Quick Service Franchise Operation

Quick Service Franchise Operation

  • Developed operational and administrative control model
  • Build a business-plan sensitivity model
  • Identified cash needs to satisfy lender covenants
The company was a $120MM quick service franchise operation that breached its covenant due to declining sales and hired CR3 Partners to assess its business plan. CR3 developed a business-plan sensitivity model, built a comprehensive cohort four-wall analysis, created a quadradic segmentation analysis, developed 13-week cash flow projection, and examined the company’s process and administrative support structure. The company accepted and implemented many of the recommendations CR3 provided based on the analyses and projections.

The Situation

  • $120MM quick service franchise operation with 100 units primarily in the Midwest that was formed from both acquisitions and organic growth
  • Company breached its fixed-charge coverage ratio covenant due to weaker-than-expected quarterly sales, in addition to administrative covenants such as documentation of real-estate leases and franchise agreements

The Work

  • Company hired CR3 to assess business plan, develop sensitivity analyses related to covenant ratios, evaluate liquidity management, and provide recommendations related to the administrative covenant breach
  • Developed business-plan sensitivity model to stress-test covenant scenarios under various growth model and COVID recovery projections
  • Built comprehensive cohort four-wall analysis, including benchmarking based on financial profile under Franchise Disclosure Document, geography/market, vintage (i.e., age of portfolio acquisition)
  • Created quadratic segmentation analysis based on AUV and four-wall EBITDAR to identify profit-improvement opportunities
  • Reviewed deferred capital expenditures and assessed company’s maintenance practice segregated by PM (Preventative Maintenance) and RM (Repair Maintenance)
  • Developed 13-week cash flow projection and analyzed company’s cash management practices, which CR3 found lacked the discipline typically required to manage through covenant breach
  • Examined process and administrative support structure, particularly related to matters in administrative covenant breach, and that there was not sufficient support for real-estate function, which resulted in administrative covenant breach

The Results

  • Provided recommendations to address its findings and proposed covenant-ratio ranges to enable company’s return to covenant compliance
  • Company accepted and implemented majority of CR3’s recommendations

Explore Insights

View All
Managing the Insource/Outsource Mix within a Restaurant Environment
Article

Managing the Insource/Outsource Mix within a Restaurant Environment

Ensuring every detail throughout the customer experience, as well as the back office, is executed according to a specific vision can lead to success, but it often means taking on functions internally that the business is not well-positioned to execute, or outsourcing functions that are best performed in-house.

Read More
Why Restaurant Data Analytics are a Necessary Tool for Success
Article

Why Restaurant Data Analytics are a Necessary Tool for Success

Partner, Sugi Hadiwijaya and OverlayAnalytics' Founder and CEO, Bryan Shupe, discuss how similar to challenges around kitchen management, data challenges are multi-faceted, from data compilation and interpretation, to conversion and utilization, and cultural integration with Nation's Restaurant News.

Read More
Lenders as Accidental Restaurant Owners: Four Success Factors of Temporary Restaurant Ownership
Article

Lenders as Accidental Restaurant Owners: Four Success Factors of Temporary Restaurant Ownership

During COVID-19, a significant amount of restaurant bankruptcies saw the lenders taking over the assets when no qualified buyers came to the table. Now that these lenders have become temporary restaurateurs.

Read More
CR3 Conversations: Restaurant Industry During COVID-19
Video

CR3 Conversations: Restaurant Industry During COVID-19

The restaurant industry has been one of the hardest-hit industries during COVID-19. Director, Kep Sweeney, gives advice on how to best navigate through it and shares what his current client has done to actually improve during these difficult times.

View Video
CR3 Partners Advises NEOPS Alongside SSG Capital on Sale of Debt
External Link

CR3 Partners Advises NEOPS Alongside SSG Capital on Sale of Debt

SSG Capital Advisors, LLC (SSG) acted as the investment banker to New England Orthotic & Prosthetic Systems, LLC and its affiliates in the sale of all of its outstanding senior debt to AHM Healthcare Strategies (AHM), an affiliate of Eschen Prosthetic and Orthotic Laboratories, Inc. (Eschen).

View
Industry Veterans Combine to Launch National Turnaround and Performance Improvement Firm
News

Industry Veterans Combine to Launch National Turnaround and Performance Improvement Firm

The leadership of CR3 Partners, LLC, today revealed the details of their newly-formed national turnaround and performance improvement firm.

Read More
Contact Us

CONTACT US

Do you have any further questions? How can we help you? Get in touch with us.

CONTACT US