Changes to the Position monitor
Taking SHAK off the SHORT Bias List - See comments below
Restaurant Industry Sees Unprecedented CEO Turnover in 2024
The restaurant industry is experiencing a significant shakeup at the top, with an unprecedented number of CEO changes in 2024:
- 24 restaurant companies have changed CEOs so far this year
- Nine publicly traded companies are affected, surpassing all of 2023's changes
- Two-thirds of new public company CEOs are industry outsiders
Driving Factors:
- Poor Stock Performance: Restaurant stocks are down 12% on average, while the S&P 500 is up 19%.
- Activist Investor Pressure: Underperformance attracts activist investors who are pushing for change.
- Industry Volatility: Weak traffic, increased competition, and increased number of bankruptcies.
- Chain Reaction: High-profile moves (like Starbucks hiring Chipotle's CEO) are causing a ripple effect.
What This Means:
- Boards are seeking fresh perspectives to navigate challenges (BLMN, BJRI)
- The industry may see more strategic shifts and restructuring
- Restaurants face pressure to innovate and improve performance quickly
MUCH NEEDED Changes at BJRI:
- Brad Richmond, a current BJ's Restaurants Board Director and former CFO of Darden Restaurants, has been appointed Interim CEO of BJ's Restaurants, effective August 28, 2024.
- Greg Levin is stepping down from his positions as CEO, President, and Board member after 19 years with the company. During that time, BJ's expanded to 217 restaurants across 31 states.
- The Board expects Richmond's leadership and experience to drive operational excellence, improve financial outcomes, and guide BJ's toward sustainable growth and increased shareholder value.
From Runways to Ribeyes: Delta's Former COO Takes the Helm at Outback Steakhouse
This is an unconventional move by BLMN.
- Cross-industry experience: While it might seem strange at first glance to hire someone from the airline industry to lead a restaurant chain, there are some potential benefits to this decision:
- Fresh perspective: Spanos might bring new ideas and strategies outside the restaurant industry.
- Operational expertise: His experience as COO of a major airline likely involved managing complex logistics and customer service operations, which could be valuable to BLMN's multi-brand opportunity.
- Leadership in large organizations: Delta and PepsiCo are large, complex organizations that could prepare Spanos for leading Bloomin' Brands.
- Relevant background: While his most recent role was at Delta, Spanos does have significant experience in the food and beverage industry:
- PepsiCo and Pepsi Bottling Group: He spent over 25 years in various roles at these companies, closely related to the food service industry.
- Six Flags Entertainment: As CEO of Six Flags, he likely oversaw food service operations within the theme parks.
- Timing and context:
- Bloomin' Brands faces significant challenges with its cor Outback brand.
- The company might seek a transformational leader to help navigate these difficult times.
SHAK STORE CLOSINGs
This is a net positive for SHAK. What else is planned for the right-size of the company?
- Shake Shack Inc. has decided to close nine underperforming company-owned restaurants in California, Ohio, and Texas by September 25, 2024, to optimize its footprint and maximize profitable growth.
- The company will offer management positions at neighboring locations. At the same time, hourly team members will be eligible for rehire at other Shacks or receive up to 60 days of pay if not transferred.
- Due to these closures, Shake Shack expects to record pretax charges of approximately $28.0 to $30.0 million in the third quarter, including cash costs (lease terminations, employee-related expenses) and non-cash costs (asset impairment, accelerated depreciation).
