Long John Silver’s for sale
America’s largest quick-service seafood chain is for sale.
Yum! Brands announced on Tuesday that it’s putting Long John Silver’s and A&W All-American Food Restaurants on the market. The two brands do not fit into the Louisville, Ky.-based quick-service giant’s long-term growth strategy, said David Novak, the company’s chairman and CEO.
“We have decided to put these two great brands up for sale, and we will complete the sale only once the right buyer or buyers have been identified and we can ensure a seamless transition,” he explained.
Yum! will focus on expanding its three core brands — Taco Bell, Pizza Hut and KFC — internationally, particularly in China.
Long John Silver’s and A&W generate about USD 1 billion in annual sales, less than USD 80 million in operating revenue and about USD 10 million in operating profit, which represent less than 1 percent of Yum!’s total operating profit, Steve West, a restaurant analyst with Stifel Financial Corp., told Dow Jones. Yum! “is so big that they don’t really need Long John Silver’s and A&W distracting them,” he said.
Yum! acquired Long John Silver’s, along with A&W, from Yorkshire Global Restaurants for USD 320 million in 2002. At the time, the 42-year-old chain, which opened its first restaurant in Lexington, Ky., in 1969, was struggling. Yum! contracted the chain from 1,225 restaurants in 2002 to about 1,150 restaurants by 2007.
Currently, the chain stands at about 1,000 units, the vast majority of which are located in the United States and all of which are owned and operated by franchisees.
Long John Silver’s has worked in recent years to broaden its appeal by targeting value- and health-consciousness consumers and expanding its menu offerings.
In October 2010, the chain launched a USD 10 Family Pack including eight pieces of Alaska whitefish, coleslaw and hushpuppies as a limited-time offer. In September 2009, it introduced its first-ever value menu, called the Dollar Stretcher Menu, featuring a dozen items priced at USD 0.99, 1.59 and 1.99 each.
In February 2009, the chain targeted calorie-counting diners with a new menu called Freshside Grille Smart Choices, featuring Grilled Pacific Salmon, Grilled Tilapia and Shrimp Scampi
And, like other quick-service chains, Long John Silver’s is offering more upscale items. During the Lenten season last year, the chain promoted its new Crispy Breaded Pollock, a hand-breaded Alaska pollock fillet.
Yum! posted revenues of nearly USD 11 billion in 2009. It’s the world’s largest restaurant company in terms of number of units, with more than 37,000 units worldwide.