Quiznos Follows Sbarro Into Bankruptcy Court

Quiznos Follows Sbarro Into Bankruptcy Court

Quiznos, which was started in 1981, and has restaurants in all 50 states and 34 countries has declared chapter 11 bankruptcy. The toasted-sandwich franchise has been consistently losing business to its fast casual competitors such as Panera Bread, Chipotle, and Subway. The prospects for success in this industry is tough due to constantly changing consumer tastes and preferences. If a firm is not able to keep up with the changing demand, they are likely to be replaced by a firm that will. Quiznos underwent a financial restructuring program in which it was able to eliminate about $300 million of its $500 million in debt in a $150 million equity infusion and debt-to-equity swap with Avenue Capital Group LLC--giving that firm majority ownership. Quiznos, Sbarro and others have dropped out of the market recently. Which companies will be next? And what new ideas will be launched to fill the void? 

Consumer confidence, wholesale prices drop

Consumer confidence in the US has dropped in March, which could be due to the bad weather the US has suffered this winter. This indicates household spending may be slow to pick up from the weather setback.
Consumers were surveyed and it was found they were more pessimistic about the outlook of the economy. Indicating that consumers feel that they need bigger payroll gains to reach a high wage growth, which could increase consumer spending. Many economists believe that it is the labor market that is the most important driver of consumer confidence.

http://www.latimes.com/business/la-fiw-consumer-confidence-producer-prices-20140314,0,446146.story#axzz2vyZ23qa4

Western Businesses in Russia, Watchful and Wary

The article discusses the Western Businesses’ increasing concern over their operations in Russia after the country’s intervention in Ukraine. They have faced crises with Russia over the years, but this time seems to be different and so uncertain. There are two problems here: the harder sanctions of other countries imposed on Russia and the Russia’ retaliation against Western interests.

The tension between America and Russia is escalating as “Russian lawmakers also considered a proposed law allowing for the confiscation of property, assets and accounts of Western companies” and “advocated dropping the dollar as a reserve currency and refusing to pay off Russian loans to American banks.”

What is happening in Russia can really hurt the global economy and affect multinationals are trying to cope with the situation. Western executives are thinking about raising the prices to deal with the inflation and low consumption in Russia, but the likely financial crisis’ impacts are so unpredictable. Other companies are concerned about their employee’s safety. Russian companies are also in trouble as well: some of the stocks have declined sharply.

With that being said, Russia is an important market for Europe and America, especially in the energy sector. Therefore, due to the uncertainty of the current issue, companies have not decided to move out of Russia yet, especially Russia is now a growing market for many industries. Yet, global firms will still keep an eye Russia’s every move and hope for a more optimistic future.

http://www.nytimes.com/2014/03/08/business/international/western-businesses-in-russia-are-watchful-and-wary.html?_r=0

Merger to Create New Banana King

Chiquita, Fyffes to Merge Creating New Top Global Banana

Chiquita Banana, now the second biggest market holder of bananas (22% of the US market) has plans to merge with Fyffes (7% US market). In a $1.2 billion all stock merger, the two companies would create Chiqutafyffes that would be the largest provider of bananas in the world. Currently Dole is the largest with 26% of the market. This deal does bring some competition issues, such banana importers such as varying Colombian and Panimian exporters will have fewer options when it comes banana sales. The new company that would be formed Chiqutafyffes would have 32,000 employees and $4.6 in annual revenue.

Gas Tank Running Low in Russian Crusade for Ukraine

Recently, much international attention has been focused on Putin's involvement in the Ukraine. And the question on everyone's mind is what the international community is going to do. What is the appropriate reaction? What policies should be implemented? But all of this fretting may be unnecessary. 

Over the past few years, all of Europe has been suffering from slow economic growth rates. Russia's sickly economy grew by a meager 1.3% in 2013. So how sustainable is this Russian crusade?

The Russian population has begun to retract their money from the economy due to a decreasing approval rate for Putin's actions in the Ukraine. This caused a sharp increase in interest rates, which would reportedly be enough to severely impact their economy. This caused their economy to decrease by 12% already. The idea of sanctions could be even more troublesome. The tension between the West and Russia has already decreased foreign investment, a huge component of the Russian financial markets. Sanctions would only compound upon these results. So if Putin continues, he could further deter foreign investment, perpetuate if not exacerbate their economic stagnation and ultimately perhaps lead to recession that would further destabilize Russia. 

Read more about their impending crisis here: http://www.reuters.com/article/2014/03/03/us-urkaine-crisis-russia-economy-analysi-idUSBREA221D020140303

Kidnapped by the Kremlin

Kidnapped by the Kremlin

http://www.economist.com/news/leaders/21598639-west-can-punish-putins-russia-its-belligerence-ukraine-only-if-it-prepared

The article discusses Western solutions to Putin's actions in Ukraine. The article makes a strong stance against military interventions but it is in support of extra stringent sanctions that would exceed Putin's expectations. The US and the EU are already considering a wide range of sanctions that would limit Russia's economic ties with Europe and the US. One of the key sanctions would be to end oil and gas contracts with Kremlin and to cut Russia's financial institutions from the world arena.

Now West is faced with the choice to either stand for what their democratic governments have been preaching for for decades, which is support of the nations that seek to establish democracies and join the West, or continue their soft stance with Putin in order to protect themselves from economic and political losses if Russia decides to cut off gas supply and side with Syrian and Iranian government (hot spots where the West has a lot of invested interest).