Movie Gallery is making its way towards acquisition of Hollywood Entertainment after winning 88.5 percent of the shareholder vote for the $13.25 per share sale. The bidding saga, which lasted six months, ended not only with Blockbuster, Inc. losing the battle (March 17th blog entry details the bidding war), but also with Carl Icahn nominating himself to Blockbuster's board (see April 8th blog entry).
Under the current bid, Movie Gallery will pay $900 million for Hollywood Entertainment.
The woman who allegedly found a 1.5” fingertip in her chili while dining at a Wendy’s in San Jose, California was arrested on April 22, 2005 in Las Vegas. San Jose police have not provided any details on the arrest but, as reported in the NY Times, officers have said that they believe her claim against the San Jose Wendy's restaurant is a hoax.
Two weeks ago, Anna Alaya, the finger lady, announced that she decided not to sue Wendy’s, curiously citing as the reason for her decision the “great emotional distress” of her claim, which may be the least-cited reason ever for deciding not to pursue a lawsuit. She has filed, however, a claim against the franchise owner, Fresno-based JEM Management Corporation. According to reports, Alaya has been involved in at least half a dozen other legal battles in the San Francisco area, including a claim against another fast-food restaurant, an auto dealership and a former employer. With witnesses now coming forward recounting Ayala's story of putting the finger in her chili, Ms. Ayala's legal battles will more likely place her in the defendant's seat.
Meanwhile, sales at Wendy’s franchises in Northern California dropped precipitously since the alleged incident on March 22, 2005, resulting in a $2.5 million loss to those restaurants and forcing layoffs and reduced hours. The case has also unfortunately spawned a number of copycat incidents, requiring Wendy's to investigate on a case by case basis, as reported in The Herald. The company offered a $100,000 reward for anyone with information leading to the finger’s owner.
The Seinfeld-inspired Soup Nazi will be selling "heat-n-serve" soups nationally, in grocery stores by September. CNN.com reports that there are plans to open 1,000 The Original SoupMan restaurants over the next seven years throughout the U.S. and Canada.
This article profiles Jiffy Lube's anticipated entry into the Chinese franchise market. When comparing Jiffy Lube to the mom and pop auto shops in Shanghai, China, Mr. Burch acknowledged that some independent shops performed oil changes, but he argued that Jiffy Lube's main offering to the consumer is time and that business component distinguishes the American franchise company from its Chinese competitors. Jiffy Lube, parented by Royal Dutch/Shell Group, aims to open 600 stores in China by 2015, with more than half of them franchised. China's auto market significantly increased over the past three years and the demand for replacement parts and on-the-road services has encouraged Jiffy Lube to introduce its 10-minute oil change to the Chinese market.
The venture awaits government approval.
In other Wendy's news, after just one year, Bill Moreton, the CEO, is leaving to join Potbelly Sandwich Works, a Chicago restaurant chain. Moreton was named CEO and president of Wendy’s Baja Fresh Mexican Grill chain in April 2004. Wendy’s has named Brion Grube, a 15-year veteran of Wendy’s, as Moreton’s replacement.
After serving “billions and billions,” McDonald’s celebrated its 50th birthday on April 15, 2005 by opening a state-of-the-art restaurant in Chicago. The new restaurant boasts 60-foot tall golden arches, sports glass stone and furnishings from around the world. McDonald's has more than 30,000 restaurants worldwide and is ranked seventh in the annual ranking of global brands.
To give the public the opportunity to act more responsibly at fast-food counters and potentially reduce litigation, lawmakers plan to introduce a bill into Congress to require fast-food chain restaurants to prominently display calorie, fat and sodium content on food labels -- much like packaged food in grocery stores.
According to the Connecticut Post, legislators expect the battle to be difficult because the restaurant industry continues to lobby against nutritional information requirements. The article also profiles state legislators' efforts to control school-sponsored calories by removing soda and candy machines from grade schools and high schools.
After Blockbuster's failed attempt to acquire Hollywood Entertainment Corp., financier Carl Icahn publicly expressed his displeasure with Blockbuster's operations. Icahn blames the failed deal on Blockbuster's CEO, John Antioco, whom he accuses of frivolously spending the stockholders' funds on high salaries and "spending sprees." Icahn threatened to battle for control of the company in order to bring discipline to the current board and give greater dividends to shareholders.
The Globe and Mail included this report on McDonald's Restaurants of Canada, Ltd.'s victory over A&W Food Services of Canada, Inc. in a Canadian federal lawsuit. A&W alleged that McDonald's use of the name "Chicken McGrill" infringed its registered trademark from 1988 for a "Chicken Grill" sandwich. The Court dismissed the suit ruling that A&W failed to prove its claim; the Court, however, also dismissed McDonald's counterclaim that A&W's trademark registration should be dissolved because the mark is not distinctive. A&W has not yet decided whether to appeal the ruling.
On April 4, 2004, a federal judge refused to dismiss an antitrust lawsuit against Mack Trucks by one of its Midwestern distributors, which brought breach of contract and copyright infringement claims against the truck maker. According to the court papers, Mack Trucks counterclaimed against the distributor, claiming that the distributor fraudulently obtained and supplied confidential business information to Mack competitors. Mack Trucks is a subsidiary of AB Volvo of Sweden.
Domino's Pizza plans to open more franchises in Scotland within the next two years. Although Scots deny that the country's fast food market is growing, the planned expansion will double Domino's reach well beyond the 2.1 million Scotish households it already serves.
The New York Post's Online Edition, reports that the latest weapon to be introduced into the fast food battleground is fat. In an effort to sweep up the young male consumers that McDonald's is losing in its healthy living campaign, fast food chains such as CKE Restaurants and Burger King have introduced items to their menus that are higher in calories.
While items such as Burger King's Enormous Omelet Sandwich (760 calories, 44 grams of carbs) are in high demand throughout the on-the-go male population, the Center for Science in the Public Interest warns that these chains are making themselves susceptible to lawsuits. The rebellious fast food chains' respond by claiming that the public can decide for itself.