Frisch's is a local Cincinnati diner chain that has recently been forced to close many Iocations. I started a project in November to model out the Frisch's private equity deal that occurred in...
Frisch's is a local Cincinnati diner chain that has recently been forced to close many Iocations. I started a project in November to model out the Frisch's private equity deal that occurred in 2015 and understand how the deal fell apart. I analyzed their value based on the pre deal business model; and then modeled out the separation of the land and restaurant that occurred in the PE deal. It's an interesting case since most of the details are publicly available now. It's also important to me as a Cincinnatian whose parents went to breakfast at Frisch's every Sunday.
As a fellow Cincinnatian whose post-mass breakfast was the buffet at Frisch's. This whole ordeal breaks my heart. In all fairness I was not helping Frisch's at all. I stopped going when the...
As a fellow Cincinnatian whose post-mass breakfast was the buffet at Frisch's. This whole ordeal breaks my heart.
In all fairness I was not helping Frisch's at all. I stopped going when the original owner sold it. The food quality took a nose dive and it simply was not worth it. It sad, the Mainliner was an institution and I'm glad the American Sign Museum will be able to save it.
Thanks for documenting this, I read a similar breakdown on WCPOs site awhile back. Not nearly as detailed but it still gave me the gist. PE, in situations like this is an absolute cancer and it's shameful.
There might be some hope! I read a week or so ago that some of the local owners want to try and buy back a couple of restaurants, the brand and the recipes - I hope they get traction and I want them to succeed.
Thanks - I was really happy to see the Sign Museum buy the sign. My wife and I were married at the old Sign Museum location and loved it. I'm a vegetarian most of my adult life - and it was always...
Thanks - I was really happy to see the Sign Museum buy the sign. My wife and I were married at the old Sign Museum location and loved it.
I'm a vegetarian most of my adult life - and it was always a bit rough eating at Frisch's. One of the issues that usually goes unreported is that we have a fondness for the institution - whether its Frisch's or Toys r Us - but we eat and shop at Amazon or Target or Chipotle instead since those stores haven't kept up with reinventing themselves for the time.
Sigh. Not surprised in the slightest to hear they did that. Leasebacks, often combined with other Leveraged Buyout techniques, is how every Vulture Capital company does it these days, especially...
the separation of the land and restaurant that occurred in the PE deal
Sigh. Not surprised in the slightest to hear they did that. Leasebacks, often combined with other Leveraged Buyout techniques, is how every Vulture Capital company does it these days, especially when it comes to acquiring restaurants/retail businesses who own the property the stores are located on, and airlines that own their own planes. And it's almost always guaranteed to bankrupt the acquisition eventually regardless of other external factors, since the rent they now need to pay for all the property they once owned is a major expense that didn't exist beforehand. But the VC companies don't care, since keeping the business running is not really the goal; Extracted the maximum short term value from their acquisition is, and selling off the acquisition's assets is where the majority of that value comes from. cc: @Requirement
A nice write up of a very complex situation. I'm left asking (as someone with a business degree) what they are teaching these MBAs in school these days, because, if they were acting in good faith,...
A nice write up of a very complex situation. I'm left asking (as someone with a business degree) what they are teaching these MBAs in school these days, because, if they were acting in good faith, they essentially bought a business under the guise that the best way to make them more efficient would be to make them suddenly pay rent. Since that is clearly an insane statement, they must have been buying Frisch's to raid and pillage. Though you don't go into it in your article, should I assume there is some cross-ownership between the private equity group and the company that bought all the land?
Either way, I was recently in Cincy visiting with some family and they were elated to be able to grab lunch at one of the remaining Frisch's and relive a small part of their childhood.
Thanks for having a read :) There's no evidence of ownership between NRD and NNN - and it wouldn't make much sense for them to do so - otherwise, they would just hold Frisch's as a single entity...
Thanks for having a read :) There's no evidence of ownership between NRD and NNN - and it wouldn't make much sense for them to do so - otherwise, they would just hold Frisch's as a single entity as it was before. There's no tax advantage or weird bankruptcy reason for separating it.
The reason they separated the two parts was to finance the purchase with the sale of the land. NRD only had to pay 10 million USD out of its own pocket with the sale of the land and buildings versus 175 million if it bought everything to hold outright. NRD also later used the land and building to finance the remodeling of the restaurants as well in their attempt to turn it around.
Frisch's is a local Cincinnati diner chain that has recently been forced to close many Iocations. I started a project in November to model out the Frisch's private equity deal that occurred in 2015 and understand how the deal fell apart. I analyzed their value based on the pre deal business model; and then modeled out the separation of the land and restaurant that occurred in the PE deal. It's an interesting case since most of the details are publicly available now. It's also important to me as a Cincinnatian whose parents went to breakfast at Frisch's every Sunday.
As a fellow Cincinnatian whose post-mass breakfast was the buffet at Frisch's. This whole ordeal breaks my heart.
In all fairness I was not helping Frisch's at all. I stopped going when the original owner sold it. The food quality took a nose dive and it simply was not worth it. It sad, the Mainliner was an institution and I'm glad the American Sign Museum will be able to save it.
Thanks for documenting this, I read a similar breakdown on WCPOs site awhile back. Not nearly as detailed but it still gave me the gist. PE, in situations like this is an absolute cancer and it's shameful.
There might be some hope! I read a week or so ago that some of the local owners want to try and buy back a couple of restaurants, the brand and the recipes - I hope they get traction and I want them to succeed.
Thanks - I was really happy to see the Sign Museum buy the sign. My wife and I were married at the old Sign Museum location and loved it.
I'm a vegetarian most of my adult life - and it was always a bit rough eating at Frisch's. One of the issues that usually goes unreported is that we have a fondness for the institution - whether its Frisch's or Toys r Us - but we eat and shop at Amazon or Target or Chipotle instead since those stores haven't kept up with reinventing themselves for the time.
Sigh. Not surprised in the slightest to hear they did that. Leasebacks, often combined with other Leveraged Buyout techniques, is how every Vulture Capital company does it these days, especially when it comes to acquiring restaurants/retail businesses who own the property the stores are located on, and airlines that own their own planes. And it's almost always guaranteed to bankrupt the acquisition eventually regardless of other external factors, since the rent they now need to pay for all the property they once owned is a major expense that didn't exist beforehand. But the VC companies don't care, since keeping the business running is not really the goal; Extracted the maximum short term value from their acquisition is, and selling off the acquisition's assets is where the majority of that value comes from. cc: @Requirement
If you want to see a similar story play out time and time again, check out Bright Sun Films' Bankrupt series. :/
A nice write up of a very complex situation. I'm left asking (as someone with a business degree) what they are teaching these MBAs in school these days, because, if they were acting in good faith, they essentially bought a business under the guise that the best way to make them more efficient would be to make them suddenly pay rent. Since that is clearly an insane statement, they must have been buying Frisch's to raid and pillage. Though you don't go into it in your article, should I assume there is some cross-ownership between the private equity group and the company that bought all the land?
Either way, I was recently in Cincy visiting with some family and they were elated to be able to grab lunch at one of the remaining Frisch's and relive a small part of their childhood.
Thanks for having a read :) There's no evidence of ownership between NRD and NNN - and it wouldn't make much sense for them to do so - otherwise, they would just hold Frisch's as a single entity as it was before. There's no tax advantage or weird bankruptcy reason for separating it.
The reason they separated the two parts was to finance the purchase with the sale of the land. NRD only had to pay 10 million USD out of its own pocket with the sale of the land and buildings versus 175 million if it bought everything to hold outright. NRD also later used the land and building to finance the remodeling of the restaurants as well in their attempt to turn it around.