Happy Friday!

Here’s to a prosperous 2024 for the restaurant industry:

To lower food costs

Increased traffic counts

And a year without a Black Swan event

Cheers!

3 Numbers

$650

Ticket price for Applebees’ New Year’s Eve celebration in Times Square. The event’s hefty price tag— which, if my math is correct, would buy you 650 Dollaritas on a typical night at the ‘Bee’s — included a buffet, DJ, street-level view of the ball drop, and all the boneless wings one could ever desire. Applebees’ tickets were actually a steal compared to what it cost to get past the velvet rope at Bubba Gump Shrimp Co. — $1,015, and its customers were not promised a view of the Times Square ball.

$67 million

Amount raised by Brazilian açaí chain Oakberry in its Series C funding round. The rapidly-growing concept has added more than 700 stores in 40 countries since it was founded in 2016, and this most recent round of financing is earmarked for growth in the U.S. Oakberry currently has 35 stores in the States, but plans to have more than 200 locations  by 2026.

£380

Cost of the tasting menu at Ynyshir, a two-Michelin Star restaurant in Wales commonly cited as the UK’s best. Despite the restaurant’s high prices and long waiting list, it doesn’t really make money, according to chef Gareth Ward in this illuminating interview on the economics of an ultra-ambitious, high-end restaurant. The restaurant should “probably be more expensive,” Ward says. (One possible reason why: Ynyshir’s wage bill runs £80,000 a month.)

Tropical Smoothie Cafe may be hitting the market

Tropical Smoothie Cafe: apparently worth a lot of Bahama Mamas (TM).

According to a recent Reuters report, Levine Leichtman Capital Partners (which acquired the concept in late 2020) plans to officially put Tropical Smoothie up for sale as early as this month. The report also says the PE firm has hired investment bank Robert W Baird & Co. to assist with the sale, which has been pegged at around $2 billion.

A $2 billion deal would value Tropical Smoothie at roughly 20x its annual EBITDA — a strong multiple, but one that could be achievable due to Tropical Smoothie’s advantageous brand positioning and recent track record. It’s no secret that beverage concepts are “so back” right now, and Tropical Smoothie has thrived in recent years: according to Technomic, the company averaged 22% system sales growth over the past five years, while also doubling its unit count to 1,200 during the same time period.

What’s especially interesting for the broader restaurant world is that we may be seeing the early rumblings of a big M&A year. After a challenging market in 2022-23 (save Roark’s FTC-hamstrung deal to buy Subway), several high-profile brands are making moves: Chuck E. Cheese is positioning for a private sale, while Panera and Twin Peaks both look to IPO this year.

Happily, we’ll not be lacking for content.

DoorDash’s next moves

DoorDash CEO Tony Xu gave a long interview with the Financial Times this week, giving a fascinating glimpse into the current state and future plans for the delivery leader.

DoorDash enters 2024 in a strong position: It’s doubled its market share in the last five years, and the company sits on a cash pile that’d make Scrooge McDuck envious: it produced $878 million of free cash flow in the trailing 12 months from September 30.

As a growth company, that cash needs to be invested, and Xu said the “two largest areas of investment are expansion and penetration outside of the U.S., as well as the same outside of restaurants.” In practice, that means a few things:

• DoorDash is going into smaller countries where it has a good chance of quickly gaining market dominance, like Iceland and Austria (which it expanded into last year), as well as Luxembourg, which is appears to be entering this year. It’s willing to acquire smaller competitors to enter a new market, like it did last year when it bought Finnish delivery service Wolt.

• DoorDash is also doubling down on its high-growth, non-restaurant delivery channel, like grocery delivery, which Xu says “went from zero to a multibillion-dollar business.” Why? “If you already have a large consumer base and a large driver base that is interacting with you many times a week, you just have more shots on goal to be able to launch into these adjacent categories,” Xu said.

• And finally DoorDash is entrenching itself in the world outside of delivery, launching a co-branded credit card with Chase and increasing its loyalty offerings.

Also: the company now has double the market share of its closest competitor (Uber).

Quick Hits

• Pinstripes began trading publicly this week after previously announcing it had closed a SPAC deal with Banyan Acquisition Corp. in late December. The 14-unit eatertainment concept — which operates massive, 25- to 38,000 square-foot venues featuring bowling, bocce and Italian-American food — says it’s raised more than $70 million to support future growth.

• Your dream of using your ol’ trusty Bubba Mug at Starbucks is now a reality. Starbucks announced this week that it now will allow guests to use personal mugs for all drive-thru and to-go app orders. The chain ran a 200-store pilot before launching the new initiative, which is an extension of Starbucks’ long-time practice of allowing dine-in guests to bring mugs from home.

• Outback owner Bloomin’ Brands has struck a deal with activist investor Starboard Value, which snapped up a 10% stake in Bloomin’ back in August. As part of the deal, Starboard partner Jon Sagal and Dave George, former operating chief at Darden Restaurants, will join the Bloomin’ board. (In 2014, Starboard successfully launched a proxy fight at Darden, resulting in the hedge fund’s full control of the board.)

• Two California-based Pizza Hut franchisees are eliminating in-house delivery, citing the state’s upcoming minimum wage hike to $20 an hour. The decision, which will impact over 1,000 jobs, means the franchises will now rely solely on third-party delivery apps like DoorDash and UberEats to handle all delivery orders. (On that note, 22 states updated their minimum wages this week.)

• TGI Fridays announced this week that it closed 36 underperforming locations across 12 states (with half the closures occurring in New York, New Jersey, and Massachusetts). Interestingly, the chain also announced that it sold eight previously corporate-owned locations to former CEO Ray Blanchette; in a press release, Fridays said Blanchette has an “unmatched understanding of the TGI Fridays business and the restaurant’s commitment to delivering excellence for guests.”

Name That Chain!

You get three guesses to name this week’s mystery chain:

• This chain has been around for almost 90 years. When it first started, its signature item cost a nickel for a dozen

• The chain’s baked goods are spreading pretty far outside its homebase of Texas — it now has over 350 locations

• It serves a menu item named after hometown hero Earl Campbell

Stay tuned… the answer will be in next week’s email.

Last issue’s answer: TGI Fridays

#Content Recs

• Coming off a monster 2023, Cava CEO Brett Schulman shares three key trends for the new year.

• Here are a whole bunch of vintage photos of fast-food chains. (Two thoughts: The moment is right for Burger King to bring back its ‘80s plaid polo uniforms, and Taco Bell’s original menu has to be seen to be believed.)

• Let’s all escape the early January doldrums with a trip to Rome’s 38 essential restaurants (if only in our minds).

• Is the “golden age” of freelancing for delivery apps over?

International Corner!

In an attempt to spur the imaginations of fast-food R&D departments across America — each week I’ll highlight an international item that should warrant at least some menu consideration in the States.

This week: PROSPERITY BURGER

From Brand Eating:

That makes back-to-back issues featuring a South Korean item. Might be time for a visit?4