The announcement came not quite six months after a Wild Wings shareholders meeting that saw the election of three nominees of activist
Longtime Wings CEO
Provided the deal with
“Let's sell it to the first qualified buyer that comes along” was not what McGuire promised
Marcato had a lot of ideas but really hung its hat on a concept called refranchising, which means selling the corporate-owned restaurants to independent operators and collecting franchise royalties and fees. That gets rid of the risk of owning a bunch of restaurants.
The plan called for at least 90 percent of restaurants to be owned by franchisees, freeing up capital to, among other things, buy back shares and boost earnings per share. At the time, the ratio of company-owned restaurants to franchised units stood at about 50/50, roughly 600 each.
Marcato confidently forecast that its refranchising plan could result in the stock price more than tripling to
In the third-quarter conference call that executives hosted for analysts and investors a little over a month ago, there was barely a peep about any of this. “Yes, a good question, and we don't have any progress to share at this point” on refranchising, company Chief Financial Officer
The company didn't repurchase any of its shares in its third quarter either, without much of an explanation.
Smith, who has stayed on as CEO while the board looks for her successor, said about the search only that she was sure directors had interviewed candidates.
So instead of discussing progress on the Marcato program when there obviously wasn't any, analysts peppered executives on expense reductions, labor cost increases and the like.
Smith and her colleagues got to explain how they had found success with a new promotion for a buy one, get one free offer of boneless chicken wings on Tuesday, supplanting a popular promotion for half-priced genuine chicken wings.
As a result of the switch to much lower-cost, ersatz wings, the company actually managed to bring food costs as a percentage of sales down a bit from earlier this year. Yet even in this better-than-expected quarterly report, same-store sales at company-owned restaurants declined 2.3 percent and declined even more at franchised restaurants.
Given that industry backdrop and the problems at
The deal price of
So this is what McGuire can confidently tell his investors when the books are finally closed on his investment in
“At least I didn't mess it up.”
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