| Client: 300-Store Specialty Retailer This 300-Store specialty retailer was originally owned and operated by an old-line multiple channel drug chain and was purchased by a wholesaler who hoped to establish a retail presence. The wholesaler owned a small group of stores and converted them to the new concept. After two years, they managed to increase sales substantially through opening new stores, renovating existing stores and improving operations. Despite the apparent turnaround and record sales, the operational improvements envisioned by the owner did not happen quickly enough, and a year later, the company recorded a loss of $3 million for the fiscal year; same store sales stagnated and the following year another significant loss was sustained. Ethan Shapiro, of Ethan Shapiro & Associates, LLC was recruited as President of the company and was given the task of improving operations and returning the chain to profitability in one year, an enormous task by any measure. Mr. Shapiro was able to accomplish this through the creation and application of proprietary strategies and processes. However, an attractive offer coupled with the belief that the company lacked differentiation from its larger competitors led to a decision to sell the chain. The company was sold for $95 million in cash after being bought five years earlier for $28 million in cash and stock valued at $3.5 million. This transaction was the first of many successful turnarounds led by Ethan Shapiro & Associates, LLC.
Client: Multiple Store Franchise of Forbes 100 Private Company Ethan Shapiro & Associates, LLC (ESA) was retained by a 4000 store retailer to determine a six-year historical sales capacity, expense efficiency and inventory productivity of several franchise operations. These stores were typically performing below accepted corporate and industry standards and positive net income had decreased despite increased revenue. ESA discovered that after the initial challenge of establishing a new venture, the franchisee ignored advice and direction from senior management and was unable to perform to established standards. Although purporting to have the background necessary to accomplish these goals, in fact, they did not have the skills to adapt to expanded revenues, such as managing inventory and adding staff. In addition, although they had the necessary resources to fund the start-up of the business, the financing needed and required to sustain the franchise fell through for the licensee. Many entrepreneurs only have an orientation toward sales, not toward profit, as evidenced in this situation. As the company grew, it faced a liquidity crisis, financial performance issues and suffered from a lack of adequate control and ownership was unable to recognize the problems surfacing throughout the business. ESA was able to confirm after extensive analysis and research that these stores would have been successful under a different franchisee. This theory was confirmed by the judicial body which decided in favor of our client; a savings of more than $2.5 million was attained due to our meticulous reconstruction of six years of retail operations by the franchisee.
Client: Private Equity Group The natural fragmentation that existed within the franchise environment of this 3,500 fast food hospitality company emerged as the Achilles heel for growth and shareholder profitability. The firm of Kohlberg Kravis Roberts, one of the oldest and most venerable management buyout firms, and ACCEL Partners, a venture capital firm dedicated to helping entrepreneurs build world class technology companies, created an entity headed by one of the partners in Ethan Shapiro & Associates, LLC (ESA). The newly formed company helped this iconic American brand change its thinking regarding using technology to drive growth and momentum. By helping this established brand analyze personnel and determine who best would serve the new company’s goals, ESA was able to better direct where this entity would be in the future. At the completion of this mission, the newly formed company was able to deliver technology and business outsourcing solutions to 40 top restaurant brands in over 50 countries and 6,000 locations. The company’s leading customers included Applebee's, Domino's, Hardee's, Houlihan's, KFC, McDonald's, Pizza Hut, and other well-known multi-unit restaurant companies. The success of the company was validated by its sale in two separate transactions for over $400 million.
Client: World’s Largest Online Retailer Tasked with the mission of establishing a profitable new online concept for a brand already known as a household name, one of the partners, prior to his association with Ethan Shapiro & Associates, LLC, was able to accomplish all of its client’s goals. In less than 6 months, the new concept was up and running on the company website and the concept has since become a significant driver in soft line sales at this retailer and a large contributor to the overall growth of the category. Appropriate development of technology allowed this sector to receive over 100,000 hits per day and the items in this department were among the top results in search queries on the store site. Thorough analyses of corporate goals enabled the partner to focus his efforts on developing and delivering exactly what the client wanted and needed to enhance their retail online presence. Client: Private Equity Group The equity firm acquired a $400 million specialty chain after which the Company began a fairly rapid expansion plan. The acquisition of other companies, combined with a weak management team resulted in issues in many areas of the business. By the time we were engaged, the Company needed to significantly strengthen its management team as well as put into place typical retail operations and operating measures. Our assignment was to find ways to stabilize the business and implement standard retail operations while shoring up the organization for future growth. The Company did not have the time or the resources to tackle an undertaking of the magnitude of a strategic plan, therefore, we created a business operating plan that comprised a revised budget and a “blueprint” that provided the basis for the Company to build a solid foundation. We addressed and applied new systems and processes and immediately reduced a $5 million overstock position. We instituted a revised budget and included specific activities to achieve the goals and objectives that comprised operating plan. We revised the existing budget to include explicit activities to achieve the goals and objectives that comprised the new plan. We addressed the first half of the fiscal year in outline form, allowing for a continuation of the current process in anticipation of a detailed three-year plan created by management. By attacking the issues in this manner the Company segued into the new programs without disturbing the business. By operating the business in this non-disruptive manner senior management had the time and the information needed to secure sufficient funding and have adequate cash flow to finance the new business and operating plans. We also had the time to help management and the boards evaluate existing management and when needed hire competent people in a timeframe and at a cost factor that kept to the budget. In a relatively short period of time we upgraded the business, managagement and the probability for success.
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