Blogs & Comment

Winners & Losers: Cara’s IPO sizzles, Tidal looks washed up

A rising tide lifts all the yachts already owned by the biggest names in music

▲ Cara Operations

Investors hungry for more

Harvey’s restaurant

The owner of Swiss Chalet and Harvey’s appears to have won the favour of investors, with reports suggesting the company’s initial public offering is oversubscribed. Cara Operations raised $200 million from institutional investors who are betting that the company will continue to grow in a competitive restaurant market. Cara is appealing to investors because it represents something unique, unlike the food at its roster of familiar and somewhat indistinguishable brands. (Come on, a Kelsey’s and a Casey’s?) The Canadian stock market is dominated by financial firms and resource companies, but Cara offers diversification, liquidity, and a growth story. Traffic at fast-food restaurants in Canada is expected to grow by only 1% annually over the next five years, as fast-casual chains bring in more customers. Luckily, Cara’s handful of brands, which also include Milestones, Montana’s, and authentic Italian eatery East Side Mario’s, fall more into the burgeoning fast-casual segment. The company generated $1.7 billion in revenue last year, making it the third-largest chain in the country behind Tim Hortons and McDonalds. Indeed, Cara is an acquisitive company. In 2013, it purchased Prime Restaurants Inc. for nearly $70-million, adding Bier Markt and authentic Irish pubs Fionn MacCool’s, Paddy Flaherty’s and D’Arcy McGee’s to its portfolio. The cash from the IPO should help Cara pay down debt and eventually expand its empire, ensuring there is always a Swiss Chalet or Milestones nearby whenever you can’t be bothered to think of anywhere else to eat.

▼ Tidal

For a bunch of musicians, surprisingly tone-deaf

Tidal announcement celebrities

A Justice League of superstar musicians led by Jay Z banded together this week to boldly ask their fans for more money. The group gathered in New York for a press event on Monday to introduce a new streaming service called Tidal, which Jay Z acquired in a US$56-million deal last month. Jay Z, who was joined on stage by Beyoncé, Rihanna, Madonna, Kanye West, a man in a cowboy hat and others, is promising better financial terms for artists who sign on. He’s pitching it as an alternative to Spotify, which has been criticized for paying artists a pittance in royalties, and is even offering equity stakes in the company. The premise behind Tidal is hard to argue with: music has value, and artists should be fairly compensated for their work. Unfortunately, the press event and the messaging behind it totally missed the mark. The event itself was horribly stilted. After all 18 musicians were introduced, they shuffled their feet for five minutes minutes while former global creative director for BlackBerry Alicia Keys effused about the power of music and quoted noted thought leader Friedrick Nietzsche. Then it was time for everyone to sign the “declaration.” What did the “declaration” say? Who knows! Before the event, Tidal released a video that sums up everything wrong with its approach. “Every great movement started with a group of people being able to get together and really just make a stand,” Beyoncé says in it. But Tidal’s “stand” amounts to asking people to pay more money for music they can legally obtain elsewhere for less. That’s it. Tidal’s backers are already some of the most powerful, well-paid entertainers in the world, and they never really articulated why music fans should pay either $9.99 or $19.99 a month when they can listen for free on Spotify. Unless Tidal tones down the self-importance and presents a compelling offer to consumers that goes beyond better financial terms for mega-rich celebrities (we assume man-in-cowboy-hat is famous), then the company is as doomed to failure as this high-five (?) between Madonna and Deadmau5: