KEY POINTS:
There are those who believe departing Restaurant Brands boss Vicki Salmon never had a chance.
Taking on the top job at New Zealand's only listed fast-food company was effectively a "hospital pass", one analyst noted this week.
Although she wasn't talking after she stood down on Tuesday, the grim reality of the situation may finally have dawned on the usually optimistic Salmon.
This month she was still arguing that Pizza Hut - which has been a drag on company profits - was on the mend. It had to be seen in the context of a year when competitors had opened 31 new stores, she said.
But if that was the case it seems odd that she would not want to see the turnaround through. Odd, too, in the eyes of the market, that she will not be around to complete a sale process that may offer shareholders their most lucrative escape path.
Chairman Ted van Arkel, now seeking a new chief executive, insisted there were no cross words in the days up to her departure. "Vicki handled herself diplomatically and we had good open discussions ... we all run out of energy and enthusiasm and we recognised from time to time that fresh blood is required to go forward."
Initial reactions were sceptical. Rumours persist that Salmon was keen to quickly progress the sale to one of the three potential buyers, while the rest of the board wanted to explore other avenues.
Van Arkel dismisses this as ludicrous. He says there was no firm offer on the table.
But that revelation in itself suggests the sale process - believed to have been under way since October - is not going well.
Van Arkel has confirmed the company is in talks with three parties, with one a trade buyer linked to private equity and one a private equity company acting on its own.
The former is believed to be Pacific Equity Partners (PEP), which owns Collins Foods with a Pizza Hut franchise in Australia. PEP also owns Tegel chicken in New Zealand.
Tegel recently lost its contract to supply chicken to KFC and would benefit from any sale. But PEP is understood to have lost interest amid wrangles over price.
Bill Falconer was the Restaurant Brands chairman from its float in 1997 until van Arkel took over last July.
He oversaw the company through some decisions that - like many - seem unwise with 20/20 hindsight.
The former chairman concurs with some investors and analysts who won-der whether Restaurant Brands belongs on the market at all. It faces the usual problems for a publicly listed company facing stiff competition and having to publish sales results each quarter.
"Competitors have tended to be privately owned and do not have to do that," Falconer said.
Restaurant Brands is built on its franchise rights to three brands - KFC, Pizza Hut and Starbucks Coffee, owned by Yum! Brands in the United States, which takes a royalty on sales. It faces strict obligations to Yum! Foods and has to negotiate for the renewal of rights.
An offer in 2005 by private equity firm CVC Asia Pacific of $1.65 a share was withdrawn because the rights for KFC were up for renewal.
But the renewal was brought forward in part to remove that barrier to a sale. Australia has only one publicly listed fast food company - Domino's Pizza - and that is mostly a franchisor, making much of its revenue by charging fees to individual operators.
By contrast, Restaurant Brands owns all of its 289 stores, which it runs as three separate businesses.
Even a Restaurant Brands board member, Australian entrepreneur Danny Diab, says he's had no problems running his privately owned Pizza Hutt franchises across the Tasman.
But it wasn't so easy for Restaurant Brands. Salmon's predecessor, Jim Collier, left in 2003 and could not be contacted at print time.
Under the board headed by Falconer and with Collier at the helm, Restaurant Brands made two major acquisitions in the pizza sector.
It bought bankrupt Pizza Hut restaurants in Victoria and a new Australian competitor, Eagle Boys, in New Zealand.
The first buy - encouraged by Yum! and sweetened with A$3 million ($3.41 million) in marketing spending - has been a millstone for years and is only now being disposed of after months of wrangling with Yum!
The Eagle Boys saw Restaurant Brands make the unusual move of closing down a new player and turning its stores into Pizza Huts. Eagle Boys' discounting tendencies meant it could have been useful to run in tandem with Pizza Hut, analysts say.
Instead the move left the door open for another new competition - Domino's - back with significant firepower from Australia.
Salmon is described as an amiable and competent chief executive, though no charismatic leader. But market analysts, who stop short of praising her, say the problems go back before her appointment as chief in 2003.
One even argues that being CEO of Restaurant Brands was "a hospital pass" because of a lack of investment before she was chief executive, although she was on the board.
At the time Salmon said "a company doesn't go bad in two months" and agreed that the problems should have been seen earlier. She said she wasn't sure why they weren't. "My view is when a new chief executive comes in, you ask the questions and you uncover [the problems] and so you deal with them as they are uncovered."
The company floated at $2.20 in May 1997 with shares more than three times oversubscribed. It has been largely downhill since then.
A third business buy which Salmon pressed for as a board member - Starbucks Coffee - has had ups and downs but has stabilised. But although the stock market has risen, Restaurant Brands shares had halved to $1.10 by last week and lost another 5c after Salmon's departure. Shares closed at $1.06 yesterday.
Carmel Fisher, managing director of Fisher Funds, had a small shareholding but has left.
"We look for companies that can double their earnings over three to five years and Restaurants Brands is never going to do that. It's competitive, it's low margin and it's a hard business."
The company is due to release its annual results in the second week of April. In the meantime, few contenders for chief executive would put their names forward while the company is being sold. KFC has been turned around with a series of store makeovers and the Australia disaster is nearly ready to be written off.
This month Salmon announced fourth-quarter Pizza Hut sales were down by 8.6 per cent. Over the year, Pizza Hut NZ sales were $79.2 million, down 10.5 per cent overall - 11.8 per cent compared with same-store sales.
Domino's is on the attack and the local Burger King operator plans to expand Hell Pizza.
Forsyth Barr analyst Guy Hallwright said the latest quarterly fall was despite the expense of more advertising.
Things look tough, leaving you to wonder: if the current negotiations fall through, can Restaurant Brands avoid a fast-food firesale?
Vicki Salmon
* Was a director of Restaurant Brands when it floated in 1997.
* Took over as chief executive in December 2003.
* Qualifications: Chartered accountant.
* Career: Ernst & Young, chief executive of Group Rentals NZ, chief executive of the Ellerslie Flower Show, current director of the Auckland District Health Board and Salmon & Partners.
Wrong Orders
Restaurant Brands' bad moves:
* Allowed KFC chains to run down before embarking on makeover.
* Bought bankrupt Pizza Hut restaurants in Australia but never dealt with underlying problems.
* Bought Eagle Boys pizza chain in New Zealand then merged it with Pizza Hut.
* Decision left open space for Domino's to move into discount pizza market.
