Crains New York - August 13, 2012 - (Page 4)

Nathan’s stock is on a roll Famed hot-dog company relishes shift in strategy BY AARON ELSTEIN Nathan’s Famous Inc., whose griddle-cooked hot dogs and crinklecut fries are synonymous with sweaty afternoons at Coney Island,has a new distinction: It’s a red-hot stock. After going nowhere for years,its shares have soared 50% in the past four months and last week hit an alltime high. The rally appears to be driven by the owners of the 96-yearold company showing signs of finally turning a popular local landmark into a national brand for hot dogs and the saltier things in life. “It took a while,” said Executive Chairman Howard Lorber, who controls 22% of Nathan’s stock and bought the company in 1987 from the founding family.“But we’ve now got a company that’s as strong as the brand behind it.” It doesn’t hurt that Nathan’s gets millions’worth of free publicity every July 4, when its renowned hot-dog eating contest is broadcast on ESPN and the winner makes national news of a sort. The company has also benefited as foodies have come to see hot dogs as regional specialties, with Nathan’s crunchy-skinned, garlicky all-beef wieners becoming the definLISTEN to a discussion at CrainsNewYork.com/podcasts IN THE MARKETS by Aaron Elstein NATHAN’S FAMOUS INC. Weekly share price $35 $31.96 30 25 20 15 12/27/11 8/6/12 itive word on the New York style. “Nathan’s has managed to position a basic street food just a bit upscale,” said Bruce Kraig, a food historian in Chicago and co-author of the upcoming book Man Bites Dog: Hot Dog Culture in America. Clearly, Nathan’s is on a roll. The number of restaurants bearing its familiar yellow logo has grown by a third since 2008, to 300. Its products are now carried in 32,000 supermarkets nationwide, more than five times the total of a decade ago. It has licensed its name to mustard, pickles and, starting last year, flavored snack chips shaped to resemble its fries. Revenues reached $66 million in the fiscal year ended March 25,a 16% increase over the prior year and 40% more than five years earlier. Since 2007, licensing revenue has increased by nearly 60%, to about $8 million. Although last year’s earnings of $6 million were actually a bit lower than 2007’s levels, a five-year company stock buyback has plumped earnings per share by a fifth. Nathan’s began to pick up momentum after Eric Gatoff, an entertainment lawyer by trade, assumed the CEO job from Mr.Lorber.While Mr.Lorber enjoyed considerable success as chairman of Prudential Douglas Elliman Real Estate and CEO of cigarette-maker Vector Group, he struggled to expand Nathan’s nationally. Forays into breakfast food and franchises in Home Depot outlets flopped, and a restaurant in Chicago quickly closed after locals shunned New York-style hot dogs. The new regime made one obvious shift in strategy: Rather than compete in hot-dog hotbeds like Chicago or Los Angeles,Nathan’s in recent years has opened most of its franchised restaurants in places like Georgia, Ohio and Pennsylvania. This spring,it also opened a greatly expanded stand on the Coney Island boardwalk, not far from its flagship restaurant on Surf Avenue. The new location, which sells hot dogs starting at $3.75 a pop (sauerkraut and grilled onions are free), accounted for about 25% of the company’s $2 million increase in sales last quarter, according to a regulatory filing. “For a long time, this was a small company with a big name,”Mr.Lorber said. “We’re going to keep expanding our licensing business, and this won’t be such a small company anymore.” London crawling: ‘superior,’ indeed F or Standard Chartered Bank, judgment day comes Wednesday. That’s when officials from the British institution have been ordered to appear before the New York Department of Financial Services and explain why its license to operate in this state shouldn’t be revoked after Superintendent Benjamin Lawsky charged it last week with hiding $250 billion worth of transactions with Iranian parties. Apart from the drama of a global financial player confronting a state regulator whom most people hadn’t heard of until last week, the fight is over vast differences in how U.S. and U.K. banks are supervised. stakes international dispute will play out, but it’s interesting to note that only a few years ago Britain’s softer approach was deemed preferable—and not just by the British. In 2007, both Mayor Michael Bloomberg and Sen. Charles Schumer signed a report warning that New York could lose its standing as the world’s financial capital unless regulators acted more like their counterparts in London. The report, titled “Sustaining New York’s and the U.S.’ Global Financial Services Leadership,” stated that the growing pace of financial innovation meant that “responsiveness and flexibility” on the part of regulators was more important than ever.“The regulatory environment that has served the United States so well in the past has begun to work against itself,” it warned, adding that “business leaders increasingly perceive” the U.K.’s approach as “superior.” One hasn’t heard that argument much since the financial crisis showed regulation in London to be woeful.Recall:Business leaders who deemed the U.K. way as superior included those at American International Group who used London as headquarters for a derivatives division that nearly destroyed the insurer and forced U.S. taxpayers to shovel out $180 billion in bailout assistance. GROW. WISELY. Everyone wants to grow. But grow how? In which markets? At what cost? To grow wisely, you need an advisor who really knows your business...and knows you. Who can deliver tailored solutions that create opportunities, maximize efﬁciency and build business. EisnerAmper is that advisor. We roll up our sleeves to get to the bottom of your toughest challenges so you get the advice and strategies you need to create sustainable growth. Charles Weinstein Chief Executive Ofﬁcer 212.949.8700 charles.weinstein@eisneramper.com Howard Cohen Chairman 732.287.1000 howard.cohen@eisneramper.com Let’s get down to business. TM www.eisneramper.com EisnerAmper LLP Accountants & Advisors Independent Member of PKF International Since 1990, Britain has embraced what’s known as “principlebased regulation” of banks. That means the rules of the road are spelled out broadly. Conversely, U.S. banking regulations are “rulesbased” and attempt to spell out which activities are forbidden in sometimes mind-numbing detail. The U.S. approach is all over Mr. Lawsky’s order, which accuses StanChart of violating a host of federal and state statutes when it used its New York branch as a “front for prohibited dealings with Iran.” For example, the bank allegedly violated section 672.1 of the New York Banking Law, which deals with falsification of business records and reports.There’s no doubt, Mr. Lawsky argues: StanChart broke a series of laws so it could pocket big fees. Au contraire, StanChart replies. The transactions in question were protected by language in the regulations that allowed it to transact with Iranians so long as their money was immediately transferred from the New York branch to an offshore institution—what are known as U-turn transactions. StanChart argues there was wiggle room that it utilized until it was ordered to stop, and Mr. Lawsky’s interpretation is “incorrect as a matter of law.” Who knows how this high- NEW YORK | NEW JERSEY | PENNSYLVANIA | CALIFORNIA | CAYMAN ISLANDS The stock-market value of Manchester United after the English soccer team’s initial public offering Friday on the New York Stock Exchange. That is about a half-billion higher than the value of the New York Yankees, estimated at $1.85 billion by Forbes. $2.3B 4 | Crain’s New York Business | August 13, 2012 newscom http://www.CrainsNewYork.com/podcasts http://www.eisneramper.com http://www.eisneramper.com

Table of Contents for the Digital Edition of Crains New York - August 13, 2012

Crains New York - August 13, 2012
Table of Contents
IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
GREG DAVID
REAL ESTATE DEALS
FROM AROUND THE CITY
REPORT: SMALL BUSINESS
THE LIST
CLASSIFIEDS
NEW YORK, NEW YORK
SOURCE LUNCH
OUT AND ABOUT
SNAPS

Crains New York - August 13, 2012