Case Studies
J.S. Held Acquires Shechter & Everett to Expand Forensic Accounting Capabilities for Family Law Disputes in Florida
Read MoreA casual dining franchisee operating 73 restaurant locations across seven states (Illinois, Florida, Michigan, Indiana, Minnesota, Wisconsin, and Ohio) faced mounting operational and financial challenges. The company generated approximately $191M in annual sales and carried $20M in debt, while experiencing sustained declines in customer traffic and revenue. Net sales had fallen by at least 2.3% for nine consecutive quarters, culminating in an 8.7% decline in the most recent quarter. Customer traffic and net sales were each decreasing by 5% or more year over year.
Performance challenges were compounded by the franchise brand's lack of a clear strategic vision and the financial impact of a heavily promoted "$10 Endless Appetizers" offering, which reduced EBITDA by approximately $18M. In addition, 11 restaurant locations were generating significant losses, collectively reducing EBITDA by $3.3M over the preceding twelve months. The company also operated 12 locations with excessive occupancy costs, creating opportunities for lease restructuring.
Further complicating matters, the strained relationship between the franchisee and the brand's leadership made negotiations difficult, the company had recently lost its CFO, and management lacked sufficient financial analytics to support informed decision-making. Without intervention, the company was expected to experience pressure on its bank financial covenants as early as the following quarter.
Our team was engaged as a restructuring advisor to evaluate the company's operational challenges and identify opportunities to improve performance and preserve value. Our experts conducted a comprehensive assessment of the restaurant portfolio and determined which locations were unlikely to achieve a sustainable turnaround. As a result, 11 significantly underperforming restaurants were closed to eliminate ongoing losses and improve overall profitability.
To address excessive occupancy costs, the team renegotiated lease rates at 12 restaurant locations, helping reduce fixed expenses and strengthen operating performance. We supported enhancements to the company's financial leadership by upgrading the CFO position and strengthening the organization's financial capabilities.
Our experts analyzed restaurant-level operating performance to identify outlier locations and target specific opportunities for improvement. We encouraged the franchisor to establish a more realistic brand vision and strategic direction that would support long-term franchisee success.
These collective initiatives were projected to improve EBITDA by approximately $3.4M in the following fiscal year. Applying a four-times EBITDA multiple, the operational and restructuring measures increased enterprise value by an estimated $14M, strengthening the company’s financial footing and enhancing value for stakeholders.
> Turnaround and Restructuring Services
Navigating the many challenges confronting a company in transition requires an operationally focused approach that looks beyond the balance sheet to minimize further degradation and build a path to sustainable growth. Drawing upon decades of experience in the turnaround space, we help companies in transition identify practical strategies to improve profitability and liquidity for immediate relief, while concurrently developing and executing a comprehensive turnaround plan for long-term, sustainable value creation.
> Office of the CFO & Corporate Finance Support
The financial function is a critical partner in value creation in most businesses. We provide unparalleled support to the Office of the CFO to shape organizational strategy and enhance long-term business value. As CFOs and finance leadership across sectors face increasing demands, understaffing, and unprecedented challenges, we deliver guidance regarding financial planning and operations improvement, risk mitigation, and strategic business intelligence.
