Shop Talk
Retailers, consumers and prices
Root beer, roast beef, fish & chips: Who’s buying?
There’s a new batch of quick-service restaurants on the block – Arby’s, A&W and Long John Silver’s – and according to YouGov BrandIndex, A&W is the most popular of the three.
A&W, founded in 1919 and known for its root beer, had the trio’s highest satisfaction rates, said YouGov BrandIndex, which does daily consumer perception research on brands.
A&W and Arby’s had higher satisfaction scores than an average of about two dozen fast-food chains, while Long John Silver’s fared worse. (See graphic below)
“A&W and Arby’s have a core group of supporters and satisfied customers,” said Ted Marzilli, global managing director for YouGov BrandIndex. “If I’m a buyer, that’s a strength.”
Marzilli predicted that all three brands would find buyers, although prices and other terms likely would differ.
He said A&W and Arby’s could be reinvigorated by buyers who focused on their strengths, while Long John Silver’s is more of a turnaround story.
Another big question is whether any of the chains will snag a valuation as rich as the one attached to Burger King’s $3.3 billion sale to 3G Capital last year. The $24 per share sale price represented a 46 percent premium to Burger King’s price before news of the negotiations emerged.
Check Out Line: July pain for retailers
Check out the continuing struggle in the retail world.
U.S. retailers reported disappointing sales declines for July, suggesting shoppers are still searching for bargains and basics in the downturn.
July’s results mark the 11th consecutive month of falling sales at stores open for at least one year, a measure known as same-store sales.
Rising unemployment, cool weather and a lack of tax-free holidays like those held last year disheartened shoppers, who bought just daily essentials last month.
Still, some companies like Gap and Macy’s managed to forecast better-than-expected earnings for the quarter, as they managed their expenses better.
But retailers’ true test? September, according to one analyst.
“The true month to watch will be September because it will mark the first month that started the streak of negative same-store sales in 2008,” said Jharonne Martis, senior research analyst with Thomson Reuters.
Check Out Line: Want growth? Buy up.
Check Out retail strategy for growth.
A list of the top 10 companies from a “Hot 100 Retailers list” compiled by Planet Retail for the National Retail Federation showed that while a few companies grew organically, most grew as a result of a merger or acquisition.
Topping the list of companies that grew through a deal was DineEquity, which bought Applebee’s last year.
Others in that category include Susser Holdings after its purchase of Town & Country Food Stores and Village Market grocery stores, as well as the combination of fast food chains Wendy’s and Arby’s into Wendy’s/Arby’s.
Of the companies that grew on their own, Los Angeles-based American Apparel was “tops,” with revenue growth of 57.6 percent, the list showed.
Another not-so-surprising name in the top 10 was Apple, known for its iPod, Mac computer and one of the latest favorites in the market — the iPhone. “Still opening new locations, Apple also uses its stores as a way to build brand awareness,” according to the survey.
Some retailers actually managed to maintain growth, averaging a 10.8 percent compound annual growth rate, the list showed. Those on the growth chart include GameStop, Urban Outfitters, Best Buy and J. Crew to name a few.
Check Out Line: Frugal fast food eaters taking toll on Arby’s
Check out the quarterly loss at Wendy’s/Arby’s Group. The third largest U.S. fast food chain posted a loss of $393.2 million, dragged down by a $417.9 million after-tax charge related, in part, to writing down the value of Arby’s company-owned stores.
While that loss looks like peanuts compared with the $61.7 billion fourth-quarter loss reported by American International Group (the biggest quarterly loss in corporate history), it comes as the restaurant chain is feeling the heat from competitors who are touting their value menus to lure cash-strapped consumers.
Wendy’s/Arby’s said North America same-store sales at its Wendy’s chain rose 3.7 in the quarter, but they fell 8.5 percent at Arby’s.
“Arby’s experienced a difficult quarter as fast-food consumers shifted spending to value meals and deeply discounted sandwiches. Our sandwich category competitors continued to focus on $5 price points, which are below Arby’s average check of about $7.50,” said Roland Smith, President and Chief Executive Officer.
To try to win back business, Arby’s said it is launching a strategy this week to “reconnect with our core customers” with a line of Roastburger sandwiches that combine its oven-roasted, thinly sliced roast beef with a variety of fresh toppings.
This year, it will also introduce roasted chicken, swirl shakes and iced fruit teas and said it plans to test value-priced products.
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