Page 7 of 12 – SEC Filing
The following constitutes
Amendment No. 3 to the Schedule 13D filed by the undersigned (“Amendment No. 3”). This Amendment No. 3 amends the Schedule
13D as specifically set forth herein.
| Item 3. | Source and Amount of Funds or Other Consideration. |
| Item | 3 is hereby amended and restated to read as follows: |
The Shares purchased
by each of Partners LP and Focus Fund were purchased with working capital (which may, at any given time, include margin loans made
by brokerage firms in the ordinary course of business) in open market purchases. The aggregate purchase price of the 875,000 Shares
beneficially owned by Partners LP is approximately $8,928,554, excluding brokerage commissions. The aggregate purchase price of
the 130,000 Shares beneficially owned by Focus Fund is approximately $1,326,299, excluding brokerage commissions.
| Item 4. | Purpose of Transaction. |
Item 4 is hereby amended
to add the following:
On February 27, 2018,
Marathon Partners delivered a letter to the Issuer’s board of directors (the “Board”) following the results of
the Issuer’s Special Meeting of Shareholders in which shareholders rejected the Board-recommended acquisition (the “Transaction”)
of 99 Restaurants, LLC (“99 Restaurants”) by the Issuer. In the letter, addressed to the Chairman of the Board Frank
Martire, Marathon Partners cited the Issuer’s share price underperformance and urged the Chairman to review strategic options
in the best interests of all shareholders. Marathon Partners also recommended that the Board appoint new, independent directors
in order to restore accountability in light of its conflicts of interests relating to the Transaction. Further, Marathon Partners
requested that the Issuer establish a special committee of independent directors and engage an independent investment bank to explore
strategic alternatives.
Marathon Partners
cited the continued stock price underperformance in which the Issuer underperformed many peers and various equity indices. Marathon
Partners further stated that, since its inception as a public company, the Issuer has returned 8.4% while the S&P 500 Total
Return Index and S&P 500 Total Return Restaurant Index have returned 55.2% and 36.6%, respectively. The letter noted that with
the Issuer’s shares trading at approximately $10.50, shareholders have suffered nearly two and a half years of extremely
low returns.
In the letter, Marathon
Partners emphasized the Chairman’s role in protecting the best interests of outside shareholders and noted that, given the
Chairman’s presence on other public company boards, the Chairman should appreciate the responsibility of serving as a fiduciary
to shareholders in the context of the conflicted and undervalued Transaction.
Marathon Partners
further noted its belief that additional independent directors, free from conflicts arising from the Transaction, should be appointed
to the Board to ensure fairness for all shareholders. Marathon Partners stated that such newly appointed independent Board members
could seek to maximize shareholder value by leveraging the Issuer’s potential for growth, balance sheet optionality, and
opportunity for margin improvement in order to assess potential interest in the Issuer from outside buyers. Marathon Partners reiterated
its belief that a full and open auction process held by a properly incentivized investment bank could yield multiple parties, and
that such a process would produce a valuation significantly higher than the $11 used by the Board in valuing the Issuer in the
Transaction. This would, according to Marathon Partners, serve to close the gap between the public and private value of the Company.
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