Koo Koo Roo Inc. Appoints Lee Iacocca as Acting Chairman, Triggering Stock Surge

Strategic Insights -

Lee Iacocca, the renowned auto industry expert, has been named acting chairman of Koo Koo Roo Inc., a move that has sent the company's shares skyrocketing. Iacocca's appointment comes as the chicken-restaurant chain struggles to make a profit in the competitive home meal-replacement segment. The company's new leadership, including Iacocca and CEO Bill Allen, has announced plans to launch a "major restructuring" to address the challenges facing Koo Koo Roo.

Key Takeaways:

  • Lee Iacocca, a Koo Koo Roo board member and former Chrysler Corp. executive, has been appointed as the acting chairman of Koo Koo Roo Inc.
  • Iacocca's appointment has triggered a surge in the company's shares, with a 1.5/32 to 3.5/32 increase in midafternoon trading of 23.5 million shares, exceeding its three-month daily average of 1.2 million shares.
  • The company operates 52 restaurants in California, Las Vegas, Florida, and Washington, D.C., including 14 Hamburger Hamlets restaurants that serve a range of food options.
  • Koo Koo Roo's revenue streams include rotisserie chicken, specialty sandwiches, and side dishes, such as potatoes and salads.
  • Iacocca has relative experience in the restaurant business, with relatives involved in the industry in his hometown of Allentown.
  • The company's former chairman, Kenneth Berg, resigned after recent open-heart surgery, paving the way for Iacocca's appointment.
  • Iacocca, 73, will lead a "major restructuring" effort with CEO Bill Allen to address Koo Koo Roo's challenges in the competitive restaurant industry.
  • Restaurant analyst Mitchell Pinheiro notes that selling rotisserie chicken and upscale takeout food is distinctly different from making cars, a challenge that Koo Koo Roo will need to overcome.

Statistics:

  • 23.5 million shares traded in midafternoon trading
  • 19 times the company's three-month daily average of 1.2 million shares
  • 1.5/32 to 3.5/32 increase in share price
  • 52 restaurants operated by Koo Koo Roo in California, Las Vegas, Florida, and Washington, D.C.
  • 14 Hamburger Hamlets restaurants operated by Koo Koo Roo

Sources:

  • Byline: The Morning Call LOS ANGELES
  • Mitchell Pinheiro, restaurant analyst with Janney Montgomery Scott Inc.
  • Iacocca, Lee
  • Berg, Kenneth, former Koo Koo Roo Chairman
  • Allen, Bill, Koo Koo Roo CEO