Japanese Restaurant Chain

Japanese Restaurant Chain

Roles
Financial Advisor
  • Comparable store sales increased
  • Net income increased 
  • Adjusted EBITDA increased
The company is a well-known Japanese fusion style restaurant chain. A weakened economy exposed operational issues and profits, EBITDA, stock and image all declined significantly. Management lost focus and a new CEO was hired. CR3 professionals were engaged to validate principles of a "renewal program" geared at improving guest experience and financial results, and were also named Interim CFO to assist with the program implementation. Net income increased in one year to $1.3MM, up from a loss of $8.9MM prior year; adjusted EBITDA increased by 22% from $27.7MM to $33.8MM; and stock price improved to over $16 per share with a market capitalization of $175MM, an increase of $124MM from beginning of engagement. Senior secured debt of $35.2MM was paid off solely through operating cash flow enabling the company to place a $30MM senior secured line of credit under favorable terms.

The Situation

  • Well-known Japanese fusion style restaurant chain
  • Weakened economy exposed the chain as more of a collection of restaurants rather than an integrated corporate restaurant chain and profits eroded; comparable restaurant sales declined up to 8%
  • Over a one-year period adjusted EBITDA declined 22% from $35.3MM to $27.7MM; company reached lowest stock price of $3.08 with a market capitalization of $51MM
  • Restaurant chain’s image declined and the value proposition suffered damage due to higher prices and lower quality products
  • Management lost focus and a new CEO was hired

The Work

  • CR3 professionals were engaged to validate principles of a “renewal program” launched by new CEO – program was geared at improving guest experience and financial results
  • Engagement team was named Interim CFO to assist with renewal program implementation
  • Participated in review of strategic alternatives for the Board of Directions including a sale process
  • Assisted a robust sale process

The Results

  • Comparable store sales increased six consecutive fiscal quarters
  • Net income increased in one year to $1.3MM, up from a loss of $8.9MM prior year
  • Adjusted EBITDA increased by 22% from $27.7MM to $33.8MM
  • Improved stock price to over $16 per share with a market capitalization of $175MM, an increase of? $124MM from beginning of engagement
  • Paid off senior secured debt of $35.2MM solely through operating cash flow enabling company to place a $30MM senior secured line of credit under favorable terms

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