IHOP Corp.'s recent announcement that it would stop using frying oils containing trans-fats by the end of the year came after about 12 months of research and planning, said spokesman Patrick Lenow.
The company has been working with suppliers and testing oils that are free of trans-fats but won't affect the taste of IHOP's food. In some cases, the change will mean that the Glendale-based company known for its hearty breakfast menu will have to find new suppliers.
The change will come at a hefty price tag, Lenow said. He declined to say how much, but it has been estimated by industry experts that an average 35-pound container of trans-fat-free cooking oil costs about $35, or $10 more than a 35-pound container of normal cooking oil.
In 2008, IHOP will eliminate trans-fats from the rest of the menu, including those in bakery items.
"We are a franchise company. We do much of the heavy lifting to find a quality product, so that franchisees don't have to," Lenow said.
A number of factors, beyond the industry's concern over trans-fat's link to heart problems, led to IHOP's elimination of it from the menu. Fast food giants, including McDonalds, have promised to use non-trans-fat oils to cook their foods. And several U.S. cities have chosen to ban trans-fats on restaurant menus provoked IHOP. New York, Philadelphia, and Chicago have all taken steps toward banning trans-fats from menus by next year. The L.A. City Council adopted an incentive program in January, under which restaurants that eliminated trans-fats would be allowed to post a Health Dept. decal noting the move.
"We want to stay ahead of what consumers want," Lenow said. "And a lot of suppliers are starting to step up and offer different options."
The transition will be gradual across the 1,319 restaurants that it franchises and operates in 49 states, the U.S. Virgin Islands, Canada, and Mexico.
The close of Bain Capital Partners LLC's $2.1 billion deal to acquire Guitar Center Inc. may pave the way for the newly private firm's expansion.
"As the company shifts away from quarterly results, it will develop a longer term growth strategy and focus," said Rick Nelson, an analyst for Chicago-based Stephens Inc., who covered the company when it was public.
Bain Capital agreed in June to buy the company.
Guitar Center was considered a good target for a takeover because its cash flow would enable a buyer to leverage the deal and because of its potential for continued store expansion, Nelson said.
"Guitar Center has talked about going overseas before," Nelson said. "A lot of retailers haven't been successful overseas, Wal-Mart being one. The Guitar Center concept could travel, but it would require an incubation period that the private market is more understandable about. Public markets are more focused on near term results."
Since Guitar Center agreed in June to be acquired by the Boston-based private equity firm, shares have been trading nearly 10 percent below Bain's $63-per-share offer a gap that bothered a number of shareholders and led to doubts about the successful close of the deal. But at the beginning of October, Guitar Center stock price rose to its highest in almost two years as investors apparently came to believe that the deal was going to be completed.
Nelson said he never doubted the deal. "The business fundamentals were there and the agreement was struck. We were pretty sure it would go through as planned," he said. "The deals you have to worry about are when the business deteriorates between when the offer comes and when the offer closes. That just wasn't the case here."
In the crowded candle industry, a local company has found its niche.
DayNa Decker Environments, founded in 2001 by the former Ford model, has seen 300 percent growth in the past year as a result of a technology she had patented called the Eco Wood Wick, used in all of her candles.
Decker, who is originally from North Dakota, wanted to create a candle that would conjure up the sounds and charm of a fireplace, said her husband and CEO of the company, Andrew Maltin. The wick makes a crackling sound as it burns.
In 2005, the technology was licensed by Smith Mountain Industries, which owns Old Virginia Candle Company. The licensing deal now accounts for about 30 percent of the company's sales, which were $3 million last year, and are expected to reach $8 million this year.
Dayna Decker candles are also distributed to about 600 upscale boutiques, department stores, and hotels in the U.S. It also exports. In the past eight months the company has expanded from three employees to 15.
"The growth of this company is literally on fire," said Maltin, who joined the company about six months ago. "And the fourth quarter is the busiest time of year."
Staff reporter Sarah Filus can be reached at (323) 549-5225, ext. 223, or at firstname.lastname@example.org.
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