database to track calls. The recall hotline is 800/541-0520.

Complete information on the safety recall, including links for dealers and operators, can be found at www.scotsman-ice.com.


Section sponsored by Server Products

India Is New Focus For Yum!
India, the world's most populous democracy, is going to see a lot more American fast-food signage and foodservice equipment. Yum! Brands is gearing up for a major expansion in India for its KFC and Taco Bell brands. Yum! CEO David Novak told The Wall Street Journal that Yum! has already invested $100 million in restaurant development in India and will more than double that amount in the next five years. Yum! currently operates 158 Pizza Huts and 72 KFCs in India; 27 of those KFC stores opened in 2009, nearly twice as many as in `08.

The company plans a total of 1,000 outlets there by '15. India's first Taco Bell opens in Bangalore this month, and will be joined by another five test stores there later in the year. The menu will be similar to that found in the United States, albeit spicier and more vegetarian in focus.

Novak said that Yum! plans to get India on the same growth trajectory as the company has experienced in China; last year, Yum! opened more than 500 restaurants in China, including one new KFC unit a day. In '09, China accounted for a third of Yum!'s operating profits.


Section sponsored by Server Products

Subway Tops 32,000 Stores, Eyes Boston Expansion
Roll out the prep tables: Subway is making a big push in the Boston market. According to franchisee and Boston-area development agent Bob Hurley, "We have tremendous potential in the Boston market, where we have 175 stores and are looking to increase that number by 130 over the next five years." Subway's aggressive development plans come after a busy 2009, in which the chain opened more than 2,000 new locations in 49 states and the District of Columbia, seven Canadian provinces, and in 67 countries.

Based on its more than 32,000 locations in 90 countries, Subway will soon become the world's single largest restaurant brand. The store count is rising based on the concept's simple equipment costs—no grill or fryer—and its adaptability to tight or unconventional spaces.

Subway has been expanding internationally since 1984 when it opened its first overseas location in Bahrain. It has more than 9,000 individually owned and operated restaurants outside of the United States and regional offices in Amsterdam, Beirut, Brisbane, Miami, and Singapore.


Section sponsored by Server Products

Carlson Taps New Leadership For T.G.I. Friday's
Carlson Restaurants Worldwide has named Ian Saunders president and COO for T.G.I. Friday's Int'l. Saunders is a veteran of Papa John's International, where he was regional v.p. of Europe, Middle East and African markets. He will use that global background in leading T.G.I. Friday's international management team and its growth strategy.

Stateside management gets a boost with Lee Sanders, newly named president of franchising for T.G.I. Friday's USA. Sanders joins the company from Johnny Rockets, where he was president and CEO of the 280-unit chain.

T.G.I. Friday's has more than 900 restaurants in 60 countries, including approximately 600 restaurants in the United States. Carlson Restaurants Worldwide owns, operates, franchises or licenses more than 1,000 restaurants in 60 countries. Nick Shepherd is president and CEO of Carlson Restaurants Worldwide.


Section sponsored by Server Products

NAFEM Announces New Officers, Directors
A new executive board was announced at the North American Association of Foodservice Equipment Manufacturers' annual meeting and management workshop in Sonoma, Calif. in February. Taking the reins for two-year terms are: Steven R. Follett, Follett Corp., president; Thomas R. Campion, Franke Foodservice Systems, president-elect; and Michael Whiteley, Hatco Corp., secretary/treasurer.

Newly elected directors Kevin Clark, The Delfield Co., and Rob Connelly, Henny Penny, join incumbents Kevin Fink, Mile-High Equipment Co.; Dana Rafferty, Chicago Metallic; and W. Michael Shanahan, Cadco Ltd. on the board.


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