RBD - Restaurant Brands

[bull....]

As KFC gets more expensive one has to consider who's the biggest customers of KFC , is KFC like smoking cigerette's you will buy it no matter what ?
we already hear stories of watered down potato and gravy will chicken become more fake going forward ? in the burgers

[BlackPeter]

As KFC gets more expensive one has to consider who's the biggest customers of KFC , is KFC like smoking cigerette's you will buy it no matter what ?
we already hear stories of watered down potato and gravy will chicken become more fake going forward ? in the burgers

Probably replacing the chicken with boiled and roasted cabbage or algae ... what do you think?

[Snoopy]

Probably replacing the chicken with boiled and roasted cabbage or algae ... what do you think?


'Algae marinated in brackish seawater' sounds quite healthy compared with usual KFC fare BP. The boiled and roasted cabbage you can get by sticking the regular KFC coleslaw in the microwave, so you are almost there. With our Russel on the way out, a new CEO is needed. I reckon you are angling for that top job BP, and doing your 'dipping your toe in the water test' for your prospective menu changes on our Sharetrader members. That's what I think....

Good luck with your job application BTW.

SNOOPY

[BlackPeter]

'Algae marinated in brackish seawater' sounds quite healthy compared with usual KFC fare BP. The boiled and roasted cabbage you can get by sticking the regular KFC coleslaw in the microwave, so you are almost there. With our Russel on the way out, a new CEO is needed. I reckon you are angling for that top job BP, and doing your 'dipping your toe in the water test' for your prospective menu changes on our Sharetrader members. That's what I think....

Good luck with your job application BTW.

SNOOPY

Interesting idea ... turning KFC into a much loved and profitable health food supplier and reducing that way the pressure on our health system - I like it :);

Maybe with you as CFO we could together turn the ship around ... ;) ;

[Rawz]

Imagine life without KFC. Sounds like hell

[BlackPeter]

Imagine life without KFC. Sounds like hell

Hell? ... I like the way this discussion is going ...

14361

[bull....]

Probably replacing the chicken with boiled and roasted cabbage or algae ... what do you think?

think the lettuce was already replaced with cabbage , but yes good idea's. kfc will be looking for all idea's to keep costs down

[nztx]

think the lettuce was already replaced with cabbage , but yes good idea's. kfc will be looking for all idea's to keep costs down


Edible flavoured packaging would be a good idea .. add flavouring then they could biff anything they like that looked
the part inside .. Might reduce the amount of rubbish left laying around by a certain quotient of untidy little cretins they call customers :)

[Sideshow Bob]

https://www.nzx.com/announcements/403351

Restaurant Brands New Zealand Limited (RBD) announced today that Chief Executive Officer (CEO) for the New Zealand Business, Arif Khan, will take on the position of Global Chief Operating Officer (COO), effective today. After Russel Creedy retires, Mr Khan will be appointed Acting Group CEO.
In addition CPA Julio Valdés has been appointed Group Chief Financial Officer, effective June 1st, 2023, taking over for Grant Ellis whose retirement is scheduled for May 31st, 2023.

[Rawz]

Arif Khan looks the goods. Internal promotion always good, even if its only acting after the retirement.

[Sideshow Bob]

Phone just pinged - RBD has just hit the (very arbitrary) price alert I set of $6.50. :scared:

Down 57% in the last year!! :scared::scared:

[Rawz]

Its in a wicked downtrend. You'd be brave to buy in now during this downtrend and with the margin pressures RBD face.

[nztx]

What is the market pointing to with RBD - an ongoing large hit to the bottom line
that takes out any possibility of further dividend and further major supply
pricing pressures / staffing pressures in play ? :)

What is likely with further inflationary pressure on discretionary loot on the loose ?

[moimoi]

Has anyone any insight into why Finaccess went to a 75% holding instead of going to 90% and de-listing RBD....?

Tax or OIC issue?

Some might have assumed they were intending on using the listed shares as a currency for further market consolidation or retaining the listing to amalgamate a larger entity.

With the severe price decline one wonders if the minorities could be taken out shortly.... if the strategy was to use the shares as a currency, and is no longer as attractive, due to the recent market malaise.....?

[moimoi]

Its in a wicked downtrend. You'd be brave to buy in now during this downtrend and with the margin pressures RBD face.

Selling pressure eased....

Inflation panic abating...Early basing pattern forming on rising volume....?

Upside here methinks.

[nztx]

Retail disposal income issues ahead ?

Labour issues ?

Supply chain issues ?

Multiple market issues exposures.

Don't know I would be that brave with the approaching treacherous economic conditions
some sectors of Retail are already experiencing in the local goldfish bowl :)

[Fortunecookie]

Does anyone else think RBD is still overvalued in light of the year long decline. Going off the previous acquisition and making some adjustments I don't feel current share price is reflective what their true value is.

[Fortunecookie]

I have always thought about that. If that is the case I am guessing buyout offer will about 20% premium on market price. Good luck picking the bottom imo I still think it is overvalued even with the year long decline.

[Filthy]

DMP down ~20% at open this morning on a poor result; wonder if similar impacts for RBD...

As inflation, through increases in labour costs, food input costs, and energy, rapidly affected the Group’s uniteconomics, management moved quickly to adjust customer-facing pricing to protect franchisee profitability andsustainability. Initially Domino’s intent was to ‘earn’ additional pricing from customers through a ‘More for More’strategy, whereby customers would be encouraged to trade into additional, or higher ticket, items that would delivervalue for customers and additional earnings for stores.This resonated well with customers, but as cost increases continued unabated, Domino’s took additional steps topass through these costs to consumers. It was anticipated that pricing changes implemented at the end of Q1 woulddeliver an improvement of earnings in Q2. However, while the initial customer response was pleasing, some of thismargin improvement unwound in November as repeat purchases were affected, particularly in markets where orderfrequency is not as high (for example Japan and Germany).

[winner69]

In 2011 RBD sales were $325m and NPAT was $24m

Eleven years on for 2022 sales are $1,239m and NPAT is $32m

So $900m more sales and only $8m more profit

Something wrong somewhere

[LaserEyeKiwi]

In 2011 RBD sales were $325m and NPAT was $24m

Eleven years on for 2022 sales are $1,239m and NPAT is $32m

So $900m more sales and only $8m more profit

Something wrong somewhere

Caught out by leverage?

2011 debt interest payments: $1.1m
2023 debt interest payments: $44.5m

[nztx]

Caught out by leverage?

2011 debt interest payments: $1.1m
2023 debt interest payments: $44.5m


did they have borrow up to bolt on the new whole country franchises elsewhere ?

Rising interest rates wont help going forwards

then to find the readies for a dividend or two :)

Supply issues / costs, rising employment costs & issues etc coming through in latest results
impacting bottom line

[moimoi]

In 2011 RBD sales were $325m and NPAT was $24m

Eleven years on for 2022 sales are $1,239m and NPAT is $32m

So $900m more sales and only $8m more profit

Something wrong somewhere

No Covid in 2011....

But you knew that already.

[Fortunecookie]

No Covid in 2011....

But you knew that already.

Covid has got nothing to do with it. If anything they benefited from it.

From what I can gather, they took a gamble with debt funded expansion(more than normal). It backfired as in short their margins are being squeezed for many reasons and the company needs to be repriced due to int rates. Leverage only works when there are favourable factors.

[nztx]

https://www.nzherald.co.nz/business/stock-takes-whats-behind-restaurant-brands-billion-dollar-valuation-slump/PBSMOAYY4NELNK6Y2WGWRS54HU/

Stock Takes: What’s behind Restaurant Brand’s billion-dollar valuation slump?

(Premium Content)

[bull....]

cabbage not lettuce ?

[Sideshow Bob]

Something else that won't help their shareprice:

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/NZXO/407811/390079.pdf

[Fortunecookie]

https://www.nzherald.co.nz/business/stock-takes-whats-behind-restaurant-brands-billion-dollar-valuation-slump/PBSMOAYY4NELNK6Y2WGWRS54HU/

Stock Takes: What’s behind Restaurant Brand’s billion-dollar valuation slump?

(Premium Content)

NZTX do you have access to the article. I would be interested to read it.

Anyway I thought I would give myself a exercise to figure out the current fair value. I was going through the previous reports, I noted the following.

"KFC New Zealand acquisition
In September 2020 the Group acquired a KFC store in New Zealand for $3.2 million. The store contributed sales of $0.9 millionand net profit after tax of $0.1 million in the consolidated statement of comprehensive income. The acquisition gives rise to$2.7 million of goodwill."

I accept interest rates have gone up significantly since. But they paid $3.2mill for npat of $100K. Seems abit excessive even back in that period. Am I missing something here??.
I don't know whether it was intentional or not to structure it with $2.7mill of goodwill (amortise large sums down the line).

[Charlie]

SP seems to be turning a corner . ? 50 might cross the 200......

[Ricky-bobby]

Meeting didn’t go well today?…

[Sideshow Bob]

Meeting didn’t go well today?…

Ouch down almost 7%.

But still up $1.20-ish on recent lows.

[Muzz1234]

Be interesting to hear thoughts of anyone who attended or tuned in for meeting

[Rawz]

Be interesting to hear thoughts of anyone who attended or tuned in for meeting

yeah keen to know as well. obviously a profit warning or tough trading flag of sorts waved for such a SP drop today?

[Ricky-bobby]

Tough trading. Rev up 12% but margins are down… no surprise?

[Rawz]

RBD had profit margin expansion AND SP multiple expansion during the last bull market cycle taking the SP up to $15-$16 was it??

Now profit margin AND multiple contraction happening. Ouch.

Anyways probably a good opportunity around here somewhere

[X-men]

Thinking Finaccess capital will come and buy the rest of 35m share? Representing their 25% float on the market.

They bought 75% holding years ago.

Fast food restaurants are busy all the time. Notice that the prices are all up...so...margin could be maintained up

[winner69]

Latest guidance bit of a disaster …..all those pizzas, chickens etc sales and only $12m to $16m NPAT

Heck they were making $20m plus years ago before they went global …..and sometimes we though that wasn’t too good

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/RBD/415852/399797.pdf

[winner69]

NPAT F21 $52m

Then F22 was $32m

This year $12m to $16m

Sales growing profits disintegrating …….blame costs etc etc

I say bring back our Russel ….you say so Snoopy

[Rawz]

The longtime CEO and CFO saw the writing on the wall and bailed at the peak.

It not just a margin issue in California.. something wrong there when sales go backwards. Did they buy a bunch of duds?

How low can this go before major shareholder buys the rest of the company.

[winner69]

A couple of months ago CEO told shareholders that F23 profit would be ‘in the vicinity of last years result’

Lots happen …not even going to be half of last years result

[X-men]

SP is down half since fy 2022 update..so the market expected this ?

[winner69]

SP is down half since fy 2022 update..so the market expected this ?

Maybe ….but probably not such a bad outlook

Share price up since beginning of year so some degree optimism of late

[Rawz]

NPAT F21 $52m

Then F22 was $32m

This year $12m to $16m

Sales growing profits disintegrating …….blame costs etc etc

I say bring back our Russel ….you say so Snoopy
Trading on FY21 profit multiple of 15x

Trying to be fair here and say one day they will be back to $51m NPAT.

But even at 15x that years earnings it’s pricy.

SP could fall much more

[X-men]

I reckon Finaccess will come n buy the rest of 25% shares..

[Snoopy]

I reckon Finaccess will come n buy the rest of 25% shares..


When the Finaccess 'takeover' happened, they made it clear that they liked having the discipline that being partially listed brings (they do this with other listed entities they control as well). I see no reason why that opinion might have changed in the interim period. So I would be very surprised if they make a bid for 100% ownership of RBD now.

They already control the company. Today's quarterly sales announcement makes it clear they have a 'path to profitability plan'. So why get involved in a pointless 'mop up' exercise that offers Finaccess no benefit, and takes away their previously announced reason for leaving the company partly listed in the first place?

SNOOPY

[X-men]

Because it is cheap....

[Snoopy]

Trading on FY21 profit multiple of 15x

Trying to be fair here and say one day they will be back to $51m NPAT.

But even at 15x that years earnings it’s pricy.

SP could fall much more


Because it is cheap....

Look at RAZ 's post above. The share may be trading at a half the price it was a few years ago. But it is not cheap by any FA measure I can see. Just because the price has gone down, does not mean it is cheap! If the share price dropped to under $3, then you might have an argument.

SNOOPY

[Habits]

No more scallops and chips, this year kfc quarter packs and big buckets

Aus is doing well though, up 13 perct revenue

Edit: have clocked 1000 posts, time to celebrate with KFC for everyone

[X-men]

Never got any scallops on my quarter pack. Which store did U go?

[X-men]

Wonder I should buy some.

Based on Winner's serko formula....SP high was $15...now it is $6....

Winner...what do U think?

[Snoopy]

Wonder I should buy some.

Based on Winner's serko formula....SP high was $15...now it is $6....

Winner...what do U think?


I suggest you get hold of the name of Winners secret 'Chippie' and buy your scallops and chips from there, and go down to the waterfront to eat them like he does. Probably a better investment than a KFC quarter pack, and a better outlook to contemplate while you consume them too!

SNOOPY

[LaserEyeKiwi]

I don’t see how a company with a market cap of ~$750m and net income of ~$16m can be defined as “cheap”. 50x multiple.

One would really need to be a believer in the long term story to be buying here.

To me it is the debt they piled on that killed the profitability. A bit concerning they lack pricing power with their product as well.

[winner69]

Wonder I should buy some.

Based on Winner's serko formula....SP high was $15...now it is $6....

Winner...what do U think?

I see no compelling reason to buy at the moment …even at these prices.

Serko has things going for it to recover its previous glorious share price …..RBD has a struggle on its hands I reckon

[winner69]

If they only make $16m this year it’ll be their worst year since 2013

Back then sales were $313m and profit $16m

This year sales ~$1,400m and maybe profit $16m

Something not working eh

[Rawz]

If they only make $16m this year it’ll be their worst year since 2013

Back then sales were $313m and profit $16m

This year sales ~$1,400m and maybe profit $16m

Something not working eh

What is the avg profit margin RBD usually spits out. Like last couple of years during free money times it ballooned out aye

[winner69]

What is the avg profit margin RBD usually spits out. Like last couple of years during free money times it ballooned out aye

I’ve had a morbid fascination with RBD since the turn of the century but stopped updating models in 2017 because profits weren’t going anywhere but the share price keep going up.

Might update them in next week or so just to show me this global expansion hasn’t work.


Might learn something

[LaserEyeKiwi]

I’ve had a morbid fascination with RBD since the turn of the century but stopped updating models in 2017 because profits weren’t going anywhere but the share price keep going up.

Might update them in next week or so just to show me this global expansion hasn’t work.


Might learn something

Best thing they could do is an equity raise while their stock price is still overinflated, use the proceeds to deleverage by paying down debt, watch profits rise again with the interest costs slashed.

[Rawz]

Best thing they could do is an equity raise while their stock price is still overinflated, use the proceeds to deleverage by paying down debt, watch profits rise again with the interest costs slashed.

Doubt that is in their minds after they only recently started paying dividends. Guess they had to try something to stop the sinking sp

[LaserEyeKiwi]

Oh wait - they have $250m+ in debt - an equity raise would have to be massive to make a difference in that giant millstone.

[silverblizzard888]

Stocks held up surprisingly well, though not sure what people are hoping to gain by holding or buying at the current price. Inflation putting pressure on their margins and the rising interest rates are eating a good part of their profit. Don't see them recovering too easily from this, they need to raise capital to ease the interest expense, though given enough time they will be fine too after all can't replace good old KFC, always a profit to be made from that grease bucket.

[winner69]

Oh wait - they have $250m+ in debt - an equity raise would have to be massive to make a difference in that giant millstone.


And capex intensive

Last 2 years Operating Cash Flows have about $100m and then they spent about the same on capex (excluding acquisitions) so essentially nil cash flow in F21 and F22

[X-men]

Free quarter for shareholders.

Will see the SP slowly going down to $3?

[whatsup]

I don’t see how a company with a market cap of ~$750m and net income of ~$16m can be defined as “cheap”. 50x multiple.

One would really need to be a believer in the long term story to be buying here.

To me it is the debt they piled on that killed the profitability. A bit concerning they lack pricing power with their product as well.

and to think that this company sold at $16-00 a couple of years ago !!

[winner69]

and to think that this company sold at $16-00 a couple of years ago !!

When RBD was around $16 RYM wasn’t far off $16 either

At least RYM recovering from being $5 odds

[Rawz]

Year
Revenue ($m)
NPAT ($m)
NPAT Margin


2015
373
24
6.4%


2016
404
24
5.9%


2017
497
26
5.2%


2018
741
35
4.7%


2019
825
36
4.4%


2020
706
30
4.2%


2021
892
31
3.5%


2022
1068
52
4.9%


2023
1239
32
2.6%




Soooo NPAT margin steadily decreased over the last 10 years. W69 was right. the overseas expansion has not been that great for the bottom line

[winner69]

Year
Revenue ($m)
NPAT ($m)
NPAT Margin


2015
373
24
6.4%


2016
404
24
5.9%


2017
497
26
5.2%


2018
741
35
4.7%


2019
825
36
4.4%


2020
706
30
4.2%


2021
892
31
3.5%


2022
1068
52
4.9%


2023
1239
32
2.6%




Soooo NPAT margin steadily decreased over the last 10 years. W69 was right. the overseas expansion has not been that great for the bottom line

Incredible you can sell nearly $1 billion more stuff and make less than a few years ago

That’s not how it’s meant to work

[X-men]

$3 is imminent

[bull....]

and to think that this company sold at $16-00 a couple of years ago !!

sold for under a dollar last time the going got tough if i remeber correctly

[thebusinessman]

sold for under a dollar last time the going got tough if i remeber correctly

From memory around 2009? Someone here kept buying and buying and low prices and was ridiculed by some. When the SP made it back up to about $7 there was some humble pie served.

[Rawz]

SP down another 4.4%

Could take years for RBD to turnaround the USA operations.

SP in for a lot of pain before gains

[nztx]

From memory around 2009? Someone here kept buying and buying and low prices and was ridiculed by some. When the SP made it back up to about $7 there was some humble pie served.


Yes around $1 pre Mid 2009 - under $1 before that - tops $2

https://nz.finance.yahoo.com/quote/RBD.NZ?p=RBD.NZ&.tsrc=fin-srch

to think this was $16 just 2 years ago .. but eclipsed by the recent PEB value wipeout

[Rawz]

Oh dear, nearly down 10%

Holders bailing and weak buyers. I mean seriously who is going to take a punt at these levels.

[X-men]

$3 is coming

[Rawz]

RBD another example why DCF models are a big fat waste of time

Best you can do is look 12 months out. Anything beyond that is just pie in the sky stuff

[silverblizzard888]

That falling knife going to get quite a few people before it finds the bottom.

[silverblizzard888]

RBD another example why DCF models are a big fat waste of time

Best you can do is look 12 months out. Anything beyond that is just pie in the sky stuff

Models work for a consistent business in a consistent environment, usually RBD is a consistent business and it would work in a stable economy. Right now is the worse time for models.

[LaserEyeKiwi]

Quite something: Yum Brands are the ones making all the money out of Restaurant Brands: They will clear close to $80m in royalties out of RBD this year, while the company only clears $!6m profit at best.

[nztx]

Quite something: Yum Brands are the ones making all the money out of Restaurant Brands: They will clear close to $80m in royalties out of RBD this year, while the company only clears $!6m profit at best.


I hear that the Limmo outfits might be wanting to improve on their chop out of the action

The buck that didn't get away might be 3 weeks away ;)

Time to float off all the foreign satellite divisions to put dough back in the tin yet ? ;)

[winner69]

Tim Hunter in NBR piece has the feeling that a lot is going on behind the scenes, Esp as not much detail as to why profits down so much

New CEO and CFO ….both from Groupon Finaccess …..setting a low point for future bonuses …or even making sure they can take the balance they don’t own really cheap

Too many coincidences gets him twitching …too many dramatic changes too fast

[Rawz]

Tim Hunter in NBR piece has the feeling that a lot is going on behind the scenes, Esp as not much detail as to why profits down so much

New CEO and CFO ….both from Groupon Finaccess …..setting a low point for future bonuses …or even making sure they can take the balance they don’t own really cheap

Too many coincidences gets him twitching …too many dramatic changes too fast
What are you saying Winner?

[Fortunecookie]

Perhaps they are after a quarter pack. So who's keen on a double down.

[Rawz]

Perhaps they are after a quarter pack. So who's keen on a double down.
If a double down costs $3 i would be interested

[Fortunecookie]

If a double down costs $3 i would be interested

True at that price I am just curious if they are the last quarter pack.

[bull....]

kfc wont be happy to read ingham's saying more price rises on way in there results yesterday

[Rawz]

kfc wont be happy to read ingham's saying more price rises on way in there results yesterday

im not happy to read that

[bull....]

wow only a 2.2 m profit :scared: and they say they are constrained in raising prices but inflationary input costs continue to rise .... loss next time ?

but the thing which made me laugh was there comment about re-engineering the menu :eek2: does that mean skimpflation or more foul ingredients ?

[Fortunecookie]

wow only a 2.2 m profit :scared: and they say they are constrained in raising prices but inflationary input costs continue to rise .... loss next time ?

but the thing which made me laugh was there comment about re-engineering the menu :eek2: does that mean skimpflation or more foul ingredients ?

Rawz might get his wish for a $3 share price.

[Fortunecookie]

"Additionally, labour market pressures have caused adverse staff shortages, requiring many stores across our network to reduce operating hours and/or operate with reduced capacity.”

Operating and financial leverage,that's a double whammy in itself. But reducing operating hours. That just amplifies the negative leverage.

[LaserEyeKiwi]

Once again a reminder that YUM Brands is the one extracting most of the profits out of Restaurant brands sales.

[Rawz]

Id say FY will be downgraded soon

[LaserEyeKiwi]

If you had invested in YUM brands instead of RBD:

Yum:
14728

RBD:

14729

[Leemsip]

Train wreck results. $2m profit of $640m revenue.

$570m business value, $270m debt. Guiding towards $12-$16m full year profit (seems optimistic). 2% yeild and full of risk on this.
Interest costs going to rise further. Report doesnt sound optimistic.

HOW is this still $4.50.... lol

[Toddy]

I feel really proud of our local KFC staff.

They face abuse and long queues all day and night.

The contribution of approximatly $5,000 from their store to the shareholders is really appreciated.


Rough calc, thats about 3 cents profit per car going through the drive through.

Food for thought.

[LaserEyeKiwi]

I struggle to comprehend how a company can not make a reasonable profit despite having a monopoly on KFC (even with the YUM brands royalty).

I think there are probably single McDonald locations in NZ that earned more in net profit than RBD did in total over the last 6 month period.

RBD totally screwed their profitability with excessive leverage.

[Rawz]

Yes and guru CEO and CFO jumped ship after putting too much debt on the company

They should do a cap raise now while the SP is still expensive

[winner69]

Yes and guru CEO and CFO jumped ship after putting too much debt on the company

They should do a cap raise now while the SP is still expensive

I think the new owners did the debt bit themselves and then put their own CEO and CFO in …..maybe ulterior motives in play here …with remaining minority shareholders the losers

[Rawz]

I think the new owners did the debt bit themselves and then put their own CEO and CFO in …..maybe ulterior motives in play here …with remaining minority shareholders the losers

Could they do that thou? Wouldnt the board be able to stop any ulterior motives.

I reckon just like a million times before them its a company expanding aggressively with debt and expanding away from core markets.. works while in the good times and now the fried chicken is coming home to roost

[Leemsip]

They should do a cap raise now while the SP is still expensive

Such a good call Rawz.

$150m cap raise at $4. Also dump in an arbitrary restructure and cost out prog at the same time and say long term benefits, short term cost. Fire a bunch of punters at head office as collateral damage, as you need the opaque fog and sweet words to disguise the shambles beneath.

Absolute no brainer.

[nztx]

Wonder if the majority holder is eyeing up taking out the minorities before the train goes over the
edge completely spilling crispy chick far & wide ? ;)

If not $1.50 coming soon ? ;)

Let's face it .. lots of happy campers seeing satellite offshore operations pop up all over the place..
but the smarter ones probably started wondering how it was all being paid for .. and some
promptly leapt overboard with their handfuls of Kiwi fiat while the going was good

[LaserEyeKiwi]

What a difference a crap ton of debt makes:

2019 H1: $28.1m Operating Profit, and $7.7m finance costs
2023 H1: $30.25m Operating profit, and $27.25m finance costs

Operational results actually aren’t that horrific, it’s the debt that is absolutely tanking the NPAT.

[Muse]

What a difference a crap ton of debt makes:

2019 H1: $28.1m Operating Profit, and $7.7m finance costs
2023 H1: $30.25m Operating profit, and $27.25m finance costs

Operational results actually aren’t that horrific, it’s the debt that is absolutely tanking the NPAT.

I haven't looked at RBD's result LEK but are those 2019 results pre ifrs16? pre that nifty little accounting change rent/leases were just that or co-mingled in occupancy costs. now they are split out into ROU depreciation (the bulk of lease charge) and lease interest charges (a minority of the total lease charge). may not be totally like for like but I suspect your point is still well made. thanks for those charts re YUM and RBD - shows where the money is made in these businesses

[Rawz]

How many extra stores from 2019 to 2023 as well

[Toddy]

Nene chicken is coming to NZ and plans to open 75 stores

A little competition is always good.

[unhuman]

Good. Never understood the relative lack of competition KFC had when compared to the amount of burger / pizza etc places NZ has.

[Habits]

Nene chicken is coming to NZ and plans to open 75 stores

A little competition is always good.

South Korean chain Nene Chicken to open first New Zealand store next month
https://www.nzherald.co.nz/business/south-korean-chain-nene-chicken-to-open-first-new-zealand-store-next-month/HZ4SYIBTT5EGBFN6MQLQWUHV4Q/

Will customers line up in pecking order or will there be a 'cock' fight to sort out who gets the first feed

We will know in just over a week

[kiwical]

Good. Never understood the relative lack of competition KFC had when compared to the amount of burger / pizza etc places NZ has.Well there was Red Rooster..... That didn't go too well? The ultimate insult in my town was probably KFC taking over the site that the red cock built and turning it into a KFC.

[Grimy]

And Homestead Chicken. Closed in 1989.

[X-men]

The trend is over... supermarkets offer ready to bake pizzas, nice chicken and chips.

Tegal n Ingham offer nice pre frozen Texas fried chicken pieces or strip..just need to be air fryer or oven baked...

All taste better n healthy than greasy KFC chicken

[Habits]

Well there was Red Rooster..... That didn't go too well? The ultimate insult in my town was probably KFC taking over the site that the red cock built and turning it into a KFC.

Are you referring to the kfc store at the thames roundabout. I remember another red rooster beside a roundabout in avondale auckland. It never became a kfc though, I think that would be a good spot

[Grimy]

The Avondale roundabout now has KFC, K-Chicken, Dominos, Kiwi Roast, Coffee club, and did have a Carl's Jnr.

[Sideshow Bob]

https://www.nzx.com/announcements/417467

Acting CEO now CEO.

No mention of an "extensive global search" or the like.

[nztx]

https://www.nzherald.co.nz/lifestyle/kfc-penis-drawings-shock-auckland-father/WEYUHCUE6RDEPGRCOAXPT4UEFI/

New packaging design (or something else) seems to have shocked ;)

[ralph]

https://www.nzherald.co.nz/lifestyle/kfc-penis-drawings-shock-auckland-father/WEYUHCUE6RDEPGRCOAXPT4UEFI/

New packaging design (or something else) seems to have shocked ;)

Sounds like a bit of a cock & bull story ;) to me

[winner69]

RBD share price sinks below 4 bucks ….back to 2015 prices ouch

Maybe this weight loss drug going to be blamed for investors bailing

[Grimy]

Should be the opposite-eat what you like, take medication, don't put on weight, eat more unhealthy food.........

[Sideshow Bob]

https://www.nzx.com/announcements/420486

FY23 Q3 Sales Results

RBD total sales for the third quarter to 30 September 2023 increased to $340.9 million. This was up $18.8 million (+5.8%) over the equivalent period last year. This reflects ongoing recovery from the impacts of the 2022 COVID-19 Omicron outbreak and the price increases that were implemented across all markets.

Total year to date sales reached $981.1 million (an increase of 8.2% on the prior year). Total sales were supported by the net inclusion of 5 new stores (to 377 stores in total) and the strengthening US dollar since the equivalent period last year.
New Zealand

Third quarter sales for New Zealand were $148.0 million, up 7.6% in total and 5.0% on a same store basis. Sales grew across all brands, largely driven by price increases and the easing of pandemic-related trading constraints.

Total year to date sales were $420.4 million, an increase of 8.0% on the prior year and 5.6% on a same store basis.

Store numbers increased by two to 145 stores during the quarter with the opening of a Carl’s Jr. in Hamilton and a Taco Bell in Otahuhu. In addition to the 145 company owned stores, the business has 114 Pizza Hut stores run by independent franchisees (an increase of six stores from December 2022).

Australia
Australia’s sales for the third quarter were $A74.1 million ($NZ80.1 million), an increase of 13.0% in total on the prior year. Same store sales were up 8.0% (local currency). Mall and city store sales have recovered to near pre-COVID-19 levels.
Total year to date sales were $A214.3 million ($NZ232.0 million). This is an increase of 13.8% on a total basis on the prior year and 9.1% on a same store basis.

Store numbers remained constant at 85 stores during the quarter.

Hawaii
Sales for the third quarter in Hawaii were $US40.3 million ($NZ66.6 million), an increase of 0.9% on a total basis, and up 5.7% on a same store basis (local currency).

Hawaii trading has solidified around the new highs achieved during last year and the new stores opened in 2022 continued to produce strong trading results. Total year to date sales were $US119.6 million ($NZ193.6 million), an increase of 3.1% on a total basis and 3.7% on a same store basis.

Store numbers decreased by two during the quarter to 71 stores with the loss of the Pizza Hut and Taco Bell stores in Lahaina during the large fire. These stores were fully insured and are planned to be rebuilt in 2024.

California
California’s sales in the third quarter were $US27.9 million ($NZ46.2 million), a decrease of 1.8% on a total basis and 3.3% on a same store basis (local currency).

Same store sales have reduced on the prior year largely due to customers shifting to value-orientated menu and promotional items.

Total year-to-date sales were $US83.4 million ($NZ135.1 million), a decrease of 1.0% on a total basis and 3.6% on a same store basis.

Store numbers remained constant at 76 stores during the quarter.

[Rawz]

California a big problem when factoring in inflation!!

[nztx]

Update seems to have caused a slight bump off the floor .. but how does the bottom line look ? :)


You can increase sales off the wall, but if the bottom line isn't showing a lift, you're going nowhere
and dividend questionmarks remain ..

[unhuman]

So pretty much all sales growth on same store basis below inflation.

A growth company thats not growing.

[Fortunecookie]

Only need 6.8% increase in expenses to cancel out the sales growth.

What is worrying is debt predominantly in us dollars with a decrease of 1.8% in sales. So put it this way relatively speaking, they need to sell more quarter packs outside of the US to offset the repayments in the US.

The Aus sales looks good though.

[Filthy]

California a big problem when factoring in inflation!!

must be the worlds most competitive fast food industry in cali. from what I recall, pretty much a competitor on every corner block. highly saturated market. not surprising they are struggling over there.

[X-men]

Inflation is going down...food prices and wages also stagnant....

Would this greasy stock come back alive???

[nztx]

Inflation is going down...food prices and wages also stagnant....

Would this greasy stock come back alive???


You want a Bouncy burger now with a side of chips with long legs ? :)

[JSwan]

You want a Bouncy burger now with a side of chips with long legs ? :)

Only if they’re giving you 10 minute paid breaks 😊

[X-men]

Greasy stock on the top of NZX best performance

[nztx]

Greasy stock on the top of NZX best performance


SP 05.01.23 $5.60

SP 29.12.23 $3.98

Net Minus (-1.62)

20.4.23 Cash Div 0.16

Net Plus / Minus (- 1.46)


= Minus (-26.07%) for the year


https://www.nzx.com/instruments/RBD


How much more greasy will things get with the prevailing economic conditions in 2024 ? ;)

[X-men]

I meant top performer of the last day of trading...up 5%

I do think things will get better... inflation is easing....n interest rate will start to go down...the last announcement said the inflation and high interest subdued the profit margin. The prices of thier menus are increasing...

The world is addicted to fast food n sugar. Especially now things are tough.... family of 4 ..go to cafe or restaurant to eat .. easily $150-200....fast food....$60-80 to feed 4 people...

[ThaiJohn]

Thoughts on RBD. Looking cheap at the mo. I've got a lazy 20K to chuck at it. :cool:

[nztx]

Thoughts on RBD. Looking cheap at the mo. I've got a lazy 20K to chuck at it. :cool:


NPAT for H1 2023 was just 2.2 Mil on $673m Revenue

Gross Profits reported in 3 recent periods dont appear to be showing sign of being runaway stars

Loans are static in Jun 22, Dec 22 & Jun 23 @ approx $280m then Jun 23 @ $290 m

I would say further pressure still incoming on Overheads - Leases, Oncosts, Staffing, Interest/ Financing
and that ignores economic conditions deteriorating in a cooling off Goldfish bowl after H1 23 reporting.

Will further dividends be seen or not ; or cash retained to reduce loans ?

With a majority stakeholder in place, possibly no great incentive for future dividend payments ?

Net Equity 2022 $293 m dipping to $280m 2023

Equity Ratio 20.6% dipping to 19.6% H2 22 & 19.6% in H1 23

Current Assets/Liabilities ratio was negative in all three periods Jun 22, Dec 22 & Jun 23
possibly more so if adverse winds present after H1 23 reporting.

But that might be quite okay for basically retail cash on the counter fast tucker businesses

Will there be further rapid improvement in bottom line past H1 23 - if so when ?

Will there be a dip into the red for H2 2023 perhaps even further past that ?

I know which way my gut feeling is pointing & that's to the conservative
but I may be wrong ;)

Will the Investors flavour of the day be a further dip to add to more recent down the slide $15 to less than $4 in the past 2 years, if H2 23 sees Red Ink and Dividend prospects evaporate for another long holiday ? ;)

If things get really tough - Cap Raise an attractive menu addition - anyone ? ;)

Lets face it - if it's not being earned, the ceiling room on borrowings is narrow - then it has to come from somewhere to sure up the expanded chain of fast food jobs, unless some of the empire gets hocked off to fill a gap ..


Lots of nice Intangible padding on the Sheet here too $360m @ H1 23 and Beancounter's Fantasy world Creative Right of Use BS bunkim to the tune of $620m on assets side & $733m on the liability side

[ThaiJohn]

Thanks nztx for that thoroughly good review. Much appreciated.

[X-men]

Nztx...if U could predict the market..U will be a millionaire now..lol

[LaserEyeKiwi]

How is this still a $500m stock?

”RBD expects to report full year NPAT for the 2023 financial year within the provided guidance range of $12 million to $16 million.”

[Sideshow Bob]

https://www.nzx.com/announcements/425250

Restaurant Brands New Zealand Limited (“RBD”) has today released its Q4 sales results.

FY23 Q4 Sales Results

RBD total sales for the fourth quarter to 31 December 2023 increased to $341.1 million. This was up $9.1 million (+2.7%) over the equivalent period last year.
Strong sales growth in the New Zealand market offset the slowing of sales growth in other regions, as cost of living pressures, driven by inflation and rising interest rates, reduced discretionary household expenditure.

Total year sales reached $1,322.2 million (an increase of 6.7% on the prior year). Total sales were supported by the recovery from the impacts of the 2022 COVID-19 Omicron outbreak earlier in the year, and a full year of trading from new stores opened in 2022.

The business has continued to implement a strategic programme of price increases across all markets to relieve margin pressures, while balancing brand health and the financial pressures faced by our customers.

New Zealand
Fourth quarter sales for New Zealand were $151.4 million, up 8.3% in total and 7.9% on a same store basis. Sales grew across all brands.
Total year sales were $571.8 million, an increase of 8.1% on the prior year and 6.2% on a same store basis.

Store numbers increased by two to 147 stores during the quarter. In addition to the 147 company owned stores, the business has 118 Pizza Hut stores run by independent franchisees (an increase of 10 stores from December 2022).

Australia

Australia’s sales for the fourth quarter were $A72.3 million ($NZ78.0 million), an increase of 2.4% in total on the prior year (local currency). Same store sales were down 0.3% (local currency). Sales growth was lower than the first three quarters as cost of living pressures continued to impact discretionary household expenditure.
Total year sales were $A286.6 million ($NZ310.1 million). This is an increase of 10.7% on a total basis on the prior year and 6.5% on a same store basis. Mall and city store sales have recovered to near pre-COVID-19 levels.

Store numbers decreased by one during the quarter to 84 stores.

Hawaii

Sales for the fourth quarter in Hawaii were $US39.9 million ($NZ66.0 million), a decrease of 1.3% on a total basis, and up 3.0% on a same store basis (local currency). Hawaii trading continues to be solid with the decrease in total sales driven primarily by the loss of two stores during the third quarter due to the large fire on Maui.
Total year sales were $US159.5 million ($NZ259.7 million), an increase of 2.0% on a total basis and 3.5% on a same store basis.
Store numbers decreased by one during the quarter to 70 stores.

California

California’s sales in the fourth quarter were $US27.5 million ($NZ45.6 million), a decrease of 4.9% on a total basis and 6.3% on a same store basis (local currency). Sales have reduced on the prior year, as cost of living pressures continued to impact discretionary household expenditure,
Total year sales were $US110.9 million ($NZ180.7 million), a decrease of 2.0% on a total basis and 4.3% on a same store basis.
Store numbers decreased by one to 75 stores during the quarter, with the opening of new two new stores offset by closures of Azusa (fire damaged), Palm Springs and Yucca Valley stores.

Annual Trading Results

RBD will release its annual trading results for the year ended 31 December 2023 on 26 February 2024.

Despite the significant inflationary pressures faced by the Group in all markets, based on preliminary unaudited trading results, RBD expects to report full year NPAT for the 2023 financial year within the provided guidance range of $12 million to $16 million.
For more information: investor@rbd.co.nz

[Balance]

As usual, a successful NZ company with a solid track record (post the 1990s and early 2000s debacles) expands overseas (again) and comes a cropper.

And what about transfer pricing with the parent company? Are there profits from NZ being siphoned away to the parent company via the overseas operations?

"Strong sales growth in the New Zealand market offset the slowing of sales growth in other regions, as cost of living pressures, driven by inflation and rising interest rates, reduced discretionary household expenditure."

[Goob]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

[Rawz]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

money was free?

[Goob]

money was free?

Ha, yeah I spose. But even in 18' it had quite the ritzy multiple

[nztx]

Ha, yeah I spose. But even in 18' it had quite the ritzy multiple


Can't be many RBD shares on the loose out there which are not in the hands of the majority stakeholder ?

Last Annual Report Dec 2022 (page 100) - SSH - 75% or 93.569m shares in that notice were owned by the Foreign Restaurant Outfit from South America


The geographic distribution ion page 99 of the last AR doesn't reflect the domicile of the beneficial ownership - just of the raw holders on the share register - how can 95.38% of this outfit be NZ owned when SSH clearly points to majority owned out of South America ? ;)

[Snoopy]

Since it has fallen so far I thought I'd spread the numbers on RBD today.

But can anyone explain why this had such a high multiple back in the days above $10? I.e. around 30x PE pre-COVID 2019. From a quick glance I can't see why (organic growth solid but nothing special, a fairly average ROIC).

Anyone know what the thesis was for 30x back then?

From someone who 'was there', my memory is it would all have been on the back of CEO at the time 'Our Russel' doing such a good job sorting out the NZ operations. It would simply be a matter of 'rinse and repeat' for Australia, Hawaii and I think California that was just coming onto the radar. at that time too. "What could possibly go wrong?". or so the Mexicans thought when they put their partial takeover offer on the table. That offer cemented a new baseline price level for the company, a level that eventually unwound when the share price once again began to match up to actual company performance.

But of course the beauty of this forum is that you can 'go back in time' and find out what everyone was saying 'at the time' for yourself.
https://www.sharetrader.co.nz/showthread.php?3228-RBD-Restaurant-Brands&p=719277&viewfull=1#post719277

SNOOPY

[Goob]

That's helpful thanks Snoopy. I scanned the forum archive but it was still a bit unclear.

FWIW I think RBD is interesting here. It's almost entirely a COGS issue (gross margins from 20% to 15%) mainly because of an idiosyncratic supply side inflation episode; no problem with sales growth, and opex has behaved (about flat as a % of sales since pre-pandemic).

As they say in commodities "The cure for high prices, is high prices". You can go line-by-line on govt Food Index CPI and Producer Price Index data from StatsNZ which all show peak to declining trend across NZ/AU/US. I'd comfortably bet food prices come down at some point, but I'm just struggling to get a feel for when. There's a pretty spicy IRR if you just assume gross margins get halfway back to pre-covid at 17.5% in two years.

I have no problems with management either. I think they've done the right moves and generally get too much flak for what was external pressures.

[ThaiJohn]

Good buying at the current price. I'm picking them up around 390-391. Accumulating.

[Rawz]

Good buying at the current price. I'm picking them up around 390-391. Accumulating.
Why is it good buying? Based on what?

Keen to learn

[ThaiJohn]

Based on my love of KFC and pizza.

[nztx]

Based on my love of KFC and pizza.


I'd be loving it even more if you spread the word to a further pile of your mates :)

Hey - what harm could be done if you also told them to jump aboard and stock their
trophy cabinets high with a large heap of RBD to support their culinary desires..

[Goob]

Appears California will only get harder for RBD. 29% minimum wage pay rise (https://bschool.pepperdine.edu/newsroom/articles/david-smith-fast-food-minimum-wage-increase-2024.htm) for fast-food workers come April. Current Cali store EBITDA margins are ~4% compared to 10%+ pre-pandemic (and that doesn't include any overhead). Ouch.

[moimoi]

From someone who 'was there', my memory is it would all have been on the back of CEO at the time 'Our Russel' doing such a good job sorting out the NZ operations. It would simply be a matter of 'rinse and repeat' for Australia, Hawaii and I think California that was just coming onto the radar. at that time too. "What could possibly go wrong?". or so the Mexicans thought when they put their partial takeover offer on the table. That offer cemented a new baseline price level for the company, a level that eventually unwound when the share price once again began to match up to actual company performance.

But of course the beauty of this forum is that you can 'go back in time' and find out what everyone was saying 'at the time' for yourself.
https://www.sharetrader.co.nz/showthread.php?3228-RBD-Restaurant-Brands&p=719277&viewfull=1#post719277

SNOOPY

As the long term resident expert on RBD on Sharetrader Snoopy do you have any inkling to get back in down at these 9 year lows.....?

Regards
Moi.

[X-men]

U need to ask Jesus...son..

No one can predict the market...not even super fundies that have all the experts and resources...

Just like FBU...no one know...the SP could crashed...

But what I know...RBD is trading at 10 years low....with inflation in control....I do think the SP is at the button.

People still love the brand n to be honest it is the cheapest option now for family to eat out compare with cafes or restaurants

[Snoopy]

As the long term resident expert on RBD on Sharetrader Snoopy do you have any inkling to get back in down at these 9 year lows.....?

Regards
Moi.


I am going to pass on your question moimoi, as I haven't been following RBD that closely since the majority of my holding was bought out in 2018/2019. I will address this issue at some time, but I want to have a really good look on how the business is running under Mexican control, before I express an opinion either way. Right now there are dynamic situations in other companies that I hold many more shares by value in than RBD, that are commanding my attention!

SNOOPY

[LaserEyeKiwi]

KFC finally gets some quality competition in 2024.

https://www.1news.co.nz/2024/02/25/us-fried-chicken-chain-popeyes-coming-to-nz/

[nztx]

KFC finally gets some quality competition in 2024.

https://www.1news.co.nz/2024/02/25/us-fried-chicken-chain-popeyes-coming-to-nz/


Not exactly a small outfit are they ? :)


Popeyes has over 4,300 stores worldwide, in countries like the UK, the US, France, Poland, Czech Republic, Indonesia and South Korea.

Someone might get their chicken eaten while they were looking the other way, if not careful ;)

[Sideshow Bob]

Turnover $1.3 billion to make $16m......:mellow:

https://www.nzx.com/announcements/426793 (https://www.nzx.com/announcements/426793)

• Total Group Store sales hit a record high of $1,322 million, an increase of $83 million (6.7%) on FY22, with all four operating divisions showing growth in terms of $NZ.

• Net Profit After Tax (NPAT) was $16.3 million (in the upper range of market guidance), NPAT was down $15.8 million on the prior year due to inflationary pressures on ingredient and wages, and underperformance in California and New Zealand, which were not fully mitigated by revenue growth.

• Cost pressures continue. The implementation of a strategic programme of price increases and cost control measures delivered margin gains in the second half of FY23, and the Group is starting to see steady signs of recovery in margins.

• Group Store EBITDA* for the period was $178.4 million, down 0.9% on the previous year.

• At present, Directors have not deemed it appropriate to declare a dividend payment.

Restaurant Brands New Zealand Limited and its subsidiaries (together the Group) delivered record total store sales of $1,322 million in FY23, an increase of $83 million (6.7%) on FY22. All four regions produced positive sales growth over the year (in terms of $NZ).

Same store sales were also positive in all regions with the exception of California, where consumer spending continues to be adversely impacted by inflation.
Inflation pressures eased in most of the regions in the second half of FY23. Inflation remains elevated and above Central Bank targets, impacting the Group’s margins.

NPAT was $16.3 million (13.04 cents per share). The decreased profit versus FY22 is primarily a result of continuing inflationary pressures, higher financing costs impacting the New Zealand region in the first half of 2023 (1H 2023), and decreased performance in the California business.

Store EBITDA was $178.4 million, down $1.6 million or -0.9% on the prior year. The decrease in Store EBITDA is due to tighter margins in 1H 2023. EBITDA margins (as a % of sales) reduced from 14.5% to 13.5% due to continued cost pressures across all divisions, particularly in 1H 2023.

Restaurant Brands New Zealand Limited Chairman, José Parés, says that while inflationary pressures continue to impact profit, sales have remained strong, with growth delivered across all four operating regions in NZ dollars.

“All divisions experienced ingredient inflation and minimum wage increases, with New Zealand stores impacted the most. This placed significant pressure on margins, particularly in the first half of FY23."

“The implementation of a strategic programme of price increases and cost control measures to relieve margin pressures proved to be successful with margin gains in the second half of FY23.”

“Our pricing strategy carefully balances the need to mitigate inflation while protecting sales volume and brand health. The delivery of record revenue growth in FY23 demonstrates this strategy is working.”

Parés says that despite FY23 being a challenging year, the Group remains well positioned to deliver on its strategy to provide continued long-term shareholder value.
Supplementary table – summary data from the Directors’ Report

$NZm Dec-23 Dec-22 Change ($) Change (%)
Total Group Store sales 1,322.2 1,239.0 +83.2 +6.7
Group Net Profit After Tax (NPAT)** 16.3 32.1 -15.8 -49.3
Group Store EBITDA* 178.4 180.0 -1.6 -0.9

* EBITDA is earnings before interest, tax, depreciation and amortisation. The Store EBITDA amounts referred to throughout this report are before General and Administration (G&A) expenses, NZ IFRS 16 and Other Items. Store EBITDA is a non-GAAP financial measure and is not in accordance with NZ IFRS.

** NPAT change may not aggregate to the total due to rounding

[Toddy]

If we cut through all of the large dollar numbers and look it from a purely business units sales point of view.

Did store sales actually increase or retract. I. E was the 6.7 percent increase in dollars due to increased prices or increase unit sales.

Looks like a struggling business.

[LaserEyeKiwi]

Not exactly a small outfit are they ? :)



Someone might get their chicken eaten while they were looking the other way, if not careful ;)

They report that they intend to open 10 stores here by the end of this year. I don’t think we have seen a new entrant that aggressive before in recent memory.

[nztx]

If we cut through all of the large dollar numbers and look it from a purely business units sales point of view.

Did store sales actually increase or retract. I. E was the 6.7 percent increase in dollars due to increased prices or increase unit sales.

Looks like a struggling business.



Div looks like it's goneburger for good .. probably for many burger lives going forwards ;)

[nztx]

They report that they intend to open 10 stores here by the end of this year. I don’t think we have seen a new entrant that aggressive before in recent memory.


Fairly aggressive Kiwi touchdown & expand for sure in volatile times