Restaurant And Hospitality News – April 25, 2016
By Christine Kern, contributing writer
In news this week, Quaker Steak & Lube becomes part of the TravelCenters of America family; all-day breakfast offerings help boost McDonald’s same-store sales; and the NRN Annual Operator Survey highlights both optimism and growing labor concerns for the industry.
Acquisition of Quaker Steak & Lube Gives TravelCenters Its First Standalone Restaurant Brand
TravelCenters of America has announced that it has acquired Quaker Steak & Lube for $25 million, creating its first standalone restaurant brand. Tom O’Brien, CEO of TravelCenters, stated: “We are pleased to welcome Quaker Steak & Lube into the TA Restaurant Group and to bring the brand’s famous wings, iconic automotive-themed décor and original sauces to customers across the country. We expect to grow Quaker Steak & Lube into a nationally recognized brand principally by franchising and licensing, but we also expect to add the brand in selected existing facilities and to be opportunistic regarding the possibility of acquiring additional locations.”
The acquisition includes 10 company-owned locations and 40 franchised and licensed locations across 16 states. Quaker Steak & Lube was founded in 1974. “We are pleased to add the Quaker Steak & Lube brand to our operation. We welcome all of our new employees, franchisees, licensees and customers. We intend to continue all of the programs that made Quaker Steak & Lube popular and to improve upon its success," said TA Restaurant Group Senior Vice President John Ponczoch in a statement.
“TravelCenters of America brings in-depth experience and resources to help Quaker Steak & Lube build upon our system’s positive performance and help us fully realize our expansion goals,” said Greg Lippert, chief executive officer of Quaker Steak & Lube. “TA has stated its desire to use the existing company and franchisee Quaker Steak & Lube locations that it acquires as a core around which to expand Quaker Steak & Lube into a nationally recognized brand.”
Lippert added, “Our future at The Lube is bright. We foresee a positive impact from these transactions to our restaurants. In fact, under TA, we’re confident that the number of our locations will continue to grow and our franchise owners, employees and suppliers will benefit from a stronger Quaker Steak & Lube.”
Quaker Steak & Lube has also submitted a bankruptcy filing, which includes the details of the TA acquisition.
All-Day Breakfast Offerings Help Boost McDonald’s U.S. Same-Store Sales
Same-store sales rose 5.4 percent at McDonald’s U.S. stores for Q1 2016, according to the Nation’s Restaurant News, and the all-day breakfast offerings and value deals played an important role in helping bring more customers in the door. These figures were higher than expectations, according to a report by CNBC.
In a release, CEO Steve Easterbrook pointed to a turnaround plan the company began shortly after his ascension to the top role, saying, “I’m pleased to report that our turnaround is taking hold. The ongoing investments we’re making in running great restaurants and delivering what matters most to our customers are beginning to yield sustained positive results. For the quarter, we generated higher sales, revenues and operating income in constant currencies across all business segments.”
In the United States, specifically, McDonald’s said, that first quarter comparable sales were fueled by the ongoing popularity of All Day Breakfast and the introduction of McPick 2,” both of which had a few bumps along the way, but now appear to be key pillars for the rising returns. Operating income in the U.S. increased 15 percent for the quarter, the company added. For the future, the company said it would continue down its path of “investing in core menu enhancements and simplifying restaurant operations.”
NRN Annual Operator Survey Reveals Optimism While Labor Fears Escalate
Restaurant operator optimism remains high, even as labor fears loom large, according to findings from the latest annual Operator Survey from the Nation’s Restaurant News. The data demonstrates that the industry is currently in “growth mode,” with traffic improving over last year and anticipating to see further growth this year. The survey polled nearly 300 participants to determine trends in labor, menus, growth plans, and other concerns. In fact, 58 percent of those polled stated that they expect same-store sales to be better in the first half of 2016, while just 11 percent said they anticipate falling same-store sales.
Significantly, despite the growing optimism, labor issues remain a serious concern for many operators, as they express worries about finding and keeping quality employees in the current market. Other labor obstacles included minimum wage increases/pressure; healthcare costs; changing consumer menu expectations; and securing prime real estate.