Two local entrepreneurs, in partnership with Citicorp, have bought the franchise rights to the 104 Wendy's restaurants in the Washington area for $16.1 million in a leveraged buyout.
The group of restaurants was a subsidiary of Po' Folks Inc., a $100 million-a-year Nashville company that owns the Po' Folks family-style restaurant chain.
Ronald D. Kirstien and Harvey Rothstein, the two top officers of DavCo Food Inc., the Po' Folks subsidiary, are equal partners in the deal and will run the company after completion of the purchase, which Citicorp is funding. DavCo is the largest franchisee of Wendy's International Inc. in the nation.
"It's wonderful. It really feels best to be working for yourself," said Kirstien, president of DavCo, which is based in Crofton, Md. The company has more than 4,000 employes, about 3,500 of them part-time hourly workers.
Kirstien, who started with the company in 1980 as vice president of operations, said Po' Folks officials wanted to retire some debt, so the company was willing to sell the Washington area Wendy's operations to raise funds to pay off the debt.
"It was a great opportunity for us to take the reins," said Kirstien, who added that he would like to increase Wendy's share of the Washington market by adding eight to 10 restaurants a year.
Columbus, Ohio-based Wendy's, the fourth-largest hamburger chain in the nation, has had several hard years and was surpassed by Hardee's in sales last year. Hardee's previously was the fourth-largest chain.
Wendy's introduced a number of food items during the past several years with varying success, but now has pared its menu to the basics, according to industry analysts.
The chain's problems are being addressed both on the national level and in the Washington area, Kirstien said. This summer, DavCo conducted tests of food and service at local Wendy's and, as a result, plans to implement programs to speed up service, he said.
"We still believe the future success of Wendy's will be derived from its original concept of deliverying the highest quality hamburger in our industry," Kirstien said.