PDA

View Full Version : RBD - Restaurant Brands



Pages : [1] 2 3 4 5 6 7 8 9 10 11 12

Lizard
26-01-2006, 03:36 PM
RBD has got to be the share with the most threads on ShareTrader! Eventually they all seem to degenerate into pointless arguments, so a new one starts...

So...starting yet again...

The trading in RBD seems to have been very odd in the last few months since the expired takeover. It is trapped in a very tight range (mostly $1.27 - $1.30). Volumes have been quite erratic and occasionally large. Today (a relatively quiet day) a large volume of shares traded (does anyone have the VWAP?). I am interested to know whether there is an explanation for this behaviour.

Phaedrus
26-01-2006, 04:49 PM
Liz, the VWAP is $1.299 - It is so close to the days high because 88% of the total days volume was a single crossing at $1.30.

Lizard
26-01-2006, 07:12 PM
Thanks Phaedrus. I wondered if that was the case. I just get the impression that occasionally, when the price hits a low point, someone moves in and buys eveything on offer up to $1.30. No point speculating I guess - but maybe similar to what rmbbrave noticed with MHI before Fisher funds declared their stake?

winner69
26-01-2006, 08:26 PM
Snoopy's value line is 130 .... maybe him

marinesalvor
27-01-2006, 06:57 AM
appalling service and product quality in last 2 RBD experiences - am sure they are being decimated by competition in each category

hard to find a less impressively run company

StainlessSteelRat
27-01-2006, 04:14 PM
quote:Originally posted by marinesalvor
hard to find a less impressively run company


You've got no imagination - i can think of plenty. :D

BRICKS
29-01-2006, 08:43 AM
quote:Originally posted by marinesalvor

appalling service and product quality in last 2 RBD experiences - am sure they are being decimated by competition in each category

hard to find a less impressively run company


IN your case suggest that you stop going there to distress yourself that is there standard and works still opening stores[which costs money which they seem to have] and paying Div`s ,, wish a lot of other Co`s would as well and the share is available another rare thing on the NZX.. [8D]

Snoopy
07-02-2006, 03:10 PM
quote:Originally posted by BRICKS


IN your case suggest that you stop going there to distress yourself that is there standard and works still opening stores [which costs money which they seem to have] and paying Div`s ,, wish a lot of other Co`s would as well and the share is available another rare thing on the NZX.. [8D]


Quite right Bricks. RBD isn't a great company, but they do have a remarkably consistant record of paying steady dividends over many years. A record that some of those supposedly stable property companies (Capital Properties, National Property Trust) might learn from.

Yet RBD is consistently rated 20% *below* those companies on a dividend yield basis! How many years of outperforming property companies does RBD have to put on the board before they are at least rated equally with them? It doesn't matter what the answer is. I have the patience to simply wait, while collecting my well above term deposit rate dividend in the meantime.

In the meantime, on an historic basis, RBD are nearing the top of their long established trading range (takeover spike excepted). So history tells me now is not a good time to buy. But I don't have much reverence for financial history and my most recent buys were well below these price levels anyway!

SNOOPY

duncan macgregor
07-02-2006, 05:01 PM
Snoopy, TUT, TUT, I know what i would sooner have had over the last 3yrs RBD, KIP, or CNZ. Add the the divedends to the share price, and come back at me.
FEB 2003 to feb 2006 Take that black patch of that eye and think about it. macdunk

Snoopy
07-02-2006, 05:45 PM
quote:Originally posted by duncan macgregor

Snoopy, TUT, TUT, I know what i would sooner have had over the last 3yrs RBD, KIP, or CNZ. Add the the dividends to the share price, and come back at me.
FEB 2003 to feb 2006 Take that black patch of that eye and think about it. macdunk


OK Macdunk, lend me your time machine and I'll sell my RBD shares three years ago and invest in KIP and CNZ.

Unfortunately in my world I can only invest going forwards. My comparison was pitching yields going forwards against long term average yields.

SNOOPY

Lizard
07-02-2006, 05:56 PM
Macdunk - if you go back a bit further, KIP and CNZ were doing nothing at all. It's been a bull run for listed property for best part of 4 years and it won't last forever. I'm getting more underweight on them by the month...

Referring to the stock picking game for 2005, RBD returned 7.3% - beating 85% of average entries in the contest (including yours at 0.81%), despite finishing well off its mid-year highs...

duncan macgregor
07-02-2006, 06:32 PM
LIZ, I didnt say that listed property companies were a good investment. Snoopy and i have been having this discussion for years. He inferred that RBD stood up well against property listed companies i think the opposite. LIZ let me remind you that my dogs selections are way ahead of yours in this years comp so that means nothing at all. macdunk

Lizard
07-02-2006, 07:50 PM
Oh well, another thread disintegrates into the same pointless arguments...

...must remember never to attempt any meaningful analysis on RBD! ;)

Snoopy
07-02-2006, 09:58 PM
quote:Originally posted by Lizard


The trading in RBD seems to have been very odd in the last few months since the expired takeover. It is trapped in a very tight range (mostly $1.27 - $1.30). Volumes have been quite erratic and occasionally large. Today (a relatively quiet day) a large volume of shares traded (does anyone have the VWAP?). I am interested to know whether there is an explanation for this behaviour.


Just noticed I hadn't answered the original question. In my assessment there is no explanation because not all market behaviour demands an explanation. And this IMO is one of those cases.

"Trapped in a very tight trading range" means there is general market agreement about the share value. Daily volume changes in all shares outside the top twenty can generally be classes as erratic.
In this case there are big shareholders selling shares to other big shareholders and small shareholders selling shares to other small shareholders.

All you have described Lizard is the normal operations of a generally static market. Just because some trading statistics can be generated doesn't mean they have meaning. My explanation for the trading behaviour you describe is 'random noise'. However, if you seek an explanation when there is nothing to explain your mind is a superb creative device. The mind will find a pattern in the random noise if you are determined to see one.

SNOOPY

Lizard
08-02-2006, 04:30 PM
Okay Snoopy, no arguments, I do have a superbly creative mind...;)[:0]

Still, RBD has broken out over the last two days. Somehow, it is not trading with the rest of the market. Personally, I think this seems positive.

Cheers,
Liz

Snoopy
08-02-2006, 04:57 PM
quote:Originally posted by Lizard


RBD has broken out over the last two days.


I'd still say a rise of under 2% is just as likely to be noise than anything significant


quote:
Somehow, it is not trading with the rest of the market. Personally, I think this seems positive.


I'm not so sure RBD ever *has* traded with the rest of the market!

Both Phaedrus and Macdunk have pointed out to me several times that RBD didn't really take part in the market rally over the last two years. Largely I suspect because the market decided it was a 'zero growth' share. That is the negative way to look at RBD.

On the positive side a 'zero growth' share will not go down in price either, unless the outlook for the business deteriorates significantly. Management forecasts 'steady as she goes', and so sails the share price - even in a falling market.

SNOOPY

Snow Leopard
08-02-2006, 06:27 PM
quote:Originally posted by Snoopy

Both Phaedrus and Macdunk have pointed out to me several times that RBD didn't really take part in the market rally over the last two years. Largely I suspect because the market decided it was a 'zero growth' share. That is the negative way to look at RBD.

On the positive side a 'zero growth' share will not go down in price either, unless the outlook for the business deteriorates significantly. Management forecasts 'steady as she goes', and so sails the share price - even in a falling market.

SNOOPY





A zero growth share with a good dividend yield in a probable zero growth market is not a bad thing.
However what you really need is a share which will actually over time grow earnings, share price and dividend to provide returns in line with with the average market growth.
Does RBD acheive this?

Reading back through the announcements from this company and the aborted takeover it is difficult to feel that although this may recently have have been a reasonable buy for the short term that as a longer term investment this is a company going nowhere and the risks of the assorted franchises are slowly mounting....

Disc: It is Hell for me.

Steve
19-02-2006, 08:48 AM
In yesterdays ODT there was an article & photo on the Dunedin North KFC being shut down on Friday with a 'D' rating. Management declined to comment...

Also, for those interested, the South Dunedin KFC is being completely upgraded. It has currently been reduced to its timber frame. I am looking forward to see what the 'new' model of store will look like.

duncan macgregor
19-02-2006, 09:57 AM
BONGO, The minimum wage will have no effect on the profit margin. The competition has to pay it as well one cancels the other out.
Bird flue now spread to india humans catching it of birds is only a small step away to humans getting it from humans. If that happens KFC had better learn how to make KENTUCKEY FRIED LAMB. MACDUNK

winner69
19-02-2006, 02:30 PM
quote:Originally posted by hiawatha


quote:The minimum wage will have no effect on the profit margin. The competition has to pay it as well one cancels the other out.

The fish & chip shops probably won't; but in any case a fall in profit which is experienced by everybody is still a fall in profit.
hiawatha


They all stick the pricess up ... might even make more money

Snoopy
19-02-2006, 10:24 PM
quote:Originally posted by bongo66

Egged on by Matt Mc Carten and his commie mate in parliament-i forget her name-Starbucks employees in Newmarket went out for 2 hours over lunchtime.

They want a minimum $12 an hour, no youth rates and guaranteed working hours for part-timers.

If this should come to pass it would almost bury RBD-wages are one of their biggest costs.


A wild claim? There isn't enough declared information in the RBD annual report to be sure. But let's try to verify it anyway.

There is a provision for employee entitlements in note 14 of the annual report. If the 'partners' turn over once per year, there are many lower skilled job employers that don't allow annual leave to be taken until one year in the job has been served. So we might guess that the $5.734m figure quoted represents 3/52 of the total employee wage bill.

If that is true , the employee wage bill is:

$5.734*52/3=$100m. Of course 51 of the 278 listed stores are not in New Zealand. Australian wages tend to be higher anyway, by let's say 20% in NZD terms. That makes the Oz stores equivalent to 61 (ten more) stores in 'NZ wage' terms.

That means we can estimate the NZ wage bill at:

$100m*([278+10-61]/10+278)= $79m

Remember that includes associated head office expenses that I have previously estimated at $4m. take that off and you get $75m

Does that sound reasonable?
$75m/227= $330,000 per store. Spread that over 16 staff and you get an average wage of $20,625pa. Still sound OK?

Boost the wage bill by 20% (from $10/hour to $12/hour) and you get an extra wage cost of $15m, equivalent to last years profit of $11m if tax is added back onto it. So yes, RBD's profit would be wiped out, assuming that they would not be able to recover any of these increased costs (a doubtful assumption). Bongo's claim looks in the ballpark at least. No doubt the economics of other wage paying fast food outlets are similar.

My take on these figures is that 'deep down' the unions know that a 20% wage claim isn't going to happen in one hit. But of course you have to aim high in wage negotiations! Auckland workers may find their plight alleviated by Auckland house prices falling 20% instead!

SNOOPY

Arthur
21-02-2006, 07:59 AM
http://www.smh.com.au/news/business/dominos-delivers-80-rise--and-wants-more/2006/02/20/1140284006278.html

Dominos seems to be doing OK

duncan macgregor
21-02-2006, 08:50 AM
The minimum wage has no effect on profits what so ever. It is the same as in my trade being a builder. I wouldnt care if a carpenters minimum wage was $20-00 or $40-00 an hour, my opposition has to price accordingly. Whatever it was i would still pay extra to keep the best people, which is one little lesson that RBD might like to pick up on. When you pay people the minimum thats what you can expect back. I would expect if RBD payed double the wages to half the people the service would be improved out of sight, with half the labour force. macdunk

kura
21-02-2006, 09:07 AM
Yep, I held off buying DMP (on ASX) as I thought they looked too pricey, now looks like the price has just gone up !

leanmeanfightingmachine
22-02-2006, 08:35 AM
i total agree with this. It has been there problem for years.

This group is the biggest dog on the stock exchange. I use to own and was luck enough to get out at 1.70$.

There marketing is a joke, there service is terrible, they would be better to turn them into
fast paced drive throughs and then they could get away with the pimple people and the bad service.

Lets face it no one goes to KFC to sit in the restraunt part do they, unless they want to catch a disease. They are grot.

This company will be 70c within 2yrs.

LMFM







quote:Originally posted by duncan macgregor

The minimum wage has no effect on profits what so ever. It is the same as in my trade being a builder. I wouldnt care if a carpenters minimum wage was $20-00 or $40-00 an hour, my opposition has to price accordingly. Whatever it was i would still pay extra to keep the best people, which is one little lesson that RBD might like to pick up on. When you pay people the minimum thats what you can expect back. I would expect if RBD payed double the wages to half the people the service would be improved out of sight, with half the labour force. macdunk

leanmeanfightingmachine
22-02-2006, 10:32 AM
i work in the ad industry and on their accounts before- trust me the advertsing is crap and
it does not help them sale KFC or PIzza. Research proven.

Second if you think there service is good it's probably what your use to.

Divi argument is ok but the future looks fatty.

LMFm




quote:Originally posted by hiawatha

LMFM
disagree on all counts. service ok in my experience. advertising ok.
I'm no longer a holder as I'm uncertain how long a high dividend can be maintained. And I think higher wage costs on top of that will be damaging.
hiawatha

kura
22-02-2006, 05:29 PM
Last time I was in a KFC (Kaitaia, about 4 years ago) a (obviously "wound up") woman came in screaming that she wanted to see the manager, she had got takeaways for her kids, and saw one of the chicken pieces was undercooked (raw and bloody) once manager saw the bits in question, she was immediately refunded her money, and offered an opology, I decided to get my lunch at the "golden arches" of McDonalds instead. Never returned to any KFC since. Sure it may be an isolated instance, but dosent take much of that sort of thing to ruin a brands reputation.

By the way, has anyone bothered (I havent) to analyse where profits come from by division (KFC,pizza,starbucks) ? As I wonder if they could sell KFC and concentrate on the divisions with growth potential ? Just a thought.

lanenz
22-02-2006, 05:58 PM
quote:Originally posted by duncan macgregor

The minimum wage has no effect on profits what so ever. It is the same as in my trade being a builder. I wouldnt care if a carpenters minimum wage was $20-00 or $40-00 an hour, my opposition has to price accordingly. Whatever it was i would still pay extra to keep the best people, which is one little lesson that RBD might like to pick up on. When you pay people the minimum thats what you can expect back. I would expect if RBD payed double the wages to half the people the service would be improved out of sight, with half the labour force. macdunk
D M.

Companies like RBD will be affected by the minium wage increase. This will also have a huge flow on effect to their suppliers as well. Primarily they will only be able to sustain or improve their profits by either reducing costs or increasing revenue. Their operating costs are going to go up with the wages. with their main suppliers of Inghams and Mr Chips, these companies may be forced to increase their prices because of their wage increases that need to be passed onto their workers. So on and so on.

I think short term RBD will have to increase the prices for their products to maintain a half decent margin. Their margins must be so tight as it is. How the customers react to any increases will really determine the viability. Medium to long term? I think their needs to be a change in focus otherwise it will be a slow and painful death. At least the likes of Mackers are targeting the health conscience with the salads etc to keep up with the change in eating habits.

I just cant see where to growth or increase in profits are going to come from unless there are some serious changes to their stratergies

winner69
22-02-2006, 06:08 PM
quote:Originally posted by kura


By the way, has anyone bothered (I havent) to analyse where profits come from by division (KFC,pizza,starbucks) ? As I wonder if they could sell KFC and concentrate on the divisions with growth potential ? Just a thought.


Problem with that a fair chunk of their profit (and thus divs) come from KFC ..... Starbucks prob run at a loss and PH make some (prob marginal although improving) profit

RBD are very very coy about disclosing any financials below their "concept ebitda" line .... and their is significant expenses below that that need to be apportioned between the concepts .... they are not keen to share anything either as i have tried

Lizard
22-02-2006, 06:50 PM
Kura, KFC is still a huge part of profits. Have a very basic spreadsheet model - e-mail me if you want it to play with.

leanmeanfightingmachine
23-02-2006, 10:13 AM
ok here it is.

KFC -makes money- good margins.
Pizza hut - no money- good margins, but brand is screwed. And is going down fast.
starbuck- losses money- terrible margins (winter is death).

In a nut shell pizza hut and starbucks drags the whole thing down.

In another nut shell KFC is the only person in it's market, so they do well. If broken off they would be a star. Pizza hut is in trouble...big trouble.

Seen it, worked on it, read real figures and they are screwed long term. Unless they do something amazing.

LMFM




quote:Originally posted by winner69


quote:Originally posted by kura


By the way, has anyone bothered (I havent) to analyse where profits come from by division (KFC,pizza,starbucks) ? As I wonder if they could sell KFC and concentrate on the divisions with growth potential ? Just a thought.


Problem with that a fair chunk of their profit (and thus divs) come from KFC ..... Starbucks prob run at a loss and PH make some (prob marginal although improving) profit

RBD are very very coy about disclosing any financials below their "concept ebitda" line .... and their is significant expenses below that that need to be apportioned between the concepts .... they are not keen to share anything either as i have tried

Snoopy
23-02-2006, 10:50 AM
Please all rise for this session of the Sharechat internet court, Judge Mick 100 presiding.

The defendent, Snoopy, is here to answer the following question

"Before you decide to hold or buy more shares in a company whose shareprice is plumetting in value - eg, restarant brands
Ask your self this question:"

"Is there a possibility that my decision making process is being affected by 'escaslation of commitment'?"

"So how about it Snoopy? Are you suffering from escalation of commitment?"

---------

A fair question Judge Mick. Now please allow me to present my evidence.

I am a foundation shareholder of RBD. I acquired my first shares in June 1997 at an effective $2.03. In March 1998 I purchased some more at an equivalent price of $1.29. I have made several purchases in subsequent periods, priced as follows: September 1998 62c (equivalent), February 2000 $1.20 (equivalent) and another batch at $1.18 (equivalent). More purchases were made in September 2000 at $1.14, March 2002 at $2.08, July 2002 at $1.71, September 2003 at $1.25, September 2004 at $1.26, December 2004 at $1.26, March 2005 at $1.29, July 2005 at $1.60, October 2005 at $1.30 and finally later in that same month at $1.24. My weighted average purchase price is $1.26. My weighted average share holding time is 2.5 years. (That's because most of my holding has been bought in the last couple of years, during the time RBD has suffered from the most derision on this forum.)

Based on a market price of $1.33 I have made an average capital gain of 2.5cps per year held. The current net yield is 10cps, or 12.5cps if we add the annualised capital gain. That gives a gross yield annual return of 13.8%. Now, I'm not going to claim that is a fantastic return, although it is double what you would earn in the bank. But I do see that return as more than satisfactory, given the conservative nature of the underlying investment.

Some people see successful investment, in the cricket analogy, as a process of hitting as many sixes as you can. Personally I prefer a technique which gets less headlines but over the long term can be just as rewarding if not more so (because you are taking less risks). I refer to the 'pushing for singles' method. Just go about your job quietly clocking up the runs and keeping the scoreboard ticking over.

Being an investor in RBD won't score you many bonus swoons at cocktail parties. But it's a great investment to put your mother into. That's because my quoted returns are IMO, quite sustainable - even if the business doesn't grow at all! That's why RBD should be a core holding of any income based portfolio. For this whole century, RBD has had a consistent dividend income record that puts *all* the listed property trusts to shame.

As for the 'plummeting share price', there has been no long term plummet since 1998, since the inital fall from grace after the IPO. The share price today is more or less what it was in 1998. Since RBD have paid out nearly all of their profits as dividends since then, this is to be expected.

The case for investment, since 1998 has always been based on dividend yield. Investing in this company from a dividend perspective makes as much sense in 2006 as it did in 1998 and virtually every year in between. Therefore I reject the 'escalation of commitment' argument. If you look at 'new' investment in RBD in 1998, 1999, 2000, 2001, 2002, 2003, 2004, 2005 and 2006 it has made huge sense every year, for eight different annually discrete reasons.

RBD, highly profitable, highly reliable and proven as a sound investment for every year of this century. Judge Mick, I rest my case.

SNOOPY

discl: hold RBD, and very satisfied with the investment performance.

duncan macgregor
23-02-2006, 02:30 PM
SNOOPY, I really fail to understand how you could buy a share at $2-03 in JUNE 1997 then average down and buy more at $1-29 nine months later. You actually followed that with a buy at 62cents all in a time frame of less than eighteen months. I have to take MICKS explanation of your investing as escalation of commitment as something to look out for. When i look back at the start of my share market investing i thought TA was for the loopies. I have almost turned full circle when i see the fundamentalists bleating on about how right they are as the share plummets. If bird flue ever gets going you will be back at your 62cents over night.
macdunk

leanmeanfightingmachine
23-02-2006, 02:48 PM
yep i think there is alot of risk at where you are sitting.

share price hits anything less than 1.15 at your yearly caculations are screwed.

And you made zip. To much risk at where you are for me.

I did the same with PVO from 30 cents up. The thing is they are now paying divi's so the results are huge alog with gains, there are better stocks to work a simliar system on than RBD. Not saying you got to be punting everything and you need some stables.

God i am glad i got out when i did. You might have brought my shares. I got the profit and out for good. never going back unless they do something amazing.

LMFM




quote:Originally posted by duncan macgregor

SNOOPY, I really fail to understand how you could buy a share at $2-03 in JUNE 1997 then average down and buy more at $1-29 nine months later. You actually followed that with a buy at 62cents all in a time frame of less than eighteen months. I have to take MICKS explanation of your investing as escalation of commitment as something to look out for. When i look back at the start of my share market investing i thought TA was for the loopies. I have almost turned full circle when i see the fundamentalists bleating on about how right they are as the share plummets. If bird flue ever gets going you will be back at your 62cents over night.
macdunk

Snoopy
23-02-2006, 09:05 PM
quote:Originally posted by duncan macgregor

SNOOPY, I really fail to understand how you could buy a share at $2-03 in JUNE 1997 then average down and buy more at $1-29 nine months later. You actually followed that with a buy at 62cents all in a time frame of less than eighteen months. I have to take MICKS explanation of your investing as 'escalation of commitment' as something to look out for.


I'll let you into a little secret Macdunk. Perhaps those three purchases you outlined were an 'escalation of commitment'. But don't tell anyone, will you ;)

1998 seems almost 'last century' now. Back then I'd barely heard of Buffett and certainly never read any Buffett books. I can't remember exactly what I was thinking at the time. But I believe it was something along the lines of "if a share was worth $2 at float time, surely 18 months later it can't be worth as little as 62c!" Turned out I was right too, although all that did was cancel out my 'mistake' of buying in at $2 in the first place!

I guess I should go out and get a 'T-shirt' and get a slogan printed on it like:

"I averaged down and survived" or something.


quote:
If bird flue ever gets going you will be back at your 62cents over night.


We live on Moa's Ark Macdunk. And the birds that migrate here from the Northern hemisphere aren't ducks or swans. I wouldn't dismiss the bird flu problem, but I'm not going to lose much sleep over it either. Hey, the fact that the spelling police failed to intercept your message has just given me an idea for a riddle.

Q/ What's the cure for bird flu?
A/ Bird flue!

SNOOPY

Mick100
23-02-2006, 10:25 PM
quote:Originally posted by Snoopy




RBD, highly profitable, highly reliable and proven as a sound investment for every year of this century. Judge Mick, I rest my case.






ce.



Judge mick summing up - all rise

Point 1
I don't think that 13.5 % pa is an acceptable return
there's a premium for inflation of 3% and add to that a risk premium which I would put at atleast 10% at the moment with bird flu out there. So that leaves you with a real rate of return of 0.5%

Point 2
Have you been to your local KFC recently - incdently the only part of restarant brands which is profitable ATM
I have not got the time to wait in line for half an hour before I get served anymore so I havn't visited KFC for quite a while
The strange thing was that even when there were only a few people to be served it still took half an hour because the staff behind the counter didn't know how to do there jobs. It appeared to me that the average period of time that someone would work at KFC was about 2-3 weeks.

Point 3
The food is crap
Chicken cooked in a preasure cooker full of fat - disgusting
Increasing numbers of people are becoming more health concious
The only people who still eat KFC are those who just don't care about their health - a minority
Have you noticed that establishments that sell relatively healthy food are doing a roaring trade these days, eg Subway

point 4
KFC outlets are located on prime realestate
Rents are going to keep going up even when sales are flat or falling
ie , KFC is going to get squeezed eventually
There number one product (fried chicken) is not going to gain market share against competitors - it's very likely to lose market share

conclusion
fried chicken is a dieing business
chickens are dieing http://xtramsn.co.nz/news/0,,11965-5439521,00.html
restarant brands are stuffed

and yes - I would recommend this share to my mother
Need I say more
,

kura
24-02-2006, 08:13 AM
quote:Originally posted by Mick100


and yes - I would recommend this share to my mother
Need I say more
,

Mick, do you really hate your mother that much ??

Lizard
10-03-2006, 09:23 AM
From sales data yesterday, it looks like FY profit will come in before write-downs at approx $10.4m. ie. underlying P/E about 12 at current price ($1.28). However, write-downs of Pizza Hut and commentary on margin squeeze will not help sentiment. Outlook for 2007 looks to me to be for a similar profit ($10.5m underlying). The hard call is on dividends...still possible they will cut to save cash for investment in KFC transformation. Or perhaps they will try to maintain for now and hope to use cash from sale of underperforming PH Aust outlets. 50:50 call - a dividend cut would certainly undermine the shares for a while.

I believe it would be risky to be in these shares at the moment, as there appear to be several negative threats to shareholder sentiment in the form of lower earnings, write-downs, mention of margin squeeze and a possible risk to dividends, with little short term upside likely (barring another takeover offer!).

Snoopy
15-03-2006, 10:49 PM
quote:Originally posted by Lizard
From sales data yesterday, it looks like FY profit will come in before write-downs at approx $10.4m. ie. underlying P/E about 12 at current price ($1.28).

I believe it would be risky to be in these shares at the moment, as there appear to be several negative threats to shareholder sentiment in the form of lower earnings, write-downs, mention of margin squeeze and a possible risk to dividends, with little short term upside likely (barring another takeover offer!).


I guess that explains why the share price has risen by 5c since the announcement then?


quote:
Write-downs of Pizza Hut and commentary on margin squeeze will not help sentiment. Outlook for 2007 looks to me to be for a similar profit ($10.5m underlying).


The write downs on PH in Victoria have been signalled before and are hardly news. Margin squeeze has been an issue forever too, so no surprises there.


quote:
The hard call is on dividends...still possible they will cut to save cash for investment in KFC transformation. Or perhaps they will try to maintain for now and hope to use cash from sale of underperforming PH Aust outlets. 50:50 call - a dividend cut would certainly undermine the shares for a while.


I don't agree. If the dividend is cut so thet the yield reduces to 10% (down from 12%) do you think that income sensitive shareholders will sell their shares to put into a term deposit at say 8% so that they can reduce their income even further?

I should add of course that there has been no mention of any proposed dividend cut, except by you. There is no shortage of cashflow. There is no shortage of cash for the KFC transformation either - it is proceeding according to plan.

Now I should add that Restaurant Brands have their weaknesses, more than they should, as have been acknowledged by me on several occasions. But please, let's not draw up any further weaknesses that don't exist. RBD management have enough problems of their own making to deal with, without others making up stuff!

SNOOPY

discl: hold RBD. Now waiting for the annual takeover offer ;-P.

Snoopy
16-03-2006, 10:47 AM
quote:Originally posted by bongo66

More than a hundred million more in sales than at the time of the original IPO. Twice as many stores.

Similar profits at 10M.


Yes, it seems profit has become an independent variable of turnover, to cast the problem in its most mathematical form!


quote:
Too many overheads: extra staff, rent, raw materials etc.


I've never been in a KFC or PH store and seen the staff mulling around doing nothing. I don't think you can say RBD employ too many staff at store level.

At management level then? I see there were 6 employees on a salary package of over $100,000 in 1997. By 2005 there were 25! Of course the comparison is not strictly fair as it doesn't allow for inflation. But even so, perhaps top management is top heavy? But of course you need highly paid good quality people to grow the business (the RBD line). Unfortunately paying mediocre people highly does not make them good quality people!

As for rent, my complaint is that perhaps the company is a little 'free spending' when it comes to the costs of relocating stores. I'm not convinced that when a store is moved and the remaining lease on the old premesis is 'written off' that enough attention is given to that written off cost. I get the impression that sometimes stores are moved 'whatever the cost'.

Went past the Coastlands Pizza Hutt dine in (just north of Wellington, at Paraparaumu) the other day and saw that it was being advertised for lease as 'the ex Pizza Hutt premesis'. PH had not moved out but the sign made the move look imminent. That is an iconic store that has been there forever IIRC. So it is interesting that it must be no longer viable.


quote:
Either IPO price was too high


Yes the IPO price was too high. But I couldn't even get a prospectus, such was the demand at float time. I sat in a broker's office for an hour inspecting a prospectus before I invested IIRC.

IMO you should not judge the worth of a company by comparing where it was floated 8 years ago to the share price today. By doing so you assume that the float price was set correctly. I wonder how the market perception of the company today would be different if it had been floated at say $1.30, instead of north of $2?


quote:
or management lack knowledge of the food business. The second is true of Salmond.


Is Salmond any worse than previous CEO Collier?


quote:
Other food groups; RBDs "parent" in the US, YUM, trades at multiples much higher than RBD because they are growing profit with sales.

Something aint right.


Not a fair comparison. YUM, being the master franchise holder, makes a lot of money from franchise fees. Those fees are paid whether the franchised individual restaurant is profitable or not.

YUM are also directly plugged into the fast growing Chinese market.

It is unrealistic to expect RBD to perform like YUM.

[quote]quote:
A unit is not covering costs in a business you cut it loose after a reasonable time.

lanenz
17-03-2006, 12:11 AM
I have never been a big fan of RBD. Clearly there are a lot of worse performers in the past. But they are going to be facing some real increases in their expenses. commercial property is becoming a lot more expensive, raw materials must have gone up and soon the minimum wage increase will kick in (im not sure if its this year or next) and that will have a hige impact on operational costs. I dont see any growth unless they diversify and more likely sales will remain static (except in south auckland).

winner69
25-03-2006, 11:02 AM
quote:Originally posted by Snoopy
[br
RBD gives me impression of being a juggler with three balls that nevertheless can only keep two balls in the air at one time and keeps dropping the third.




Snoopy ... so you would worried that a recent NBR article quoted Vicki as really keen on introducing another concept ... plenty of money to develop/support another one she said

At least she said Taco's are not a goer in NZ .... but mentioned something in the fish line .... oh well with a name like Salmon probably has some deep seated yearning to own a chaon of fish and chip shops

Same issue had the story that Hell was on the market ....

winner69
25-03-2006, 11:05 AM
... so the price of pizzas coffees and chicken and chips to go up .... quite a bit as well I hope

http://www.nzherald.co.nz/section/story.cfm?c_id=1&ObjectID=10374386

warthog
25-03-2006, 08:38 PM
quote:Originally posted by Snoopy

Personally I think RBD should flick off Starbucks to the American parent (Starbucks Australia is IIRC fully American parent owned) and concentrate their efforts on KFC and PH.

The warthog says that - over time - even kiwis will realise that KFC and PH is rubbish food and slowly migrate to healthier (but still tasty) fast food. More interesting pizza, etc.

Starbucks is under attack from anybody who has a decent coffee grinder and a bit of an atmosphere.

RBD will bump along and ultimately might end up with the junk dealers.

lanenz
26-03-2006, 12:39 AM
Good victory for the hard working staff of RBD. Albeit with a very small minority.

compared to many other countries around the world the labour laws arent too bad in NZ. In other countries where there is strong capitalism or communism you tend to see a big percentage in poverty. NZ is overall still lucky in this way.

What does this mean for RBD. Maybe increases around the 15 - 20% in their overall prices. If people stop buying the greasy food because of price then they have put themselve in a corner. You only had to see what happened to Georgey Pie.Generally their prices are very competitive so i see no reason why thet shouldnt up the ante. Long term view is that they still need to change their strategy especially in providing for the health conscience people. Im sure the likes of Nick Willis doesnt eat KFC because of the price.

Gryffyn
26-03-2006, 04:25 PM
mmmmm Georgie Pie

Snoopy
26-03-2006, 09:02 PM
quote:Originally posted by winner69


Snoopy ... so you would worried that a recent NBR article quoted Vicki as really keen on introducing another concept ... plenty of money to develop/support another one she said


Yes. I'm none too keen on spreading management resources even thinner. Or alternatively adding yet another branch of highly paid restaurant development managers to be supported buy those 'declining KFC restaurants' (that nevertheless remain the profitable heart of RBD) while yet another new restaurant concept is brought up to speed (very slowly and with plenty of wobbles. However, in fairness to the article, I think it said any such development would be two years away. Perhaps PH Victoria will be sorted out by then?


quote:
At least she said Taco's are not a goer in NZ .... but mentioned something in the fish line .... oh well with a name like Salmon probably has some deep seated yearning to own a chain of fish and chip shops


As Bongo said, Long John Silver's is the YUM fish and chip shop brand that RBD have access too. LJS doesn't have a big international presence though - only 34 stores in the entire world outside of the USA (vs 1200 inside). My fear for bringing LJS here is that it would have to be better than the incumbant competition. NZ is a land of close coastlines, fresh fish, and generally good fish and chip shops that offer good value. Is there a profitable niche for Long John Silver's in New Zealand?


quote:
Same issue had the story that Hell was on the market ....


Yes saw that too. Did I see that the founder thought that the Hell Pizza Chain would be a good buy for Dominos who are still 'struggling for presence in NZ'? I can only see it as good news for Pizza Hut if 'Hell' ever got consumed by the Dominos brand.

SNOOPY

patsy
27-03-2006, 07:48 AM
quote:Originally posted by Snoopy


As Bongo said, Long John Silver's is the YUM fish and chip shop brand that RBD have access too. LJS doesn't have a big international presence though - only 34 stores in the entire world outside of the USA (vs 1200 inside). My fear for bringing LJS here is that it would have to be better than the incumbant competition. NZ is a land of close coastlines, fresh fish, and generally good fish and chip shops that offer good value. Is there a profitable niche for Long John Silver's in New Zealand?


Is Yum!'s LJS the same LJS that you can find in some malls in Auckland? If so, and if RBD maintains similar menu, practices and price range to those of such LJS, then I would struggle to see how it would fit with RBD's current positioning strategy.

LJS is possibly on the "healthier" side of the junk food spectrum, e.g., fish is really fresh, is cooked to order, prices are higher, cooking oil is claimed to be canola. Those, if retained, would mean a departure from the RBD's fast food product culture - bringing in a business unit that has a clash of business practices and positioning strategy is a sure strategy for disaster. However, this could be easily avoided by using the brand name but changing the product quality but, still, diversification of suppliers, etc. would grow exponentially the business relationships and complexity of RBD's operation.

Trying to expand product range in the expectation that a wider customer base can be captured is a sure recipe for disaster, and one of the worse strategic mistakes a company can make. To do so in the expectation that a firm may leverage off support/overhead resources by finding economies of scale shows shortsighteness rather than solid strategic thinking.

duncan macgregor
27-03-2006, 07:55 AM
quote:Originally posted by lanenz

I have never been a big fan of RBD. Clearly there are a lot of worse performers in the past. But they are going to be facing some real increases in their expenses. commercial property is becoming a lot more expensive, raw materials must have gone up and soon the minimum wage increase will kick in (im not sure if its this year or next) and that will have a hige impact on operational costs. I dont see any growth unless they diversify and more likely sales will remain static (except in south auckland).


I remember the time that this dog sold its kennel to expand in Australia. I told SNOOPY at the time what a great mistake that was. I wonder SNOOPY now that we are further down the track with hindesight what your views on that are now. macdunk

foodee
27-03-2006, 09:19 AM
Patsy - good post.
Fish - NZ is basically a harvestor of sea fish (therefore 'rationed'), there is some attempt at production (kingfish) up North - a 'high value' product. Salmon (no punt) is in the doldrums (you wouldn't think so looking at the prices!) because of the dollar. Thus if RBD is to go down this tract secured supply is a big factor.
Chicken - produced product and supply not a problem - unless 'birdflu' gets here! Incidently(whilst travelling) tried some hot spicy chicken-much better than original.
Have always wondered why venison is not consumed more-the industry is at rock bottom.

Lizard
06-04-2006, 11:47 AM
quote:Originally posted by Lizard

From sales data yesterday, it looks like FY profit will come in before write-downs at approx $10.4m. ie. underlying P/E about 12 at current price ($1.28). However, write-downs of Pizza Hut and commentary on margin squeeze will not help sentiment. Outlook for 2007 looks to me to be for a similar profit ($10.5m underlying). The hard call is on dividends...still possible they will cut to save cash for investment in KFC transformation. Or perhaps they will try to maintain for now and hope to use cash from sale of underperforming PH Aust outlets. 50:50 call - a dividend cut would certainly undermine the shares for a while.

I believe it would be risky to be in these shares at the moment, as there appear to be several negative threats to shareholder sentiment in the form of lower earnings, write-downs, mention of margin squeeze and a possible risk to dividends, with little short term upside likely (barring another takeover offer!).


FY NPAT before write-downs came in at $10.5m. The dividend was preserved - although it could be viewed that debt was increased in order to do so. Snoopy will no doubt prefer to see it as the debt being incurred as an investment in the KFC re-vitalisation. But note they are talking about refurbishment of the remaining 80 KFC stores over the next 2-3 years - seems a larger financial undertaking than the 6 stores refurbished last year. They mention "higher depreciation and interest costs", implying at least some of it comes from additional debt.

winner69
30-05-2006, 11:14 AM
So the pizza market growing at 20% pa (see other thread) but poor old Pizza Hut sales down ....
10.6% on a same store basis they say.

RBD are 'responding to this challenging environment with a new brand campaign' seems appropriate that the new ads feature "PIZZA MUT"

Has Vicki finally realised she has a DOG in her stables .... slow on the uptake is this Vicki

BRICKS
30-05-2006, 11:31 AM
quote:Originally posted by duncan macgregor


quote:Originally posted by lanenz

I have never been a big fan of RBD. Clearly there are a lot of worse performers in the past. But they are going to be facing some real increases in their expenses. commercial property is becoming a lot more expensive, raw materials must have gone up and soon the minimum wage increase will kick in (im not sure if its this year or next) and that will have a hige impact on operational costs. I dont see any growth unless they diversify and more likely sales will remain static (except in south auckland).


I remember the time that this dog sold its kennel to expand in Australia. I told SNOOPY at the time what a great mistake that was. I wonder SNOOPY now that we are further down the track with hindesight what your views on that are now. macdunk


WOULD be good if you sold your KENNEL and try the same TRICK.. [8D]

Snow Leopard
30-05-2006, 11:47 AM
I thought the choice of a mongrel and the pizza MUTT name was a "brave" move.
Perhaps they could not afford Lassie.

marinesalvor
30-05-2006, 12:12 PM
is Vicki still there? wow what patient shareholders!

StainlessSteelRat
01-06-2006, 03:17 PM
quote:Originally posted by winner69

So the pizza market growing at 20% pa (see other thread) but poor old Pizza Hut sales down ....
10.6% on a same store basis they say.

RBD are 'responding to this challenging environment with a new brand campaign' seems appropriate that the new ads feature "PIZZA MUT"


The ONLY way that Pizza Hut will turn it's operation around is to engage in a bit of honesty. Their headline prices bear only a passing relation to what you actually pay for your order - and people like me are getting highly pissed off at being gyped.

Domino's have deals that are much cheaper, and when they say you'll pay $6.95 a pizza, that's what you pay. But PH by comparison - you order 2 pizza's for $19.95 and end up paying $30!

It'll be a long time before they see the contents of my wallet again. :(

StainlessSteelRat
02-06-2006, 07:31 AM
quote:Originally posted by hiawatha


quote:But PH by comparison - you order 2 pizza's for $19.95 and end up paying $30!

Actually, I find that odd. Why do you end up paying $30.00.


It's the add-ons. $2 for chicken, $2 for stuffed crust, $5 for delivery. I know it seems odd, but i get pissed off with companies who think it's smart to deceive you with small print.

winner69
02-06-2006, 07:40 AM
So Pizza Hut sales have declined in 3 of the past 4 years (quote NBR today) ..... because of competition .... and in future competition is going to get a lot tougher.
In the same article 'She (Vicki) declined to comment on other stratgeies the company has up its sleeve to minimise the effects of competition'

Come on Vicki .... be honest ... you don't have any strategies up your sleeve do you .... except watching Pizza Hut profitability (if it is indeed making any money) decline and blaming competitive pressures.

And thats only the Pizza Hut story .... will Vicki react the same way (ie ignore) when Red Rooster actually starts to get some critical mass.

marinesalvor
02-06-2006, 07:46 AM
true W69 - Vicki has been short of clues before a desperate board forced her to take the CEO salary and perks

winner69
02-06-2006, 11:57 AM
quote:Originally posted by hiawatha


quote:Come on Vicki .... be honest ... you don't have any strategies up your sleeve do you .... except watching Pizza Hut profitability (if it is indeed making any money) decline and blaming competitive pressures.

I think this is unfair. Competition is a fact of life. What do you expect her to do? Get a posse together and run PH's competitors outa town!?
hiawatha



Hiawatha ... surely you WANT Vicki to do something to ensure Pizza Hut at least tries to maintain share ... instead of the "PIZZA MUTT" rolling on its back and submitting to the competitors

Intersting that same article in the NBR asked Vicki whether RBD was going to quit Pizza Hut .... denied of course but wonder what bought that subject up

leanmeanfightingmachine
02-06-2006, 01:17 PM
the brand is screwed, have been saying it for years, they got no hope. i can because i am a brand expert.

run run run run shareholders before it gets in to the cents.

LMFM




quote:Originally posted by bongo66

The company should be split into its 3 constituent parts.

Salmon el al are/is incapable of doing justice to any 3 brands as a group.

Even considering this a board of more passionate, dedicated and capable directors would be a good start.

It says it all really doesnt it. Pizza Mutt!! THAT is building a brand?

I think not.

B

Onthemoney
02-06-2006, 02:21 PM
How much money did they pay to come up with Pizza Mutt. What a great way to destroy a brand....

peat
08-06-2006, 11:46 AM
who are the owners of RB's ???

I read the share register in the latest annual report. but who are the personalities involved in this business?

Snoopy
08-06-2006, 09:47 PM
quote:Originally posted by peat

who are the owners of RB's ???

I read the share register in the latest annual report. but who are the personalities involved in this business?


Institutions do not have personalities Peat. Once you become part of an institution you become part of 'the collective'. That means a grey suit driven by a dollar sign that has had his (for they are always male) face surgically removed. Welcome to the world of the corporate cyborg.

SNOOPY

lanenz
09-06-2006, 05:13 AM
Heres my call. In the next 12 months the PH or at least some of them will have a make over. Or they can keep doing what they doing and get the same results. That is a gently downtrend in sales and profit. At least SB's are doing ok.

Phaedrus
10-07-2006, 04:49 PM
I haven't posted a chart on RBD for a long, long time for the simple reason that so little was happening - the price has crabbed sideways for 3 years now. Overall, the shareprice has halved since 1997. Not a good "Buy and Hold" candidate!
The chart shows a 200 day moving average. This long-term indicator is commonly used by conservative investors to keep them on the right side of major trends. See how well this simple indicator worked, getting you into the big uptrend quite early - and out again when it ended, without giving too much of the profit back to the market. See how closely its signals coincided with those provided by trendline breaks. See how a trend indicator like this becomes totally useless when a stock is not trending, giving a string of useless and contradictory buy/sell signals.

See when the "smart money" got in. See when the "smart money" got out. What exquisite timing! Didn't they do well?

http://img.villagephotos.com/p/2006-2/1151662/RBD710001.gif

A wonderful stock to have been out of these last 4 years!

Deev8
10-07-2006, 04:56 PM
From today's Herald:

Fried-chicken chain KFC is speeding up store upgrade plans as the radical new formats help claw back its "share of stomach".

The chain, owned by Restaurant Brands, unveiled its 13th new-look store in Ponsonby last week and intends growing that to 22 by the end of its financial year in February.

Sales have risen by an average of 20 to 30 per cent at the new-format stores - redesigned inside and out with modern amenities such as plasma TVs, outdoor seating, larger tables for family groups and new branding.

The new format has so impressed the brand's international owner, Yum! Restaurants, that it will be adopted for new KFCs worldwide.

Full article: KFC rebounds with new stores (http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10390518)

BRICKS
10-07-2006, 06:39 PM
quote:Originally posted by Deev8

From today's Herald:

Fried-chicken chain KFC is speeding up store upgrade plans as the radical new formats help claw back its "share of stomach".

The chain, owned by Restaurant Brands, unveiled its 13th new-look store in Ponsonby last week and intends growing that to 22 by the end of its financial year in February.

Sales have risen by an average of 20 to 30 per cent at the new-format stores - redesigned inside and out with modern amenities such as plasma TVs, outdoor seating, larger tables for family groups and new branding.

The new format has so impressed the brand's international owner, Yum! Restaurants, that it will be adopted for new KFCs worldwide.

Full article: KFC rebounds with new stores (http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10390518)


GOOD one Deev along with bringing Mr Chips back into PLAY they love those CHIPS at any AGE.. [8D]

Bling_Bling
11-07-2006, 10:25 AM
TAY looks good at these price. Have to do some work on it to see if it is worth putting some away :)

BRICKS
12-07-2006, 09:38 AM
HERE in Russia the poor buggers are staving,, have a good day.. CHIO.. [8D]

Snoopy
31-08-2006, 09:44 AM
quote:Originally posted by leanmeanfightingmachine

the brand is screwed, have been saying it for years, they got no hope. i can because i am a brand expert.

run run run run shareholders before it gets in to the cents.

LMFM


I have decided to revive this RBD thread and leave the other one to the RBD dining critics. Judging from the pre-opening quotes the Lean Machine's prediction will come true today. Buyers at 70c, sellers at 99c equates to an opening price of 85c?

Despite declaring my buy point for RBD at $1.20, I actually haven't been buying - awaiting clarification of the earnings review announced a month ago. There has been a slight upward movement in the share price over the last month from $1.15 to $1.20. Nevertheless the actual result appears worse than expected so either Mr Market has been giving the wrong signal or the mole that has been leaking results from within RBD headquarters (sic) has been fired.

Today's announcement has both short and long term effects so I will treat those seperately.

SNOOPY

discl: hold RBD

peat
31-08-2006, 09:46 AM
ABN-Amro
Restaurant Brands NZ - A feeling of deja vu - RBD's
announcement that its 1H07 NPAT will be 50% below the
pcp at best has a ring of déjà vu. This company continues to
disappoint. Yield is not enough to keep our interest
anymore. We downgrade our recommendation on the stock
to Sell. SELL

winner69
31-08-2006, 10:48 AM
Famous Yogi Berra quip was 'this is like deja vu all over again'

Why sell though ... yield up to 16% now .... they'll do all they can to make sure the divie flow is uninterupted ....... must be a buy

Lizard
31-08-2006, 11:02 AM
2.5cps - 3.0 cps trading earnings. Est 5cps investment needed for the HY. 4.5cps divi? Yeah, right.

Snow Leopard
31-08-2006, 11:05 AM
It is a pity they did not have the deja vu a little earlier.

Also: Hindsight is wonderful I just wish it came a little earlier.

Halebop
31-08-2006, 11:16 AM
Years of underperformance as a pedigree and ABN-Amro wait for the day the price drops 20% to change their minds. Gotta wonder how they made their mind in the 1st place? Those nice young private equity guys must be counting their blessings.

duncan macgregor
31-08-2006, 11:30 AM
quote:Originally posted by Paper Tiger

It is a pity they did not have the deja vu a little earlier.

Also: Hindsight is wonderful I just wish it came a little earlier.

Pity you dont pay attention to old macdunk more often PT. Who needs hindesight, when a little bit of foresight is all that is required.
Your old mate keeping you on track as usual. macdunk

peat
31-08-2006, 11:47 AM
oh for sure i knew there would be criticism of the after the fact sell recommendation, but thought I would post it anyway ,

so sorry that I didnt do it last week ;)

i guess now that we are entering a bear market bad news will get punished quite badly.

winner69
31-08-2006, 11:48 AM
quote:Originally posted by Paper Tiger

It is a pity they did not have the deja vu a little earlier.

Also: Hindsight is wonderful I just wish it came a little earlier.



Seeing we are on about pizzas Yogi also said 'You had better cut the pizza into four pieces because I'm not hungry enough to eat six'

marinesalvor
31-08-2006, 11:55 AM
CEO needs to fall on her sword

Snow Leopard
31-08-2006, 12:42 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by Paper Tiger

It is a pity they did not have the deja vu a little earlier.

Also: Hindsight is wonderful I just wish it came a little earlier.

Pity you dont pay attention to old macdunk more often PT. Who needs hindesight, when a little bit of foresight is all that is required.
Your old mate keeping you on track as usual. macdunk

Now, why would this pussy want to pay attention to someone like you?
Why do you think I have ever owned this one, Mr "I am one of the few to tell what I have bought" MacDunk?

duncan macgregor
31-08-2006, 12:48 PM
quote:Originally posted by Paper Tiger


Now, why would this pussy want to pay attention to someone like you?
Why do you think I have ever owned this one, Mr "I am one of the few to tell what I have bought" MacDunk?
[/quote]
JEEZE paper boy you must have had a few over the lunch break to print that. Your old mate macdunk

Snoopy
31-08-2006, 02:44 PM
Short Term Effect: 2005 Profit Downgrade.

Half-year profit has been downgraded to $2.5m - $3m from ongoing operations compared to $6m from the previous year. This is not indicative of what the declared half-year profit will be. The one off financial arrangements associated with the exit from Pizza Hut Victoria will determine that.

The announcement makes it clear that sales are not decreasing. This points more to a blowout in costs rather than any serious undermining of the business concepts as a long-term prospect. There have been extensive negotiations with the parent company of the Pizza Hut and Restaurant Brands, YUM Brands of the United States. The way the first big franchise renewal deal was announced, contingent on a $35m store refurbishment program for KFC, sounds like YUM were playing hard ball with Vicky and the rest of the RBD management team. $12.5m was spent on the first 15 KFC stores during the transformation process. At that rate $35m will cover the rebuilding of 42 stores over the next three years. All information tabled to date suggests that this store refurbishment is a profitable strategy, which nevertheless has some short term costs. IMO, any reduction in profitability due to KFC refurbishment does not represent a weakening of RBDs position in the market. Nevertheless, I think it is a useful exercise to try and quantify the short term effects of the refurbishment.

The first KFC store to be refurbished in the South Island is not too far away from me. Thus I have observed first hand the ‘revenge of the chickens’ where a bulldozer was driven through the old restaurant and the signature KFC bucket was toppled from its tower to lie battered and forlorn amongst the rubble. The Riccarton Road KFC restaurant was out of action for around six weeks. That doesn’t mean that six weeks of trading was lost to RBD as regular customers may have sought out other KFC outlets (there is another one in the food court of the nearby Westfield Mall). But the extravagant promotion that surrounded the opening (flying billboards, huge radio promotion) would have occurred unusual expenses that -for we shareholders- are the *equivalent* of lost sales. So I’m sticking to my six weeks of lost sales as a good estimate of the short-term effect of building a new KFC premises.

Eight KFC stores out of a total of 104 were refurbished over the first half reporting period. Annual turnover for KFC was around $175m before this refurbishment program started. That means the reduction in turnover as a result of the refurbishment program for this half-year can be estimated as:

$175m x 6/52 x 8/104 = $1.55m

Adding to this loss will be the interest loss effect of the borrowed funds that is needed to carry out the redevelopment. If we assume redevelopment costs for 8 stores of $6.66m (total) and an interest rate of 8% over an average period of 3 months I get:

0.08 x $6.66m x ¼= $130,000

I think it is a fair assumption that this loss of turnover and extra interest payable without any associated income will come straight off RBD’s profit for the half. Taking into account the 'after tax' effect that equates to a summed reduction in profit of:

0.67 x $1.68m = $1.13m per half.

In summary, this means the predicted normalized profit for this half is $3.6m-$4.6m (not the headline $2m-$3m figure). That is a 23-40% profit reduction on the previous period. Now factor in a 10% reduction in last years NPAT over the second half of the financial year:

0.9 x$5.3m= $4.8m

We are looking at a full year forecast of $8.4m-$9.4m normalized profit, or 8.6-9.6cps. Based on a share price of 95c this gives a forecast P/E of 10-11.

Of further note is the debt position of the company. An extra $3.2m in franchise renewal fees for 40 odd KFC restaurants is now on the balance sheet. We need to add to this, the amount borrowed to refurbish 15 KFC stores ($12.5m). If we add those figures to last years $33m of debt on the books, I get $48.7m. That gives a minimum debt repayment time of 5

zac
31-08-2006, 02:48 PM
Grasping at feathers

duncan macgregor
31-08-2006, 02:59 PM
SNOOPY, Please explain to an old ignorant landlord What the hell is going on.
This dog sold its kennels for a holiday in Australia. Tell me is it doing up the landlords premises to lease back?, or am i missing something. On second thoughts dont answer that last question or you might upset my mate PT. macdunk

Stranger_Danger
31-08-2006, 04:02 PM
On paper RBD has looked like a "cheap" or "value" stock for years. If one ignores the chart, and never visits the stores, I can easily see how they could rationalise buying RBD.

Before buying this stock, do three things and ponder one other.

To do :

(a) Call a Pizza Hutt "helpdesk", far removed from the store that makes and delivers your pizza. Note disinterested tone. Wait till pizza and the bill arrives - in an attempt to fight Hell Pizza, note they've half achieved this. Rather than being the "cheap family" option, Pizza Hutt have moved half way away from this - they are now not as cheap as Dominos, and not as good as Hell. Quality has improved. Prices have gone up a little. Where are they now? Slap bang in the middle. Who wants to be there?

(b) Call into your local Starbucks. Note that coffee takes a while to make. Snack food is crappy, ambience is minimal - it is all about the coffee. Coffee selection is vast and personalised - they can't prepare 25 cups in advance. Result? Slow. Limited space for staff to move around, limit to how many you could have. Labour intensive. Note what happens during peak time - sometimes a queue stretching outside. That sounds good - the reality is, this business can't "ramp up" or go much faster than it does. There is a reason most coffee shops are owned by owner operators who just own one. Henry Ford would struggle to "production line" this business any more than it currently is, and currently, its slow.

(c) Go into your local KFC. My god. Talk about little shop of horrors. How can this place be their jewel? 9/10 times staff of a certain ethnic group are having a great time talking to their friends. Have twice seen a ball game being enjoyed by staff and "customers" (their mates who don't buy stuff). Have observed product being handed out more than once. Have seen customers ignored for friends many times. No signs of management supervision. Food totally inconsistent. Have been into two revamped stores - all the bright, fresh backdrop did for me is highlight how bored, uncaring and unsupervised the staff were, and how drab the food is.

To ponder :

There are three things you need to sell chicken, coffee and pizza. Buildings, a business model, and management/staff.

As I understand it, they lease their buildings. They pay YUM a fee for the intellectual property, brand and business model.

What is left? What can Restaurant Brands as a company bring to the party?

Management and staff. The ONLY way there is upside in this stock (cheap as it always looks) is if management runs the stores a lot better, actually supervises the staff, and create an environment of real enthusiasm.

If profits accidentally improved by pure good luck, YUM would go for more money, the landlords would go for more money. Thats life - those two groups are working for themselves, not for shareholders.

The only people working for shareholders - and able to create wealth for shareholders - are management and staff.

Except they're not. Thats the problem. I see no signs of them fixing it.

biker
31-08-2006, 04:19 PM
Have you tried Starbucks in Queenstreet by Imax?
As I walked in a pidgeon flew out of the kitchen area.Looking around, there were several birds in the mezzanine area above, with pidgeon shi t down the walls and over the floor. The workers seemed oblivious and unconcerned.A mirror of management?
The pidgeons were shi tting, and it seems, the chickens were coming home to roost.

BRICKS
31-08-2006, 04:23 PM
quote:Originally posted by Stranger_Danger

On paper RBD has looked like a "cheap" or "value" stock for years. If one ignores the chart, and never visits the stores, I can easily see how they could rationalise buying RBD.

Before buying this stock, do three things and ponder one other.

To do :

(a) Call a Pizza Hutt "helpdesk", far removed from the store that makes and delivers your pizza. Note disinterested tone. Wait till pizza and the bill arrives - in an attempt to fight Hell Pizza, note they've half achieved this. Rather than being the "cheap family" option, Pizza Hutt have moved half way away from this - they are now not as cheap as Dominos, and not as good as Hell. Quality has improved. Prices have gone up a little. Where are they now? Slap bang in the middle. Who wants to be there?

(b) Call into your local Starbucks. Note that coffee takes a while to make. Snack food is crappy, ambience is minimal - it is all about the coffee. Coffee selection is vast and personalised - they can't prepare 25 cups in advance. Result? Slow. Limited space for staff to move around, limit to how many you could have. Labour intensive. Note what happens during peak time - sometimes a queue stretching outside. That sounds good - the reality is, this business can't "ramp up" or go much faster than it does. There is a reason most coffee shops are owned by owner operators who just own one. Henry Ford would struggle to "production line" this business any more than it currently is, and currently, its slow.

(c) Go into your local KFC. My god. Talk about little shop of horrors. How can this place be their jewel? 9/10 times staff of a certain ethnic group are having a great time talking to their friends. Have twice seen a ball game being enjoyed by staff and "customers" (their mates who don't buy stuff). Have observed product being handed out more than once. Have seen customers ignored for friends many times. No signs of management supervision. Food totally inconsistent. Have been into two revamped stores - all the bright, fresh backdrop did for me is highlight how bored, uncaring and unsupervised the staff were, and how drab the food is.

To ponder :

There are three things you need to sell chicken, coffee and pizza. Buildings, a business model, and management/staff.

As I understand it, they lease their buildings. They pay YUM a fee for the intellectual property, brand and business model.

What is left? What can Restaurant Brands as a company bring to the party?

Management and staff. The ONLY way there is upside in this stock (cheap as it always looks) is if management runs the stores a lot better, actually supervises the staff, and create an environment of real enthusiasm.

If profits accidentally improved by pure good luck, YUM would go for more money, the landlords would go for more money. Thats life - those two groups are working for themselves, not for shareholders.

The only people working for shareholders - and able to create wealth for shareholders - are management and staff.

Except they're not. Thats the problem. I see no signs of them fixing it.



Stranger_Danger we have heard all that crap BEFORE so if you dont like , dont BUY it.. [8D]

biker
31-08-2006, 04:25 PM
Or EAT it,or DRINK it.

BRICKS
31-08-2006, 04:28 PM
quote:Originally posted by biker

Or EAT it,or DRINK it.


ITS always up to YOU..[8D]

winner69
31-08-2006, 04:49 PM
quote:Originally posted by biker

Have you tried Starbucks in Queenstreet by Imax?
As I walked in a pidgeon flew out of the kitchen area.Looking around, there were several birds in the mezzanine area above, with pidgeon shi t down the walls and over the floor. The workers seemed oblivious and unconcerned.A mirror of management?
The pidgeons were shi tting, and it seems, the chickens were coming home to roost.



Very well put biker ... i like it

We could if we wanted 'normalise' management (like snoopy does with earnings) and say they do a good job ... and hold their job

Snoopy
31-08-2006, 04:53 PM
Medium Term Effect: PH/KFC Franchise Renewals and KFC refurbishment program.

Restaurant Brands have committed themselves to a $35m rebuild of KFC over a four-year period, which commenced in FY2006. At the last balance date (28-02-2006) 7 stores had been transformed at an estimated average cost of $830,000 each. That means that $5.8m of these transformation costs is already on the books - leaving approximately $29m of the program still to be committed to the balance sheet. At an interest rate of 8%, that $29m will eventually cost RBD an extra $2.32m annually in interest.

In addition to the ‘physical rebuilding’, 80 odd KFC stores need their franchises renewed in 2007 (including the 40 just committed to by Restaurant Brands in advance this year). We can add to this total some 40 Pizza Hut stores. At my estimated renewal rate of $80,000 per store, this requires an incremental capital commitment of $9.6m. That equates to an extra interest bill of $770,000.

This all adds up to an extra interest bill of ($2.32m+$0.77m=$3.1m) to be paid out once these rollover adjustments have bedded in. Profit will reduce by around 67% of this ~$2m per annum. RBD management will not agree with this projection because they will assume the natural growth in the business will render these cost increases not material. Nevertheless while the cost increases are inevitable, the compensating revenue increases are not. That is why I am sticking to this conservative valuation approach.

My $3.1m increase in concept funding costs, when tax adjusted will reduce annual profit by $2.1m down from $10.5m to $8.4m. There are 97m shares on issue. Valued at 95c I calculate a projected sustainable P/E of 11. Assuming 8c per share of profit is paid out as a dividend, this gives a projected gross dividend yield of 12.7%. If the business can prove the steadiness of its earnings, my forecast is for the P/E ratio to go up over time. A 9% yield, probably more fitting for this kind of investment if they can start scoring runs steadily, would imply a share price of $1.34. All management promotional initiatives going wrong, this is where I expect the share price to settle in five years.

Turning to my standard performance measure of ‘Return on Equity’, $8.4m of net profit on $45m worth of shareholders equity (figure pinched from the last annual report) is a return of 18.7%- more than satisfactory.

Our medium term analysis would not be complete without looking at the projected debt position of the company. I project the long-term debt to blow out from today’s $33.1m by another $38.6m to make a grand total of $71.7m. An $8.4m profit would take 8.5 years to repay this debt, which means that RBD would have lost their status as a ‘low debt’ company. Nevertheless many companies do operate successfully with debt levels that high, particularly in utility type industries. But it would be negligent not to point out that some kind of small scale equity raising may be on the cards for the RBD shareholders staying on through to 2010.

SNOOPY

discl: hold RBD, and have buying more today.

duncan macgregor
31-08-2006, 05:02 PM
SNOOPY, Have you worked out yet that they are doing up buildings that they sold and now lease back?. Makes a lot of sense if you are trying to go broke. macdunk

duncan macgregor
31-08-2006, 06:17 PM
TOM, I havent thats why i asked. Its rather a big issue that nobody seems to know the answer.
Millions of dollars spent doing up landlords premises lets hear the facts before passing judgement. SNOOPY FIND OUT BEFORE YOU AVERAGE DOWN. macdunk

winner69
31-08-2006, 06:18 PM
quote:Originally posted by Snoopy


Our medium term analysis would not be complete without looking at the projected debt position of the company. I project the long-term debt to blow out from today’s $33.1m by another $38.6m to make a grand total of $71.7m. An $8.4m profit would take 8.5 years to repay this debt, which means that RBD would have lost their status as a ‘low debt’ company. Nevertheless many companies do operate successfully with debt levels that high, particularly in utility type industries. But it would be negligent not to point out that some kind of small scale equity raising may be on the cards for the RBD shareholders staying on through to 2010.

SNOOPY

discl: hold RBD, and have buying more today.





Debt $71M / Equity $45M /Market Cap $90M odd as per your workings .... ****e man thats about Feltex sort of proportions


A lot of capex to be sent .... no previous earnings retained .... you don't want future earnings to pay for it ... so borrowing it is .... but is that wise?


Your ROE of 18% might sound repectable but being so highly leveraged you would expect to be a lot higher ..... how about return on all invested capital (equity plus debt) .... is that more than the cost of capital?

Halebop
31-08-2006, 06:19 PM
quote:Originally posted by Snoopy

Our medium term analysis...

:D


quote:Originally posted by Snoopy

...long-term debt to blow out from today’s $33.1m by another $38.6m to make a grand total of $71.7m. An $8.4m profit would take 8.5 years to repay this debt, which means that RBD would have lost their status as a ‘low debt’ company. Nevertheless many companies do operate successfully with debt levels that high, particularly in utility type industries.

71.7m debt / 8.5m NPAT would take maybe 7 years to repay assuming no dividend was paid. It doesn't get repaid at all at current dividend levels. Debt repayment needs to be calculated from available cashflows, or as "long term" holders discover, a nasty outcome can be in the offing. Because the franchise arrangement needs to be refinanced in pertpertuity (or you can't assess the income as perpetual) the future cost of refinancing them needs to be factored. This means lower dividends or yet higher debt levels.

Comparing the 8.5 years figure with utility companies is a strange mechanism. Utilities negotiate multi decade supply and offtake agreements on multi hundred million dollar projects with finite capacity - the debt is supportable because everything is defined. RBD operate in the restaurant and take out segment of FMCG. They operate hand to mouth from week to week. A high debt level is not supportable.

Strange that now you call their forecast debt high and about a year ago I said debt levels were too high, they had no flexability and you poo-poo'd the concept...

Halebop
31-08-2006, 06:21 PM
Hmmm, W69 beat me to the punch.

Halebop
31-08-2006, 06:23 PM
quote:Originally posted by BRICKS

Stranger_Danger we have heard all that crap BEFORE so if you dont like , dont BUY it.. [8D]

Stranger Danger at least offered something that wasn't illiterate vitriol.

Sideshow Bob
31-08-2006, 06:44 PM
In the meantime, Bricks is looking in the dictionary to see what 'vitriol' means.........

Snoopy
31-08-2006, 09:19 PM
quote:Originally posted by winner69


Debt $71M / Equity $45M /Market Cap $90M odd as per your workings .... ****e man thats about Feltex sort of proportions.


95c per share x 97m shares = $92m market capitalisation.

Don't get too hyped up Winner. Those figures relate to a realistic worst case scenario. I wanted to imagine what would happen if the parachute didn't open. It looks like I still live if that happens.

There are key difference vis a vis Feltex. RBD is a cash business. They don't have to chase up customers to pay for the chicken!


quote:
A lot of capex to be spent ....


No. There is some Capex to spend each year, that is true. But the figures I am quoting get RBD over the investment 'hump' that is coming up. So from that point on, there is not much capex to spend at all.


quote:
no previous earnings retained .... you don't want future earnings to pay for it ... so borrowing it is .... but is that wise?


I have projected retaining *some* future earnings if you look at my worst case dividend payout - only about 0.4cps per year. There is also the amortization and depreciation cashflow that can be used for 'other projects', should things get tight.

I'm not great fan of expansion by borrowing when the leverage you have is already 'appropriate'. Nevertheless by running the figures I did, I am explaining that expansion by debt is *possible*. RBD management don't have to go back to shareholders to grow, even though I am hinting that they might.


quote:
Your ROE of 18% might sound repectable but being so highly leveraged you would expect to be a lot higher .....


Hopefully the ROE will be higher than 18%. Like I said, RBD management would be shocked at my projections. They are aiming to do much better than that. But we know that RBD management don't always get it right. So I think it is appropriate to ask the question, "What if...?". It is called investing with a margin of safety.


quote:
how about return on all invested capital (equity plus debt) .... is that more than the cost of capital?


$8.4m/($71m+$41m)= 7.5%

Long term, RBD have been able to borrow for less than that.

SNOOPY

Snoopy
31-08-2006, 09:46 PM
quote:Originally posted by Halebop


71.7m debt / 8.5m NPAT would take maybe 7 years to repay assuming no dividend was paid. It doesn't get repaid at all at current dividend levels.


Yes that is right. The debt doesn't need to be repaid as long as RBD can afford the interest bill. Of course I would hope that at some time in the next ten years RBD will hit a 'sweet spot' and be able to repay some debt. That way, they will be able to afford the next round of franchise fees in 2017.

But even then, there are other ways of raising cash. They could sell off Starbucks, for example, back to the US parent. I think Starbucks acquired their franchised Australian operations in such a deal.


quote:
Debt repayment needs to be calculated from available cashflows, or as "long term" holders discover, a nasty outcome can be in the offing. Because the franchise arrangement needs to be refinanced in pertpertuity (or you can't assess the income as perpetual) the future cost of refinancing them needs to be factored. This means lower dividends or yet higher debt levels.


You are right Halebop. See my solutions above.


quote:
Comparing the 8.5 years figure with utility companies is a strange mechanism. Utilities negotiate multi decade supply and offtake agreements on multi hundred million dollar projects with finite capacity - the debt is supportable because everything is defined. RBD operate in the restaurant and take out segment of FMCG. They operate hand to mouth from week to week. A high debt level is not supportable.


KFC have been operating hand to mouth (good double entendre metaphor there) for around 50 years. They have a 'brand'. Granted it isn't a brand for everyone, but it is one of the world's most recognised. The KFC business model is durable and it works. KFC is also in a market area -food- which is essential to life. IMO KFC/PH has many aspects in common with the more traditional utility. And they certainly can support a high level of debt. You should have seen the leverage in YUM brands when it was floated off from Pepsi!


quote:
Strange that now you call their forecast debt high and about a year ago I said debt levels were too high, they had no flexability and you poo-poo'd the concept...


Quite so.

A lot of water flows under the bridge between FY2006 and FY2010 Halebop.

SNOOPY

winner69
01-09-2006, 06:04 AM
quote:Originally posted by Snoopy



KFC have been operating hand to mouth (good double entendre metaphor there) for around 50 years. They have a 'brand'. Granted it isn't a brand for everyone, but it is one of the world's most recognised. The KFC business model is durable and it works. KFC is also in a market area -food- which is essential to life. IMO KFC/PH has many aspects in common with the more traditional utility. And they certainly can support a high level of debt. You should have seen the leverage in YUM brands when it was floated off from Pepsi!

SNOOPY




KFC for all it's sins is a great business in its own right .... its got great margins .... its a cash cow .... and it deserves ongoing investment

Pity all the profits go to keep Pizza Hut and Starbucks afloat

Ever wondered by RBD never disclose PH and SB profitability ... they would be embarassed

duncan macgregor
01-09-2006, 07:25 AM
I take it that most of you think its not an issue to lease buildings then spend millions doing them up. I think that the company if it eventually goes under it will have very little to sell. It was stupidity at its peak when they sold the buildings. I remember SNOOPY and i having words on that at the time. I said it is better to own a building as it saves paying rent in the bad times. He said better to use the money to expand the business. Where are you now snoopy its the bad times, they are doing up the landlords buildings plus paying rent. macdunk

Snoopy
01-09-2006, 08:13 AM
quote:Originally posted by duncan macgregor

I take it that most of you think its not an issue to lease buildings then spend millions doing them up. I think that the company if it eventually goes under it will have very little to sell. It was stupidity at its peak when they sold the buildings.


Whatever the end game turns out to be Macdunk, you can only sell your buildings once. What is your alternative? Lower wages, cut staff training, lower the quality of ingredients and cut promotional activity, but keep the buildings in case your other cutbacks strangle the business?

Actually I think you are underplaying the property situation. KFC haven't just done up the buldings. They have flattened them and built new ones. One advantage of doing it this way is that KFC have new buildings to work from, for which they are being charged 'old rents'. But all of this is just standard commercial practice isn't it? Commercial tenants always pay for building upgrades.

Now Macdunk, you are in the building industry. You must have driven past one of these new KFCs, redeveloped for $830,000 each (complete with all the landscaping) - even if only with disgust. Could you build KFC a restaurant for that price?


quote:
I remember SNOOPY and i having words on that at the time. I said it is better to own a building as it saves paying rent in the bad times. He said better to use the money to expanad the business. Where are you now snoopy its the bad times, they are doing up the landlords buildings plus paying rent.


As opposed to doing up their own buildings, and being locked into unprofitable locations you mean?

SNOOPY

duncan macgregor
01-09-2006, 08:45 AM
SNOOPY, I feel quite sick that i didnt buy one of their buildings for them to flatten and give me a new one. SILLY SILLY ME macdunk

Tyke
01-09-2006, 08:46 AM
I notice that Ted van Arkel has replaced Bill Falconer as Chairman. I worked with Ted for a few years and he is a retailer through and through having been with Woolworths PlaceMakers and latterly as CEO of Progressive Enterprises. If he is going to be a hands on type of Chairman there is a glimmer of hope as he certainly won't tolerate the lack of standards as described by Stranger Danger and others.

Steve
01-09-2006, 08:54 AM
I hope that they don't stop the annual shareholder freebie![:p]

duncan macgregor
01-09-2006, 09:27 AM
quote:Originally posted by Snoopy
Whatever the end game turns out to be Macdunk, you can only sell your buildings once. What is your alternative? Lower wages, cut staff training, lower the quality of ingredients and cut promotional activity, but keep the buildings in case your other cutbacks strangle the business?

Actually I think you are underplaying the property situation. KFC haven't just done up the buldings. They have flattened them and built new ones. One advantage of doing it this way is that KFC have new buildings to work from, for which they are being charged 'old rents'. But all of this is just standard commercial practice isn't it? Commercial tenants always pay for building upgrades.

Now Macdunk, you are in the building industry. You must have driven past one of these new KFCs, redeveloped for $830,000 each (complete with all the landscaping) - even if only with disgust. Could you build KFC a restaurant for that price.

SNOOPY, I thought and told you at the time how stupid they were selling the kennel to start up in AUSTRALIA. I am now telling you that their stupidity has reached the limits beyond my comprehension to spend $830000 doing up the landlords property. I wonder how much the landlord paid for the property in the first place. Some people are getting rich out of their stupidity. The long term investors are getting poor out of theirs, is my opinion. macdunk

Snoopy
01-09-2006, 09:39 AM
quote:Originally posted by Stranger_Danger


Before buying this stock, do three things and ponder one other.

To do :

(a) Call a Pizza Hutt "helpdesk", far removed from the store that makes and delivers your pizza. Note disinterested tone.


Disinterested tone I can cope with. I don't want some super sales spiel when I ring up. I just want to order a Pizza!


quote:
Wait till pizza and the bill arrives - in an attempt to fight Hell Pizza, note they've half achieved this. Rather than being the "cheap family" option, Pizza Hutt have moved half way away from this - they are now not as cheap as Dominos, and not as good as Hell. Quality has improved. Prices have gone up a little. Where are they now? Slap bang in the middle. Who wants to be there?


The Japanese have positioned themselves above the other Asian competition but below the prestiege makers of Europe in the car market. 'In the middle' is a good place to be. In the middle is where Pizza Hut are *trying* to position themselves.


quote:
(b) Call into your local Starbucks. Note that coffee takes a while to make. Snack food is crappy, ambience is minimal - it is all about the coffee. Coffee selection is vast and personalised - they can't prepare 25 cups in advance. Result? Slow. Limited space for staff to move around, limit to how many you could have. Labour intensive. Note what happens during peak time - sometimes a queue stretching outside. That sounds good - the reality is, this business can't "ramp up" or go much faster than it does. There is a reason most coffee shops are owned by owner operators who just own one. Henry Ford would struggle to "production line" this business any more than it currently is, and currently, its slow.


So what is the solution? Prefabricated coffee and polystyrene cups?
People seem prepared to stand in line at places like Starbucks to avoid that. How would having owner operators control the coffee shops improve the situation in the industry?


quote:
(c) Go into your local KFC. My god. Talk about little shop of horrors. How can this place be their jewel? 9/10 times staff of a certain ethnic group are having a great time talking to their friends. Have twice seen a ball game being enjoyed by staff and "customers" (their mates who don't buy stuff). Have observed product being handed out more than once. Have seen customers ignored for friends many times. No signs of management supervision. Food totally inconsistent. Have been into two revamped stores - all the bright, fresh backdrop did for me is highlight how bored, uncaring and unsupervised the staff were, and how drab the food is.


Definitely sounds like a management issue there!


quote:
To ponder :

There are three things you need to sell chicken, coffee and pizza. Buildings, a business model, and management/staff.

As I understand it, they lease their buildings. They pay YUM a fee for the intellectual property, brand and business model.


Yes

[quote]quote:<hr height="1" noshade

Pennywise
01-09-2006, 09:45 AM
Snoop...maybe dismissable as hype.

from the top, chairmans address less than 3 months ago included...


"Overall therefore, we believe that the market will quickly come to recognise
that Restaurant Brands' earnings are sustainable into the future, and when
this occurs it will be reflected in the company's share price."

their valuation $1.65-75.

market valuation ...nearly half

Disc: getting interested;)

Pennywise
01-09-2006, 09:50 AM
what is the current yeild on this stock?

someone mentioned now 16%??

haven't they paid 10cps PA over recent times

can someone clarify current yeild @ 95c and yeild going forward


cheers, PW

BRICKS
01-09-2006, 10:50 AM
quote:Originally posted by Sideshow Bob

In the meantime, Bricks is looking in the dictionary to see what 'vitriol' means.........


BOB thanks your still thinking of me soon be HOME.. [8D]

Snoopy
01-09-2006, 12:14 PM
quote:Originally posted by Pennywise

Snoop...maybe dismissable as hype.

from the top, chairmans address less than 3 months ago included...

"Overall therefore, we believe that the market will quickly come to recognise that Restaurant Brands' earnings are sustainable into the future, and when this occurs it will be reflected in the company's share price."

their valuation $1.65-75.


Pennywise the (old) chaiman Falconer who uttered that quote of yours prefixed it with:

"If we could eliminate the losses being experienced in Australia, either by successfully completing the turnaround of that business, or by exiting it, then the earnings of the New Zealand business on its own, taking into account expected earnings from the completion of the KFC transformation programme, at multiples which are characteristic of the sector, would yield share values of $1.65-75 a share."

I think there are a few qualifications there.

A clean exit from Australia is needed.

The 'KFC transformation project' has to deliver. My observation of the Riccarton Road branch since transformation (I go past it most days) is that the business has improved a bit but not incrementally. What works in Auckland may not work nationwide.

I think there is also the implication that things won't get any worse for Pizza Hut in New Zealand. I would say PH is under intense pressure. I wouldn't dismiss $1.65-$1.75 for RBD as impossible, but I think it more likely that any recovery will be to a lower level than that. I would guess $1.35 max,but then again that is still 40% above today's trading prices!

If old Chairman Falconer was being optimistic, I think that new Chairman Van Arkel is clearing skeletons out of the closet before he begins his watch. IMO, if anything, Van Arkel is being unnecessarily negative with his latest profit warning announcement.


quote:
market valuation ...nearly half

Disc: getting interested;)


I do believe the upside is decent and the downside is not much. That kind of risk return payoff pushes my value investor buttons as well.

SNOOPY

discl: hold RBD

PS Dividend paid out over the last seven years has been 10cps. At a share price of 95c, the gross yield is 15.7%.

A 15.7% yield depends on the dividend being maintained. While short term there is no doubt they could do that, in the medium term perhaps new Chairman Van Arkel will have a different policy when he sees the amount of one off capital expenditure coming up in FY2007.

Pennywise
01-09-2006, 12:36 PM
maybe you could add to my simple look at div vs earnings

if we are looking at around $6m full year now?
then we are looking at earnings around 6.5cps?

surely the div of 10c must be cut.

this is my real concern going forward, cutting the div surely MUST happen with the capex even on KFC alone 06-07

market reaction to div cut may still take it lower, actually will take it lower imo.

that may be the time I enter.

duncan macgregor
01-09-2006, 12:49 PM
What exactly does RBD own to sell other than goodwill and a few kitchen utencils. If the worst comes to the worst they have sold the buildings spending $830k according to SNOOPY doing each store up. I bet the landlords have the fingers crossed that they go under.
They will all be sitting hoping like hell that they cant pay the rent. macdunk

Pennywise
01-09-2006, 12:52 PM
Macdrunk, you are now getting beside yourself

say hello

Snoopy
01-09-2006, 01:20 PM
quote:Originally posted by Pennywise

maybe you could add to my simple look at div vs earnings

if we are looking at around $6m full year now?
then we are looking at earnings around 6.5cps?

surely the div of 10c must be cut.


Not necessarily. That underlying half year ongoing profit could be boosted by asset sales from Australia. That could allow the dividend to be maintained without eating into company equity.

Let's suppose the interim dividend is cut from last years 5.5cps to 3cps. That would save RBD about $2.4m: Chicken feed compared to the amount of capital spending they are doing. Van Arkel could decide to not annoy shareholders and keep the dividend the same, because saving the dividend wouldn't make much difference to the company. Borrowing to pay the dividend? RBD has done it before.

A third possibility is that RBD might 'do a Sky City' and declare their dividend in 'bonus shares' with an opt in cash option. A good way to save capital while keeping your dividend apparently unchanged.


quote:
this is my real concern going forward, cutting the div surely MUST happen with the capex even on KFC alone 06-07

market reaction to div cut may still take it lower, actually will take it lower imo.

that may be the time I enter.


At 7cps annual dividend (Van Arkel has hinted the second half will be better) RBD would still be yielding 11% (gross) based on a share price of 95c. Are there any shares on the NZ market paying more than that? How cheap does it have to get?

You are right Pennywise in that the RBD share price *might* go lower if the dividend is cut. But it might not go lower, and the dividend might not even be cut. The share is so cheap anyway IMO, you can't afford to miss your buy chance completely can you? It is a delicate balancing act, this optimization of risk and return.

SNOOPY

winner69
01-09-2006, 01:25 PM
Snoopy says '...the business has improved a bit but not incrementally.'

Almost as good as Yogi Berra

If incremental means 'something added or gained' do you mean that business hasn't grown .... but it has improved .... from an experience point of view or something?

Sorry mate .... bit bored today

moimoi
01-09-2006, 01:27 PM
i suspect the landlords are on their knees praying RB doesn't fall over....Having witnessed the auctioning off of the properties...and watching the punters climb over each other to buy them on a 4.5%-7% yield...they'll need the rent.

dunno quite who you would lease an empty KFC store too.?
[:p]moi.

Snoopy
01-09-2006, 03:26 PM
quote:Originally posted by winner69

Snoopy says '...the business has improved a bit but not incrementally.'

Almost as good as Yogi Berra

If incremental means 'something added or gained' do you mean that business hasn't grown .... but it has improved .... from an experience point of view or something?


I mean the business hasn't taken a 'big step forward' in being very obviouly busy all the time. I don't regard dribs and drabs of business as adding up to a 'step increment'.

My very superficial unscientific glances at the place mean that I have never seen it full since opening night. No problem getting a park (all car parks are now out the front so you can easily see them.) I haven't seen the drive through spilling out cars into the street as was a regular occurence BR (before renovation). But then again the driveway up to the order window is now longer due to the redesign. I should add that I've never seen the place empty either.

Hope that clarifies things.

SNOOPY

Snow Leopard
01-09-2006, 05:00 PM
All these numbers are normalised to exclude any one-offs.

With this $2.5m to $3.0m guidance for this half year an optimistic guess for the full year would be an IFRS NPAT in the range $7.0m to $8.0m? (Equivalent for 2006 was $12.4m)
Assume an EPS of 7.5cps
I think they should bite the bullet, cut the divvy to 1.5cps this half and concentrate on sorting this company out with the extra retained cash.
If they do that then I will consider buying some.

Halebop
01-09-2006, 05:16 PM
quote:Originally posted by Snoopy

You have to remember many of these workers are school kids on their first job. They are down near the bottom end of the pay scale. It is unrealistic to expect a team with military drill discipline on hand to serve you.

Absolute BS. I've successfully run teams of teenagers and 20 somethings and I've seen others do the same. While there are inter-generational value differences, people of any age respond to clearly defined expectations, challenge, leadership, opportunity and reward. The real problem is low standards, low expectations. ...and that starts at senior management levels.


quote:Originally posted by Snoopy

...According to KFC management 'staff motivation and operational key performance indicators through the transformed stores are at an all time high'. You could easily dismiss that statement as 'hype' except that partner turnover for KFC is down from 82% to 71%. That compares well with overseas benchmarks of about 100%. The longer they retain staff, the more staff they can promote to become experienced managers.

That last sentance is true. 71% staff turnover can't deliver it. High turnover is a feature of the industry but a lot of that comes down to recruitment and management practices. It's tough to build line management on anything more than 50% turnover. But in terms of hype, how long have these guys been talking about improving staff and customer satisfaction levels? That they have not delivered is the only "hype-able" factor.


quote:Originally posted by Snoopy

Restaurant Brands have been pro-active in being one of the first fast food companies to settle wage negotiations at significantly higher levels for the year.

While this makes for good reading in a Labour party billboard, it's not the stuff of legends in the boardroom. Superior companies have been finding non cash incentives a cheaper and often more effective strategy to retain quality staff. As a company, if the choice is to pay me $6,000 per year more to remain competitive, the better option can be to pay my tuition for tertiary studies at $4,000 a year and a $1,200 gym membership. The employee gets maybe $8,000 of pre tax value, the company gets better trained, more motivated, fitter, healthier employees who stay around longer (Saving recruitment and training costs as well) at a lower cost than $6,000. Maccas have partially defined a route to this challenge by branding their employment on Television and offering NZQA compliant training (as well as a superior career progression path). RBD just reports a 50% profit drop instead.

Snoopy
01-09-2006, 08:08 PM
quote:Originally posted by Halebop


Snoopy wrote

...According to KFC management 'staff motivation and operational key performance indicators through the transformed stores are at an all time high'. You could easily dismiss that statement as 'hype' except that partner turnover for KFC is down from 82% to 71%. That compares well with overseas benchmarks of about 100%. The longer they retain staff, the more staff they can promote to become experienced managers.

That last sentance is true. 71% staff turnover can't deliver it. High turnover is a feature of the industry but a lot of that comes down to recruitment and management practices. It's tough to build line management on anything more than 50% turnover. But in terms of hype, how long have these guys been talking about improving staff and customer satisfaction levels? That they have not delivered is the only "hype-able" factor.


KFC Employee turnover from 2000 to 2006 is:

72%,73%,73%,84%,82%,71%

So we are back to all time low levels. Not bad for a period of near full employment.

For KFC customer service, scores on the CHAMPS scale *have* been improving. The figures for the last six years are from FY2000 to FY2006:

93.2%, 93.0%, 92.0%, 89.0%, 95.4%, 95.5%

95.5% is better than anything achieved in any state of Australia
Note: this is not hype Halebop! There has been a real measurable turnaround in years 2005 and 2006.

'CHAMPS', BTW is a rigorous six scale quality control scheme. The CHAMPS acronym stands for in order:

Cleanliness, Hospitality (Say 'Great to see you' and smile at the customer), Accuracy (correctness of order), Maintenance, 'Product Quality' and 'Speed with Service' (hint: only open the drive through window once with product in hand ready for the customer). Actually I think there is a whole book on CHAMPS the public can buy. I saw it at Borders.


quote:
Superior companies have been finding non cash incentives a cheaper and often more effective strategy to retain quality staff. As a company, if the choice is to pay me $6,000 per year more to remain competitive, the better option can be to pay my tuition for tertiary studies at $4,000 a year and a $1,200 gym membership. The employee gets maybe $8,000 of pre tax value, the company gets better trained, more motivated, fitter, healthier employees who stay around longer (Saving recruitment and training costs as well) at a lower cost than $6,000.


Get real Halebop. Some of these employees might only be on $6,000 per year total. A free gym membership isn't going to pay their bills for them.


quote:
Maccas have partially defined a route to this challenge by branding their employment on Television and offering NZQA compliant training (as well as a superior career progression path).


From p23 of the RBD FY2006 annual report:

"In conjunction with New Zealand Hospitality Standards Institute we have developed a tailored training cirriculuum called 'Future 2 Go' which we offer through all of our stores. This earn as you learn training is base don a modular building block approach that enables learners to progress from one qualification level to the next at their own pace. Competancy at each level is recognised with a National Certificate in Hospitality and often results in staff promotion or advancement."

SNOOPY

winner69
01-09-2006, 08:40 PM
Snoopy ... if 71 staff out of 100 staff leave during a year how long on the average does an employee hang around for?

winner69
01-09-2006, 08:44 PM
quote:Originally posted by Snoopy

For KFC customer service, scores on the CHAMPS scale *have* been improving. The figures for the last six years are from FY2000 to FY2006:

93.2%, 93.0%, 92.0%, 89.0%, 95.4%, 95.5%

95.5% is better than anything achieved in any state of Australia

Note: this is not hype Halebop! There has been a real measurable turnaround in years 2005 and 2006.

SNOOPY




95.4% to 95.5% real measurable turnaroud ???????

Suppose real ... and measurable .... but turnaround

BRICKS
01-09-2006, 09:47 PM
DONT worry boys the s/price will soon back over $1 those poor soles who dumped over 2 million of there hard earned shares at such a big LOSS will then regret while the traders CHEER.. [8D]

Snoopy
01-09-2006, 10:59 PM
quote:Originally posted by winner69

Originally posted by Snoopy

For KFC customer service, scores on the CHAMPS scale *have* been improving. The figures for the last six years are from FY2000 to FY2006:

93.2%, 93.0%, 92.0%, 89.0%, 95.4%, 95.5%

95.5% is better than anything achieved in any state of Australia

Note: this is not hype Halebop! There has been a real measurable turnaround in years 2005 and 2006.

95.4% to 95.5% real measurable turnaroud ???????
Suppose real ... and measurable .... but turnaround


Years 2005 and 2006 taken together, compared to the previous four years of course. The downtrend reverses and steps up by five CHAMP points.

Since we are in pedant mode, I would like to point out that it is bad form to mix up letters and numbers in a single word. Henceforth I shall call you 'winnersixtynine' or '95663769' - the SMS text key version of your name.

SNOOPY

Toddy
01-09-2006, 11:43 PM
Cantab

I'll put a bucket of KFC on Otago beating Canterbury for the shield. They must be due to win, I have never seen the Blue and Golds ever win the shield.

Either way, it will boost RBD sales and add another couple of cents on to the bottom line.

Halebop
01-09-2006, 11:59 PM
quote:KFC Employee turnover from 2000 to 2006 is:

72%,73%,73%,84%,82%,71%

So we are back to all time low levels. Not bad for a period of near full employment.

For KFC customer service, scores on the CHAMPS scale *have* been improving. The figures for the last six years are from FY2000 to FY2006:

93.2%, 93.0%, 92.0%, 89.0%, 95.4%, 95.5%

95.5% is better than anything achieved in any state of Australia
Note: this is not hype Halebop! There has been a real measurable turnaround in years 2005 and 2006.

'CHAMPS', BTW is a rigorous six scale quality control scheme. The CHAMPS acronym stands for in order:

Cleanliness, Hospitality (Say 'Great to see you' and smile at the customer), Accuracy (correctness of order), Maintenance, 'Product Quality' and 'Speed with Service' (hint: only open the drive through window once with product in hand ready for the customer). Actually I think there is a whole book on CHAMPS the public can buy. I saw it at Borders.

Snoopy I'm quite famililar with Champs, with the process measurements involved and with several pertinent restaurant formats, including 2 out of 3 of RBDs. 95.5% is not a good score. It might read good on the outside, but it aint. Conversely 89% is a Sh!t score.


quote:
Get real Halebop. Some of these employees might only be on $6,000 per year total. A free gym membership isn't going to pay their bills for them.

Get real yourself Snoopy. Everything is scalable. That was an example.


quote:From p23 of the RBD FY2006 annual report:

"In conjunction with New Zealand Hospitality Standards Institute we have developed a tailored training cirriculuum called 'Future 2 Go' which we offer through all of our stores. This earn as you learn training is base don a modular building block approach that enables learners to progress from one qualification level to the next at their own pace. Competancy at each level is recognised with a National Certificate in Hospitality and often results in staff promotion or advancement."

And the PR firm edited out the next lines... "We are so successful at the stragegy, staff turnover has fallen to 71%. In any case we benchmark against world worst practice to makes ourselves look good so what the hell."

winner69
02-09-2006, 06:04 AM
For what it is worth

From stats nz ... The accommodation, cafes and restaurant industry had the second-highest average quarterly worker turnover rate of all industries, with average quarterly worker turnover rate of 28.2 percent, higher than the all industries average of 17.4 percent.


If i understand the workngs properly thats an annual turnover rate in excess of 100% ... well done KFC

Snoopy
02-09-2006, 08:59 AM
quote:Originally posted by Halebop


Snoopy wrote:

For KFC customer service, scores on the CHAMPS scale *have* been improving. The figures for the last six years are from FY2000 to FY2006:

93.2%, 93.0%, 92.0%, 89.0%, 95.4%, 95.5%

95.5% is better than anything achieved in any state of Australia
Note: this is not hype Halebop! There has been a real measurable turnaround in years 2005 and 2006.

'CHAMPS', BTW is a rigorous six scale quality control scheme. The CHAMPS acronym stands for in order:

Cleanliness, Hospitality (Say 'Great to see you' and smile at the customer), Accuracy (correctness of order), Maintenance, 'Product Quality' and 'Speed with Service' (hint: only open the drive through window once with product in hand ready for the customer).

Snoopy I'm quite famililar with Champs, with the process measurements involved and with several pertinent restaurant formats, including 2 out of 3 of RBDs. 95.5% is not a good score. It might read good on the outside, but it aint. Conversely 89% is a Sh!t score.


I guess a KFC restaurant could could be perfect on 5 out of six of the champ categories, yet muck up 30% of processed orders by missing a piece of chicken out of them. Such a restaurant would annoy the hell out of customers, yet still end up with a CHAMPS score of 95%.
And customers make negative judgements on restaurants by their mistakes. So a 95% CHAMPS score could still mean commercial suicide.
(Is that the kind of thing you mean Halebop?)


quote:
Snoopy wrote

Get real Halebop. Some of these employees might only be on $6,000 per year total. A free gym membership isn't going to pay their bills for them.

Get real yourself Snoopy. Everything is scalable. That was an example.


That's where yo are wrong Halebop. It is all very well offering gym packages to middle management. Workers at the bottom of the pay heap need all of their pay just to survive. So cutting their pay by $5 per week and giving them a $10 voucher for a single gym session as compensation is an extremely negative result for a low paid worker, despite them being better off 'in dollar terms'.


quote:From p23 of the RBD FY2006 annual report:

"In conjunction with New Zealand Hospitality Standards Institute we have developed a tailored training cirriculum called 'Future 2 Go' which we offer through all of our stores. This earn as you learn training is base don a modular building block approach that enables learners to progress from one qualification level to the next at their own pace. Competancy at each level is recognised with a National Certificate in Hospitality and often results in staff promotion or advancement."

And the PR firm edited out the next lines... "We are so successful at the stragegy, staff turnover has fallen to 71%. In any case we benchmark against world worst practice to makes ourselves look good so what the hell."
[/quote]

As '95663769' has pointed out:

"From stats nz ... The accommodation, cafes and restaurant industry had the second-highest average quarterly worker turnover rate of all industries, with average quarterly worker turnover rate of 28.2 percent, higher than the all industries average of 17.4 percent."

The hospitality trade annual labour force still 'employed rate' is:

(1.000-0.282)^4= 26.6%.

That means on average 73.4% of workers have 'turned over' during the year. Rather more than the 71% turnover from KFC. KFC are now 'better than average' aft

BRICKS
02-09-2006, 08:59 AM
quote:Originally posted by BRICKS

DONT worry boys the s/price will soon back over $1 those poor soles who dumped over 2 million of there hard earned shares at such a big LOSS will then regret while the traders CHEER.. [8D]


BET all you HARD talkers did not BUY or SELL note that Winger69 never DOE`S.. [8D]

Snoopy
02-09-2006, 09:06 AM
quote:Originally posted by winner69

For what it is worth

From stats nz ... The accommodation, cafes and restaurant industry had the second-highest average quarterly worker turnover rate of all industries, with average quarterly worker turnover rate of 28.2 percent, higher than the all industries average of 17.4 percent.


If i understand the workings properly thats an annual turnover rate in excess of 100% ... well done KFC


Before Enumerate lambastes you '95663769', I will do it. This is another example of 'geometric averages' after successive trials (to use the statistical jargon).

The hospitality trade annual labour force still 'employed rate' after four successive quarters is:

(1.000-0.282)^4= 26.6%.

That means on average 73.4% of workers have 'turned over' during the year. KFC is better than this average, but not by all that much. Nevertheless for a national chain the KFC's 71% staff turnover figure is a creditable result.

SNOOPY

duncan macgregor
02-09-2006, 09:20 AM
quote:Originally posted by moimoi

i suspect the landlords are on their knees praying RB doesn't fall over....Having witnessed the auctioning off of the properties...and watching the punters climb over each other to buy them on a 4.5%-7% yield...they'll need the rent.

dunno quite who you would lease an empty KFC store too.?
[:p]moi.

Let us look at this from the landlords point of view, presuming that you are right with your figures. Lets say the average store at 6pc yeild which is a bit to low at the start making the initial purchase not an outstanding investment. Then along comes RBD and upgrades the place by $830000 whoopee look at what the place must be worth now. Remember RBD still pay the outgoings you still get your rotten 6pc but further down the track look at the capital gain. Well done landlords, you are on to a winner when this lot go under, or get taken over, which must happen, you are in the box seat. SNOOPY you should have bought the place with those shares of yours. macdunk

Pennywise
02-09-2006, 01:27 PM
dunc, you not making a sense mun

what value is there to "KFC" style improvements to a building that will not have ANY value to the landlord if they run the lease course, just like the old buildings, eventually they need doing up again and again.

they have locked in LOW yeilding rents for the landlord and since the landlord didn't pay for the these improvements, there will be no improvements based rental increases. If the lease clauses are based on inflation, then what chance does the landlord have of increasing rent in the near future? rent improvement percentages only apply if the landlord paid as far as I know.

your assumption seems based only on the chance that if KFC fell over tomorrow and the landlord took over the building, they would get a huge rent jump from a new leasee.
their is no value to the landlord if KFC improvements run their full use by date, 10 years or more

being out of property right now in the current cycle and at yeilds under mortgage rates...seems to me RBD are winning here.

duncan macgregor
02-09-2006, 02:26 PM
PENNYWISE, It is only speculation on our part what the benefits or losses to the landlord might be. Lets look at it from all the angles using figures that have been banded about. If RBD goes under, the landlord has a building renovated at an average cost to the tennant $830000. Part of that sum would be RBD chattels but a large part according to SNOOPY is that they renewed and up graded the building. The building is now in a far superior condition with a larger long term capital gain. The landlords upkeep is reduced to nil in the short term, the idiot tennant has renewed it at their expence. The capital gain on a newly renovated property is far greater than a property due for maintanance. The landlord initially was happy with a six pc yeild plus a capital gain. When the lease expires or gets renewed the rent is based on the value of the property excluding tenants chattels. RBD has placed the landlord in a strong position to up the rent in the future. If the land lord decides to sell the building, i would gaurantee that they would now make a decent profit. I only wish that i had known about this in advance i would be delighted with a six pc yeild under those conditions. It definately beats having shares in the company. macdunk

winner69
02-09-2006, 03:03 PM
Duncan .... its $1M a store .... from RBD announcement .....Restaurant Brands plans to spend a further NZ$8 million on 8 stores by the end of the year.

winner69
02-09-2006, 03:13 PM
Question 766679 ... I take it RBD would have had to front up with some dosh for the new franchise agreements on 44 KFC stores ... and some more dosh next May for the other 33 KFC stores and all the PH stores.

Any ideas how much? ... wasn't stated in the announcement

Happy Camper
02-09-2006, 03:47 PM
quote:Let us look at this from the landlords point of view, presuming that you are right with your figures. Lets say the average store at 6pc yeild which is a bit to low at the start making the initial purchase not an outstanding investment. Then along comes RBD and upgrades the place by $830000 whoopee look at what the place must be worth now. Remember RBD still pay the outgoings you still get your rotten 6pc but further down the track look at the capital gain. Well done landlords, you are on to a winner when this lot go under, or get taken over, which must happen, you are in the box seat. SNOOPY you should have bought the place with those shares of yours. macdunk


Unless RBD are overnight paying increased leases on the renovated premises then the fact that RBD have spent millions of dollars on building refits means little to the value of those commercial buildings. A large part of assessing the value of a commercial property is based on the lease income. Often a "fancy-pants valuer" will try to justify the value based on some other criteria, but at the end of the day it always comes back to a yield against lease.

There will be no capital gain on these commercial properties for landlords to bank unless the lease income from these properties increase. And somehow I think RBD will have protected their position to ensure leases don't go through the roof.

And as for RBD going under, that opens a whole new kettle of fish. Try being a landlord of one of those properties then! Your relationship manager at the bank will be pushing it uphill to convince the credit manager that there is any lending value in the property if there is no lease in place.

As an aside snoopy, I know that private equity ran the ruler over RBD last year, and deemed north of $1.60 too expensive. What chance of private equity determining that the numbers stack up now? You would have to assume that they could get their first 20% at a weighted price of around $1.10.

Cheers

Pennywise
02-09-2006, 04:53 PM
quote:Originally posted by duncan macgregor
If RBD goes under

there is no point discussing any further the value of building improvements to landlords unless you are convinced of your above "IF'

my opinion, fat chance:D [pun intended]

Snoopy
02-09-2006, 04:53 PM
quote:Originally posted by winner69

Question 766679 ...


Think yourself lucky '95663769' that you don't have to deal with the devil 'in-car-n-eight', even if you do have to deal with the devil 'between-seven-nine'.


quote:
I take it RBD would have had to front up with some dosh for the new franchise agreements on 44 KFC stores ... and some more dosh next May for the other 33 KFC stores and all the PH stores.

Any ideas how much? ... wasn't stated in the announcement


This is exactly the question that Graeme Bulling put to the board at the 2003 AGM. They wouldn't give a straight answer, but responded thus:

"We have given careful consideration to how we might meet Mr Bulling's wish for shareholders to know the impact of franchise fee renewals on the Company going forward, without compromising commercial sensitivity and confidentiality of franchise agreements.

We do not disclose per store franchise renewal fees that form part of (any negotiated) arrangements. But shareholders may take as a reference point, the renewal fees disclosed for the original purchase of 122 stores from Pepsi i.e. NZ$55,000 per store adjusted by New Zealand CPI from 1997 top the renewal date in 2007."

I have already covered this issue on page 6 of this thread under the heading:

"Medium Term Effect: PH/KFC Franchise Renewals and KFC refurbishment program."

In that posting I said:

"In addition to the ‘physical rebuilding’, 80 odd KFC stores need their franchises renewed in 2007 (including the 40 just committed to by Restaurant Brands in advance this year). We can add to this total some 40 Pizza Hut stores. At my estimated renewal rate of $80,000 per store, this requires an incremental capital commitment of $9.6m. That equates to an extra (annual) interest bill of $770,000."

766679 (or SNOOPY for those that must use alphabetics)

Snoopy
02-09-2006, 05:12 PM
quote:Originally posted by Happy Camper


As an aside snoopy, I know that private equity ran the ruler over RBD last year, and deemed north of $1.60 too expensive. What chance of private equity determining that the numbers stack up now? You would have to assume that they could get their first 20% at a weighted price of around $1.10.

Cheers


Private equity bid $1.65 Happy Camper. It was a firm bid on the undestanding they could get agreement on the KFC and PH renewal clauses from 'YUM'. They couldn't reach an agreement with YUM so the deal fell over. I would imagine that private equity will wait for the franchise agreements to be renegotiated now, before having another go at RBD. That means they will wait another year at least.

I imagine that because YUM have forced RBD to undertake an accelerated store redevelopment program, a private equity opening bid will no longer be at $1.65. If payment of the new store redevelopment program lops around 15% off RBD group profits, and I estimate it does, then expect the next takeover bid to come in at $1.40. Nevertheless even at that, it is a healthy premium over today's market prices.

SNOOPY

rmbbrave
03-09-2006, 09:12 AM
Aussies hungry for fast food
03 September 2006
By GARRY SHEERAN

Restaurant Brands' plunging share price has put New Zealand's only listed fast food operator firmly back on the takeover agendas of hungry Australian private equity players, say analysts.


"It's only speculation at this stage, but I'd be willing to bet money on it," said one.

Last week's near 30% fall in share price - Restaurant Brands shares are at an eight-year low of 95c - gives the firm a market capitalisation of $92 million. Private equity player CVC Asia Pacific offered it $160m ($1.65 a share) last year and an offer at $1.20 a share might now be enough to secure the company.

The CVC offer failed because CVC could not agree with US franchiser Yum, which owns the franchise on KFC and Pizza Hut.

But last week's profit warning from Restaurant Brands, and doubts it would be able to maintain its dividend, could see renewed interest from CVC Pacific.

Macquarie Equities investment director Arthur Lim said Restaurant Brands was "seriously on the back foot".

Last month, Restaurant Brands renewed half its KFC store franchises with Yum and the other 50% are due for renewal in May next year, when Pizza Hut franchises also expire.

Lim said whoever took control of Restaurant Brands could, for example, "call Yum's bluff and convert the expiring franchises to Domino's Pizza stores. It's starting to look really appealing".

As well as CVC Pacific, Pacific Equity Partners (PEP), which now owns KFC and Sizzler restaurants in Australia, has also said Restaurant Brands would complement its recently acquired Collins Food Group

Happy Camper
03-09-2006, 06:28 PM
Egads, is the penny dropping all over Australasia about the potential arbitrage opportunity that RBD offers at present?

Snoopy, thanks for confirming the theoretical value a potential takeover would occur at. The ego within prefers your ($1.40)valuation to that of Garry Sheeran's ($1.20). I for one would not be a willing seller into a bid at $1.20.

Cheers

BRICKS
04-09-2006, 09:58 AM
quote:Originally posted by BRICKS


quote:Originally posted by BRICKS

DONT worry boys the s/price will soon back over $1 those poor soles who dumped over 2 million of there hard earned shares at such a big LOSS will then regret while the traders CHEER.. [8D]


BET all you HARD talkers did not BUY or SELL note that Winger69 never DOE`S.. [8D]


WELL thanks boys all your hard talking [& non buying] is looking GOOD up 10%,, IN China at present may come home to eat some KFC.. [8D]

duncan macgregor
04-09-2006, 01:16 PM
Exactly what has RBD got left to sell if the business starts on a downward slide. I like companies that i invest in to have something of substance probabely a throw back to the 87 crash. They sold the buildings whats left to sell?. They are stupid enough to spend millions doing up the landlords buildings so what is left if it all keeps going bad. Nearly all the companies have property as a back up if times get tough, but this lot have very little other than a faultering business. macdunk

Snoopy
04-09-2006, 02:04 PM
quote:Originally posted by duncan macgregor

Exactly what has RBD got left to sell if the business starts on a downward slide. I like companies that i invest in to have something of substance probably a throw back to the 87 crash. They sold the buildings whats left to sell?. They are stupid enough to spend millions doing up the landlords buildings so what is left if it all keeps going bad. Nearly all the companies have property as a back up if times get tough, but this lot have very little other than a faultering business. macdunk


RBD have the spoils of three enduring franchise agreements to offer. If they play things right they can exploit the intellectual capital base of the Starbucks, Pizza Hut and KFC. Originally I thought this was *all* they had, which is one of the reasons RBD continue to be priced so cheaply on the market.

Reading those speculative articles in the press over the weekend has got be thinking though. There are over 100 prime high visibility food outlet sites that RBD holds the lease on. Those lease agreements, while being seen as a liability when the business is not going well, could very well be seen as an asset by another fast food chain wanting to break into the NZ market. I think there are restriction of trade agreements in place that says that if RBD does not renew its Pizza Hut and KFC agreements, then it will be precluded from converting those relinquished outlets into competitive takeaway food outlets for a period of time. However it seems unlikely that the reverse is true. Namely that if YUM brands dump Restaurant Brands as their NZ agent, that any restriction of trade to Restaurant Brands could apply.

Perhaps with that 'other' US Pizza chain (who were they again?), seemingly intent on getting into the NZ market, RBD has a bit more bargaining leverage than they thought? If 'YUM' rejects the franchise renewal proposal put forward by Restaurant Brands, any downstream distressed(?) leases could be a very economical way to build a new business of scale in NZ overnight, at the expense of YUM! After all if Pizza Hut took out Eagle Boys a few years back, there may be nothing to stop a new Pizza market entrant dealing to Pizza Hut in exactly the same way.

I wonder if Vicky realises she has a bit more to bargain with than she thought? Or will her training in water sports in her younger years continue to ensure she has the backbone of an amoeba in the upcoming negotiations with YUM? Perhaps a lightning raid on the RBD share register by a competitor looking to get into the NZ market would make sense - soon!

SNOOPY

BRICKS
04-09-2006, 02:20 PM
WELL boys we have gone from a profit down turn notice to a death notice where do you people get all this rubbish we have to look at and spit OUT.. [8D]

duncan macgregor
04-09-2006, 02:57 PM
quote:Originally posted by BRICKS

WELL boys we have gone from a profit down turn notice to a death notice where do you people get all this rubbish we have to look at and spit OUT.. [8D]

Bricks
Fair questions and answers dont you think?. I asked what has this company has got to sell if things get bad. Snoopy gave me his thoughts you give us yours. Remember they got out of Australia at a substantial loss squandering the money from property sales in NZ.
Think what can happen before or if it does is what investing is all about. macdunk

Placebo
04-09-2006, 03:03 PM
I recall once a friend of mine went to a conference in the UK where they were addressed by the Euro head of McDonalds. He got them off-guard when he asked delegates `can anyone tell me what business I am in'. The answer wasn't "burgers" as everyone thought, it was "property". Apparently throughout the world. McD's only has a proportion of its operations in franchises and controls the rest, including owning the shop and the building. In that way they are one of the biggest property owners in the US.

His message was `looks aren't always what they seem'; but it also makes good business sense. And Maccas haven't done too badly for themselves, have they?:)

BRICKS
04-09-2006, 03:54 PM
quote:Originally posted by duncan macgregor


quote:Originally posted by BRICKS

WELL boys we have gone from a profit down turn notice to a death notice where do you people get all this rubbish we have to look at and spit OUT.. [8D]

Bricks
Fair questions and answers don't you think?. I asked what has this company has got to sell if things get bad. Snoopy gave me his thoughts you give us yours. Remember they got out of Australia at a substantial loss squandering the money from property sales in NZ.
Think what can happen before or if it does is what investing is all about. macdunk


THE company is not going broke, it is not all out of Victoria still retains the best ones they are not dumping and will get out with money in hand when that happens we will have another look, Please stop repeating your self about who own`s what who cares I know one thing you own nothing in this COMPANY.. [8D]

Bling_Bling
04-09-2006, 04:32 PM
All I know is that Dominoes is kicking Pizza Hut's ass and the Star Bucks trend is gone. So the only thing left is KFC. Ouch !

BRICKS
04-09-2006, 04:51 PM
quote:Originally posted by Bling_Bling

All I know is that Dominoes is kicking Pizza Hut's ass and the Star Bucks trend is gone. So the only thing left is KFC. Ouch !


BLING stop eating at Dominoes and save your COMPANY.. [8D]

Bling_Bling
05-09-2006, 08:59 AM
Dom taste better and is much cheaper. I do admit i have to drink alot of water after eating Dom's pizzas. Must be the MSG they put in to make it tasty. Why would I want to drink at a cafe that i have to stand and wait for my coffee???

On a serious note, I dont really see any future in RBD unless they put in a new management that can add value. Maybe franchise Pizza Hut and Starbucks or simply cash it up by selling them off?

Pennywise
05-09-2006, 09:24 AM
quote:Originally posted by Bling_Bling

Dom taste better and is much cheaper. I do admit i have to drink alot of water after eating Dom's pizzas. Must be the MSG they put in to make it tasty. Why would I want to drink at a cafe that i have to stand and wait for my coffee???

On a serious note, I dont really see any future in RBD unless they put in a new management that can add value. Maybe franchise Pizza Hut and Starbucks or simply cash it up by selling them off?


barharaararafaararaahahahaha

best post of the year BB

leanmeanfightingmachine
05-09-2006, 11:37 AM
My commenst from early this year in feb page 2 of this thread.
Looks like i was right.


This group is the biggest dog on the stock exchange. I use to own and was luck enough to get out at 1.70$. There marketing is a joke, there service is terrible, they would be better to turn them into fast paced drive throughs and then they could get away with the pimple people and the bad service. Lets face it no one goes to KFC to sit in the restraunt part do they, unless they want to catch a disease. They are grot. This company will be 70c within 2yrs.

LMFM










quote:Originally posted by Pennywise


quote:Originally posted by Bling_Bling

Dom taste better and is much cheaper. I do admit i have to drink alot of water after eating Dom's pizzas. Must be the MSG they put in to make it tasty. Why would I want to drink at a cafe that i have to stand and wait for my coffee???

On a serious note, I dont really see any future in RBD unless they put in a new management that can add value. Maybe franchise Pizza Hut and Starbucks or simply cash it up by selling them off?


barharaararafaararaahahahaha

best post of the year BB

BRICKS
05-09-2006, 11:59 AM
quote:Originally posted by leanmeanfightingmachine

My commenst from early this year in feb page 2 of this thread.
Looks like i was right.


This group is the biggest dog on the stock exchange. I use to own and was luck enough to get out at 1.70$. There marketing is a joke, there service is terrible, they would be better to turn them into fast paced drive throughs and then they could get away with the pimple people and the bad service. Lets face it no one goes to KFC to sit in the restraunt part do they, unless they want to catch a disease. They are grot. This company will be 70c within 2yrs.

LMFM










quote:Originally posted by Pennywise


quote:Originally posted by Bling_Bling

Dom taste better and is much cheaper. I do admit i have to drink alot of water after eating Dom's pizzas. Must be the MSG they put in to make it tasty. Why would I want to drink at a cafe that i have to stand and wait for my coffee???

On a serious note, I dont really see any future in RBD unless they put in a new management that can add value. Maybe franchise Pizza Hut and Starbucks or simply cash it up by selling them off?


barharaararafaararaahahahaha

best post of the year BB



OTHER than that is every thing ALRIGHT.. [8D]

ratkin
05-09-2006, 06:30 PM
They ruined pizza hut by getting rid of all the sitdown ones.
That format works well overseas but they had to mess it up here.
The one at northlands in chch is usually so full yiou cant get a table, all the rest have been shut by the idiots

Bling_Bling
06-09-2006, 07:50 AM
Anyone have a valuation on this dog?

Pennywise
06-09-2006, 08:12 AM
quote:Originally posted by Bling_Bling

Anyone have a valuation on this dog?


"Maybe they could franchise PH and SB" BB

Barhararahahahafarhar:D

you don't need a new valuation mate, you need corrective surgery

croesus
06-09-2006, 08:25 AM
Good Point Ratkin don't think Ive been to Pizza Hut since they shut down the Restaurant in Hastings. Their local outlet doesnt appeal... big slabs of rubbish pizza and 2 litre bottles of coke...very state house.. and all their clients appear to be obese and unemployed,, , fat people are the new poor it seems.

BRICKS
06-09-2006, 08:55 AM
quote:Originally posted by Bling_Bling

Anyone have a valuation on this dog?


THE current price is $1.08.. and how is your DOG.. [8D]

Bling_Bling
06-09-2006, 01:55 PM
quote:Originally posted by Pennywise


quote:Originally posted by Bling_Bling

Anyone have a valuation on this dog?


"Maybe they could franchise PH and SB" BB

Barhararahahahafarhar:D

you don't need a new valuation mate, you need corrective surgery


Me broker says my wallet and me are too good looooking and dont require any surgery... hahahahohoho. [:p]

Bling_Bling
11-09-2006, 12:31 PM
Fast food chain a juicy takeover titbit

Monday September 11, 2006
By John Drinnan


Restaurant Brands is looking like a tasty target for takeovers after early renewal of its KFC and Pizza Hut franchises.

Signing the ten-year deal with franchisor Yum Brands, seven months before they were to run out, secures two brands that make up 92 per cent of the Restaurant Brands business.

This time last year the short time left on the old deal was said to be a factor in a takeover offer of $1.66 per share being withdrawn by private equity fund CVC Asia-Pacific.

Restaurant Brands' chairman Ted Van Arkle said the signing provided "certainty for the market".

But its brands - KFC, Starbucks and Pizza Hut - face tough times.

KFC's sales have improved after a $12 million refit of some stores and a new menu, but it will soon face competition from the Australian Red Rooster chain.

Starbucks, which delivers 8 per cent of the business, is growing slowly. Investors are waiting to hear what the company is going to do about the troubled Pizza Hutt chain. First and second quarter sales figures confirm that competition is hurting Pizza Hut.

Domino's Pizza last month highlighted New Zealand as one of its biggest regional growth markets, and the New Zealand franchisees for Burger King were negotiating to buy the award-winning Hell Pizza chain.

So Restaurant Brands - with the two oldest fast food outlets - has been fighting a rearguard action.

It has been extracting itself from its 2002 purchase of Pizza Hutt outlets in Victoria, Australia. Van Arkle declined to name who was buying, but said he was confident that the sale would be completed and the buyer revealed soon.

After a profit warning at the end of August that the pizzas were weighing down profits on both sides of the Tasman, the stock initially dropped 21 per cent from $1.19 to 94 cents. It rose the following week to $1.03 - still down 16 cents or 11 per cent.

Pacific Equity Partners had expressed an interest in buying Restaurant Brands but no one has come forward since the recent slide.

The half-year results in October would provide more "clarity" about the way ahead, Van Arkle said.

One analyst said there were rumours about potential for buyer interest amid investor dismay at the current price of the stock.

Domino's Pizza Australia and New Zealand chief executive Don Meij dismissed a suggestion that it might pick up some of the Pizza Hut stores in Victoria or New Zealand.

Domino's was a global competitor to Pizza Hut, and even if such a deal were viable, Yum Brands would never allow it to happen, he said.

winner69
11-09-2006, 01:30 PM
Good what a story in the press will do for the shareprice eh

Price had drifted down from the interest after the SST article a couple of weekends ago ... now The Herald prints much the same story and away she goes again

Wheres there smoke must be fire .... takeover bid next week? At what price?

BRICKS
11-09-2006, 02:10 PM
quote:Originally posted by winner69

Good what a story in the press will do for the share price eh

Price had drifted down from the interest after the SST article a couple of weekends ago ... now The Herald prints much the same story and away she goes again

Wheres there smoke must be fire .... takeover bid next week? At what price?


YOU should have jumped in by NOW.. [8D]

Snow Leopard
14-09-2006, 07:50 AM
This article (http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10401186) suggests several possible options in the world of Pizza.
Read it and make you own guess as to what may actually happen or not.

Phaedrus
14-09-2006, 08:28 AM
http://img.villagephotos.com/p/2006-2/1151662/RBD914001.gif

Pennywise
14-09-2006, 08:44 AM
saw an add last night for a new chicken burger at KFC

the reason I remember it is because we both said...$6!!

was that $6 for the new burger?

what a joke, this place is getting more expensive than Tokyo


either KFC makes alot of profit on it or no one buys it and the campaign wastes lots of TV $$$

seemed bloody expensive to me for a chicken burger

warthog
14-09-2006, 08:57 AM
quote:Originally posted by Pennywise

saw an add last night for a new chicken burger at KFC

the reason I remember it is because we both said...$6!!

was that $6 for the new burger?

what a joke, this place is getting more expensive than Tokyo


either KFC makes alot of profit on it or no one buys it and the campaign wastes lots of TV $$$

seemed bloody expensive to me for a chicken burger


Therein lies a clue (maybe).

Burger Fuel charges the hog - on occasion - around double this (i.e. $12) for a decent burger.

So it's all up to where in the market they are heading.

So where are they heading? Up? As in, "up market"?

Will a KFC bruger ever be "up maket"? - this old hog will stick with Burger Fuel thank you ... and soon will increasing numbers of Kiwis and Aussies ...

Pennywise
16-09-2006, 12:45 PM
Yum! Brands completes buyout of UK Pizza Hut chains

(BSIMagazine.com, 12 September 2006)
by Eric Schroeder

RELATED ARTICLE

Yum! Brands, Inc., Louisville, Kentucky, USA, has completed the purchase of the remaining 50% interest of its 541 Pizza Huts in the United Kingdom from Whitbread P.L.C. for US$184 million (€144 million) plus the assumption of US$25 million (€19.6 million) in certain debt and liabilities. Yum! Brands and Whitbread are longtime joint venture partners.

The transaction was first announced on 31 July.

Yum! Brands Inc. is the world’s largest restaurant company in terms of system restaurants with more than 34,000 restaurants, which includes more than 2,000 licensed restaurants, in more than 100 countries and territories.

BRICKS
16-09-2006, 01:15 PM
quote:Originally posted by Pennywise

Yum! Brands completes buyout of UK Pizza Hut chains

(BSIMagazine.com, 12 September 2006)
by Eric Schroeder

RELATED ARTICLE

Yum! Brands, Inc., Louisville, Kentucky, USA, has completed the purchase of the remaining 50% interest of its 541 Pizza Huts in the United Kingdom from Whitbread P.L.C. for US$184 million (€144 million) plus the assumption of US$25 million (€19.6 million) in certain debt and liabilities. Yum! Brands and Whitbread are longtime joint venture partners.

The transaction was first announced on 31 July.

Yum! Brands Inc. is the world’s largest restaurant company in terms of system restaurants with more than 34,000 restaurants, which includes more than 2,000 licensed restaurants, in more than 100 countries and territories.



RIGHT hope they BUY NZ Pizza Hut from RBD,, So we could start up a whole new chain of Fish & Chip Shops [Mr Chip of co****] and make a KILLING.. [8D]

winner69
19-09-2006, 10:56 AM
The decline at Pizza Hut is quite dramatic

Continued difficult trading conditions and competitive pressures have further
impacted the Pizza Hut business in New Zealand. The brand produced total
sales for the quarter of $24.9 million, down 14.7% on prior year and 16.5% on
a same store basis.


Certain irony that PH Victoria sales are up

BRICKS
19-09-2006, 03:43 PM
quote:Originally posted by winner69

The decline at Pizza Hut is quite dramatic

Continued difficult trading conditions and competitive pressures have further
impacted the Pizza Hut business in New Zealand. The brand produced total
sales for the quarter of $24.9 million, down 14.7% on prior year and 16.5% on
a same store basis.

SO much for that , WELL the KIWI loves KFC $54 million up 4.6% & Starbucks up 13.1% great eat & drink what a BIZ and they will make 3million PROFIT cop a DIV a cheap BUY.. [8D]


Certain irony that PH Victoria sales are up

Happy Camper
19-09-2006, 07:37 PM
Were the Barmy Army that keen on pizza?

This Happy Camper wouldn't mind betting that a good number of them chose to stick with the brands they knew whilst touring our fair country last year in pursuit of an elusive Lions victory.

Cheers

BRICKS
20-09-2006, 08:50 AM
quote:Originally posted by Happy Camper

Were the Barmy Army that keen on pizza?

This Happy Camper wouldn't mind betting that a good number of them chose to stick with the brands they knew whilst touring our fair country last year in pursuit of an elusive Lions victory.

Cheers


Dear Happy over the years have noticed that KIWI & Ozzie have never been great pizza eaters, and was a very bad move into AU that's why they where selling same so as water finds its own level so will Pizza the other two produces are great and KIWI loves KFC.. [8D]

Snow Leopard
20-09-2006, 08:58 AM
quote:Originally posted by BRICKS

Dear Happy over the years have noticed that KIWI & Ozzie have never been great pizza eaters, and was a very bad move into AU that's why they where selling same so as water finds its own level so will Pizza the other two produces are great and KIWI loves KFC.. [8D]

Dear Happy over the years I have noticed that kiwis & Ozzies have never been great pizza eaters. It was a very bad move into AU, that's why they are selling same. So, as water finds its own level, so will Pizza. The other two products are great and Kiwis love KFC.

Suddenly all becomes clear [8D]

BRICKS
20-09-2006, 10:10 AM
quote:Originally posted by Paper Tiger


quote:Originally posted by BRICKS

Dear Happy over the years have noticed that KIWI & Ozzie have never been great pizza eaters, and was a very bad move into AU that's why they where selling same so as water finds its own level so will Pizza the other two produces are great and KIWI loves KFC.. [8D]

Dear Happy over the years I have noticed that kiwis & Ozzies have never been great pizza eaters. It was a very bad move into AU, that's why they are selling same. So, as water finds its own level, so will Pizza. The other two products are great and Kiwis love KFC.

Suddenly all becomes clear [8D]


Dear Tiger for you nothing is so SIMPLE.. [8D]

Bling_Bling
20-09-2006, 03:56 PM
They got the wrong people running the show.

leanmeanfightingmachine
20-09-2006, 10:24 PM
Ok. Vicky is hopeless slag who should be fired.
The marketing department has a campaign with a dog in it, made in Aussie. No one wants a dog near their Pizza. Trust me i am a adman guru. They also should be fired.

What are pack of drop kicks. Told the lot of you. And i will tell you again, get out at 1.09 as it is not going to get any better. Worse.

I reakon they will be the next Feltex.

Leanmeanfightingmachine.







quote:Originally posted by Bling_Bling

They got the wrong people running the show.

leanmeanfightingmachine
20-09-2006, 10:26 PM
And i can say this because i was right the last two times. Back thread.

You heard it here fellas.

Leighton.



quote:Originally posted by leanmeanfightingmachine

Ok. Vicky is hopeless slag who should be fired.
The marketing department has a campaign with a dog in it, made in Aussie. No one wants a dog near their Pizza. Trust me i am a adman guru. They also should be fired.

What are pack of drop kicks. Told the lot of you. And i will tell you again, get out at 1.09 as it is not going to get any better. Worse.

I reakon they will be the next Feltex.

Leanmeanfightingmachine.







quote:Originally posted by Bling_Bling

They got the wrong people running the show.

leanmeanfightingmachine
20-09-2006, 10:30 PM
....Leighton Simons a guy i meet their painted are pretty bad picture about two years ago, so looks like he was right.

Glad i got out 2yrs back.

LMFM






quote:Originally posted by leanmeanfightingmachine

And i can say this because i was right the last two times. Back thread.

You heard it here fellas.

Leighton.



quote:Originally posted by leanmeanfightingmachine

Ok. Vicky is hopeless slag who should be fired.
The marketing department has a campaign with a dog in it, made in Aussie. No one wants a dog near their Pizza. Trust me i am a adman guru. They also should be fired.

What are pack of drop kicks. Told the lot of you. And i will tell you again, get out at 1.09 as it is not going to get any better. Worse.

I reakon they will be the next Feltex.

Leanmeanfightingmachine.







quote:Originally posted by Bling_Bling

They got the wrong people running the show.

Bling_Bling
21-09-2006, 05:57 AM
I dont think it is another feltex. Their debt level is not as bad. I do think that they need a management team that is more aggressive and with creativity. The competition is eating RBD alive and it is gonna get nastier as the competitor grows stronger. There must be more to RBD than just Pizza Hut, Starbucks and KFC ! WTF are they doing in the officer all day?

BRICKS
21-09-2006, 08:35 AM
[quote]Originally posted by Bling_Bling

They got the wrong people running the show.
[/quote ]

WE could put you in CHARGE.. [8D]

The BOWMAN
21-09-2006, 09:06 AM
quote:Originally posted by BRICKS

[quote]Originally posted by Bling_Bling

They got the wrong people running the show.
[/quote ]

WE could put you in CHARGE.. [8D]


No you couldn't.

Bling_Bling
21-09-2006, 09:22 AM
I would eat all the food [:p][xx(]

rugila
12-10-2006, 11:00 AM
Getting lower and lower.
Profit falling.
Dividend (usually good to date) falling.
Where next?
Sinking?

marinesalvor
12-10-2006, 11:37 AM
dont try Rugila - if you try and say anything negative about RBD - Snoopy and his mates will arrive and make impassioned pleas about how amazing the company is, always ignoring feedback on actually how bad RBD are at service and delivery, which is why they arent successful

duncan macgregor
12-10-2006, 12:03 PM
quote:Originally posted by marinesalvor

dont try Rugila - if you try and say anything negative about RBD - Snoopy and his mates will arrive and make impassioned pleas about how amazing the company is, always ignoring feedback on actually how bad RBD are at service and delivery, which is why they arent successful
SNOOPY at least is big enough to let you know exactly what companies he has invested in. We have over the years had numerous heated debates on this company amongst others. Snoopy leaves himself open as i do by informing you what he holds, when he buys it, and why.
Before you have the right to say he is not successfull, let us know in advance of what you intend to hold, and why. Incidentely guys i found the place last weekend that makes the best pizza in nz.
WAIPU pizza parlour, thin crust, great topping, just like the wogs make it. Log into bongoes site he still has a lot to say about RBD. macdunk

marinesalvor
12-10-2006, 01:09 PM
Macdunk - I think its pretty obvious from my posts what I have held and am holding(and taken much ribbing for) eg FTB, MSL, IMU, NEU
its attacks like snoopys and yours that make people not bother posting at all.

Snow Leopard
12-10-2006, 01:14 PM
quote:Originally posted by Paper Tiger at 6:00:33 01/09/2006

All these numbers are normalised to exclude any one-offs.

With this $2.5m to $3.0m guidance for this half year an optimistic guess for the full year would be an IFRS NPAT in the range $7.0m to $8.0m? (Equivalent for 2006 was $12.4m)
Assume an EPS of 7.5cps
I think they should bite the bullet, cut the divvy to 1.5cps this half and concentrate on sorting this company out with the extra retained cash.
If they do that then I will consider buying some.

2.5cps declared.
Off the hook, luckily ;)

duncan macgregor
12-10-2006, 01:25 PM
quote:Originally posted by marinesalvor

Macdunk - I think its pretty obvious from my posts what I have held and am holding(and taken much ribbing for) eg FTB, MSL, IMU, NEU
its attacks like snoopys and yours that make people not bother posting at all.
MARINESALVOR, I have no intention on attacking anyone on the forum. I only mentioned that SNOOPY is one of the few big enough to show us what he holds then says why. I can see from what you are holding or were holding, that you and SNOOPY might have benefitted from attack in the past, if you had paid attention. Have a go at me and my lot sometime, i can do with a stirr up. Your old mate and harshest critic macdunk.
Discl, TPW HQP, POT, BCA, NZO, PGW. traded POT,NZO,HQP,PGW.

Snow Leopard
12-10-2006, 01:31 PM
While on this thread I will just mention that when I gave thought to investing this one I thought back over the number of times I have actually been in a KFC, Pizza Hut and Starbucks in New Zealand and the answer came out at 4.
1) Pizza Hut, Queenstown, 1992. Nice meal but a different format from the modern PH's
2) KFC, Thames, 1998. Bought a cup of coffee, the rest of Thames was shut for the night.
3) Pizza Hut, Pakuranga, 2001. An utterly terrible experience.
4) Pizza Hut, Taupo, 2001. Proof that the Pakuranga experience was not unique.

The issue for me is that there is always somewhere better (probably even in Thames these days) than one of these places, such as the excellent pizza place in Waipu which MacDunk alluded to. It is worth the deviation from SH1.

Halebop
12-10-2006, 02:54 PM
quote:Originally posted by duncan macgregor

WAIPU pizza parlour, thin crust, great topping, just like the wogs make it. Log into bongoes site he still has a lot to say about RBD. macdunk

The "Waipu Pizza Parlour" is called Pizza Barn. I find myself temporarily living just up the road from it. Excellent place.

Disagree with you Duncan that there might be any merit in disclosing holdings:

1. The poster could be lying about the holding
2. There is no form of proof as to the identiy of the poster and the number of share they own
3. Not holding a share in a company doesn't preclude being able to make a comment about it, in the negative or positive.
4. If holding shares, making the disclosure and making positive comments were a reasonable yardstick of outperformance, RBD and any number of other "bottom drawer" investments would be going gangbusters.

patsy
12-10-2006, 02:58 PM
PH's product is OK relative to those of other companies competing on price (e.g., Domino's).

The real problem is the people they employ - especially, their overall attitude and demeanour. I am unsure if the problem is that RBD pays peanuts (therefore attracting monkeys) or that their brand attract the wrong type of worker (e.g., the casual overseas student who wants to work in NZ but who culturally doesn't understand what good service is).

What is clear is that if you go a Saturday evening to a PH restaurant, you're most likely going to witness an absolute dirtiest level. It seems that, with their all-you-can-eat offer, they try to target families and they believe that families tolerate premises more suited as pigsty. RBD are the ones responsible for their own demise.

minimoke
12-10-2006, 03:17 PM
quote:Originally posted by patsy

.... they try to target families and they believe that families tolerate premises more suited as pigsty.

Can’t see a problem with that. A person would have to be a bit of a pig to want “all you can eat” pizza, so you’d be right at home.

rugila
12-10-2006, 04:13 PM
Hey there MS

Maybe just something sounds like maybe related to your line of business.

Like on a calm languid day off the coast of San Salvador a frantic Zild voice burst over the VHF "Mayday, Mayday, I'm sinking, I'm sinking".

After some delay a laid-back voice responded "Hello dere Mayday. This is Easy Come Easy Go. What are you sinking about?"

So I guess I was just sinking about how far "down there somewhere" is the answer, the pirate treasure, or whatever the rewards if any in this share business?

Phaedrus
12-10-2006, 05:00 PM
The aim is to share ideas and try to learn something from other peoples successes and failures.

For example, here are some of one poster's comments - from these you could learn :-

(1) Not to average down.
(2) Not to buy downtrending stocks.
(3) Not to add to losing positions.
(4) Patience is not always a virtue.

Or, alternatively, you could learn nothing at all!

http://h1.ripway.com/Phaedrus/RBD1012001.gif

mothership
12-10-2006, 05:16 PM
Great post Phaedrus - may print it out to remind me in the future! That wasn't a Feltex chart was it? And I won't hazard a guess as to who you were quoting!

ratkin
12-10-2006, 06:33 PM
RBDs brands do look rather dated these days.

Ten years ago there was no subway, indian restaurants , hundreds of pizza places, hardly any ethnic restaurants at all.

Now subway , tandoori palace, hell , spagalinis, dominos etc etc etc hundreds of independents all selling food seen as more healthy than KFC

The price would of fallen a while ago if it wasnt for certain newpaper journalists giving the impression that suiters were queuing up to takeover these brands

Snoopy
12-10-2006, 06:47 PM
quote:Originally posted by Phaedrus

The aim is to share ideas and try to learn something from other peoples successes and failures.

For example, here are some of one poster's comments - from these you could learn :-

(1) Not to average down.
(2) Not to buy downtrending stocks.
(3) Not to add to losing positions.
(4) Patience is not always a virtue.

Or, alternatively, you could learn nothing at all!


'Bought more today', 'I added to my holding today', 'Added to my stake today', 'Couldn't resist adding a few more', 'I have the patience to simply wait while collecting my well above term deposit rate in the meantime', 'Buying more today'.

Wow! You have to admire that guy's detail of disclosure and tenacity. It is nice to know I have a kindrid spirit out there. In a parallel universe these are the sort of utterances, I could have even made myself! So time to support this 'anonymous guy' with some counterfoil comments.

(1) Not to average down.

Being a foundation shareholder, I first bought into RBD at an equivalent price of $2. So if I hadn't averaged across...

(I don't agree with the term 'averaging down' because if you are doing that you have already lost money. You can only buy more shares at 'present day price'. All shares that you have bought in the past are also only readily tradeable at 'present day price'. There is no choice. So investments can only be judged on whether that share is worth investing in 'today' at present day prices. Thus it is only *ever* possible to 'average across' by buying at present day prices.)

....then I would still have an average entry price of $2, not $1.30! Clearly I would be worse off if I hadn't 'averaged across'.

(2) Not to buy downtrending stocks.

If you ignore the first purchase made during a takeover offer, where generally different buy/sell strategies apply, all the other purchases were actually made at established support levels of $1.25 and $1.30. Certainly not in a medium term downtrend! Furthermore subsequent to these purchases, the share price held at these levels for around nine months. Thus you can hardly describe these purchases as being 'made in a downtrend'. Finally the very last purchase shown, at 96c, is below closing market value, despite the share price fall today. Thus you can hardly say that was a bad decision!

(3) Not to add to losing positions.
(4) Patience is not always a virtue.

I didn't hear the final whistle blow! No doubt RBD is going through a difficult period. Let's wait until 'full time' before we judge the final result shall we :-). It is still 'game on' as far as I am concerned.

SNOOPY

discl: hold RBD

ratkin
12-10-2006, 06:52 PM
I didn't hear the final whistle blow! No doubt RBD is going through a difficult period. Let's wait until 'full time' before we judge the final result shall we :-). It is still 'game on' as far as I am concerned.

SNOOPY

I agree with this bit. Cant expect P to take that into account though , he only deals with hindsight

Snoopy
12-10-2006, 08:23 PM
quote:Originally posted by marinesalvor

dont try Rugila - if you try and say anything negative about RBD - Snoopy and his mates will arrive and make impassioned pleas about how amazing the company is,


That must be my cue to 'dial up some impassion'. :-)

First off I'm not going to pretend this company is amazing. Plainly it isn't. But I don't have to invest in amazing companies to be a successful investor, provided those companies I *do* invest in are cheap enough to start with.

Today's result was the confirmation of a bad result that had been well signalled. I did note that RBD underpromised and overdelivered for the first time! Perhaps that is the influence of new chairman Van Arkel? Anyway, long may that underpromising/overdelivering reporting style continue. I was getting sick of looking at the RBD 'positive headline sales announcement' always knowing that I would have to dig a bit to find out how bad was the latest deterioration in real profitability!

The reduction in interim dividend from 4.5cps to 2.5cps is about what I expected. I am expecting a similar reduction in final dividend down from 5.5c to 3.0c. At a share price of $1, that gives a gross dividend yield of 8.2%, a reduced figure that nevertheless still compares favourably with other 'income' shares out there.

But RBD is not about 'this year', FY2007. To look at the potential dividend yield for FY2008 and beyond, you need to look at the cashflow. Operating cashflow is $9m per annum, which equates to 9.3cps. Even an FY2008 total dividend of 8cps would mean the new 'clean' Van Arkel RBD is trading on an earnings yield of 12%, which is pretty attractive. I'm going to be keeping a close eye on debt levels as the store redevelopment program rolls out, and the exit costs from Australia are crystallized. But from where I sit now, holding on to this investment at $1 is an easy decision to make.


quote:
always ignoring feedback on actually how bad RBD are at service and delivery, which is why they aren't successful.


This 'aren't successful' bit I can't let go by, as it just isn't true. RBD clearly are successful as they have declared a profit every year since listing. What can't be denied is that RBD have been more successful in the past than they are now. But even if the current six monthly operating profit is annualised at $6.2m for the year, that is still an ROE of 13.7%. Even 13.7% is a relatively efficient use of shareholder funds that many other 'respectable' companies would die to be able to match.

The reason why some people perceive RBD as 'not successful' can be likened to the view of the parent of the A+ student who starts secondary school only to be distracted by girls and sport. By failing to keep his eye on the academic ball, our A+ student (1996 ROE 50%) becomes a B student (2006 ROE 23%). Yes he could have done better. Yes he may need a stern talking to occasionally. But don't write him off. He is still a B student - still well above average, still successful!

SNOOPY

discl: hold RBD

COLIN
12-10-2006, 09:09 PM
Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"? Believe me when I say that it has taken me many years to acknowledge the absolute folly of clinging to, or buying into, weakening shares. Learn to cut your losses - it is hard to do, I know - and buy into strength.
I'm sure you want your investing activities to enhance your net wealth!

I know this posting will incur your wrath, but I do want to help you!

DISCLOSURE: I bought RBD at $2-20 in the IPO - in 1997 it was! - and sold at $1-27 in 2003.

Snoopy
12-10-2006, 11:12 PM
quote:Originally posted by COLIN

Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"?


Thanks for the concern Colin, but really I am doing just fine. I'm not quite sure what the fixation with RBD is all about on this forum.
But keep in mind it is one of only eight shares I have in my NZX portfolio (the others being TEL, LPC, SKC, CEN, PGW, TUA (just purchased) and SCT).

You also need to appreciate that as a contrarian investor I tend to look for losers that have a capacity to recover. Uptrend following is an anathema to me as such shares I generally regard as too expensive, and susceptable to the 'torpedo shareprice effect' from earnings disappointments in the future. Contrast this with RBD where the profit halved today yet the shares dropped a mere 2c (2%).

TEL was hit by overnight government regulation, and such hits cannot be predicted with any certainty. I still hold the view that without LLU/naked DSL intervention, TEL was a steal at $6.

It is actually *because* of the problems encountered with RBD and TEL that they have become so relatively safe as investments. Perhaps that is easier to appreciate if you don't look in your rear view investment mirror?


quote:
Believe me when I say that it has taken me many years to acknowledge the absolute folly of clinging to, or buying into, weakening shares. Learn to cut your losses - it is hard to do, I know - and buy into strength.
I'm sure you want your investing activities to enhance your net wealth!

I know this posting will incur your wrath, but I do want to help you!

DISCLOSURE: I bought RBD at $2-20 in the IPO - in 1997 it was! - and sold at $1-27 in 2003.


So you got out of RBD, just as I was getting in (in a significant way - actually it was 2005 when I bought most of my RBD shares, but it makes a good story)! I may have even bought your shares off you Colin! Such is the lot of the contrarian investor.

SNOOPY

duncan macgregor
13-10-2006, 07:59 AM
SNOOPY your company selections TEL,LPC,SKC,CEN,PGW,TUA,SCT,RBD, tells me that your method of selection leaves a lot to be desired. You have more dogs than the average kennel club. You are way behind what the monkey and dart board might acheive. How you can keep defending some of those dogs is beyond me. We all make mistakes, and hopefully learn, you make them and i learn. I owe you lot you turned me into a TA investor, with a decent sell system. Bongo still has a lot to say about RBD if you look him up. MACDUNK

COLIN
13-10-2006, 09:58 AM
quote:Originally posted by Snoopy


quote:Originally posted by COLIN

Snoopy, my dear friend. While I admire your tenacity, your optimism and the sheer hard work you put into detailed analysis to justify your investing/holding decisions, I just shake my head in disbelief that you could still describe RBD and TEL as "good investments". Its not rocket science: Take the present price, add the net dividends you have received, and deduct the purchase price (ignore the decline in the purchasing power of those dollars you outlaid, for the purposes of this exercise). Then compare that net DEBIT figure with the growth in any of the NZX indices over the same period. How on earth could you call that "success"?


Thanks for the concern Colin, but really I am doing just fine. I'm not quite sure what the fixation with RBD is all about on this forum.
But keep in mind it is one of only eight shares I have in my NZX portfolio (the others being TEL, LPC, SKC, CEN, PGW, TUA (just purchased) and SCT).

You also need to appreciate that as a contrarian investor I tend to look for losers that have a capacity to recover.

SNOOPY







Good on you, Snoopy, for not coming back with all guns blazing.
I must get back to real work, but I just wanted to say that I, too, look for shares that have the capacity to recover, but I wait until there is clear evidence of an upturn in their fortunes and share price. For instance, I was able to make significant gains on the upswings of AMP, TWR, and BCA.
Some of the most valuable contributions to this forum have been made by our friend Phaedrus - he and his charts are worth taking notice of. None of us will get it right all the time, but its the overall result that counts. (As I have admitted on the FTX thread, at one stage I did think I would be smart and hop on the "salvation" wagon there, when Godfrey Hirst first bought in, but I exited as soon as I realised that they had walked away, and I also tried to warn others to bail out as doom approached but, to my great disbelief, some apparently seasoned investors were still trying to "average down" when the bailiffs were knocking on the door.)

Snoopy
13-10-2006, 12:05 PM
quote:Originally posted by COLIN


Good on you, Snoopy, for not coming back with all guns blazing.
I must get back to real work, but I just wanted to say that I, too, look for shares that have the capacity to recover, but I wait until there is clear evidence of an upturn in their fortunes and share price. For instance, I was able to make significant gains on the upswings of AMP, TWR, and BCA.


I guess it all depends on what you call 'evidence' Colin.

1/ New Chairman,
2/ New reporting style,
3/ Recognition of the fact that new buildings won't do anything on their own- there is a need to upskill staff as well.
4/ Taking the lead among the fast food brands in moving wages (thus being a proactive rather than a reactive employer).

The evidence that all this is working is the improved earnings from KFC despite the store upgrade closure periods.

Of course none of this has been reflected in the RBD share price because of the Pizza Hut problems, both in NZ and Australia. But don't let that share price trend blind you to the evidence that is already out there Colin!

I'm generally a risk averse sharemarket investor, and that means buying with a large margin of safety. Buying on the premise of a chart confirmation will generally reduce your margin of safety. Particularly so with a lower growth company like RBD.

Good on you with your success in AMP and Tower though Colin. I regard insurance companies as outside my circle of competance at present so don't invest directly in that sector myself.

SNOOPY

BRICKS
13-10-2006, 02:30 PM
WHEN your on the bottom floor you dont have to much room to FALL.. [8D]

duncan macgregor
13-10-2006, 06:28 PM
quote:Originally posted by BRICKS

WHEN your on the bottom floor you dont have to much room to FALL.. [8D]
The SNOOPY of old our hero of the past should get with it and buy a parachute or eventually will fall pray to the evil market. Absolutely no requirement to go down fast pull the cord then select your landing site. macdunk

Paddy
14-10-2006, 03:45 PM
Snoopy, do you really think RBD will take the lead as a proactive employer in either training or wage rates?

My experience (ownership & management) in this industry has them stuck in a 'cut labour costs and be damned with growth through quality & service' rut - they have been this way for ever

George
15-10-2006, 06:37 AM
Am looking to trade stocks now with TA compared to simply using my gut - may be better for my gut too. Hoping to get expert comment on my comments.
Possible double bottom with top of the range at 107 - a move of 10-12c which does not appear a good risk/reward scenario.
Also comment on MHI and PGC thread.
George

BRICKS
15-10-2006, 08:25 AM
quote:Originally posted by George

Am looking to trade stocks now with TA compared to simply using my gut - may be better for my gut too. Hoping to get expert comment on my comments.
Possible double bottom with top of the range at 107 - a move of 10-12c which does not appear a good risk/reward scenario.
Also comment on MHI and PGC thread.
George


WHATS is "TA"

George
15-10-2006, 08:56 AM
A senior member doesn't know TA is Technical Analysis - maybe I'm wasting my time???

Lizard
15-10-2006, 09:41 AM
Keep going George. Putting your thoughts on the record is a good way to test ideas - nothing like a dose of embarrassment when something doesn't work to make you ditch any losing strategies! Unfortunately, the nature of forums is that you are far less likely to get positive reinforcement for the ones you get right. For that, you have to rely on the positive feedback from your accountant.

BRICKS
15-10-2006, 10:22 AM
quote:Originally posted by George

A senior member doesn't know TA is Technical Analysis - maybe I'm wasting my time???


DEAR George your Right YOU are wasting your time do your own "TA" THING.. [8D]

COLIN
15-10-2006, 03:33 PM
quote:Originally posted by BRICKS


quote:Originally posted by George

A senior member doesn't know TA is Technical Analysis - maybe I'm wasting my time???


DEAR George your Right YOU are wasting your time do your own "TA" THING.. [8D]


Please can we have less abuse? Thank you.

BRICKS
15-10-2006, 03:52 PM
quote:Originally posted by COLIN


quote:Originally posted by BRICKS


quote:Originally posted by George

A senior member doesn't know TA is Technical Analysis - maybe I'm wasting my time???


DEAR George your Right YOU are wasting your time do your own "TA" THING.. [8D]


Please can we have less abuse? Thank you.


DEAR Colin who are you talking to ME or GEORGE,, [8D]

Phaedrus
15-10-2006, 08:11 PM
George, RBD not worth buying into at the moment? That's my opinion as well. Too risky.

BRICKS
16-10-2006, 07:46 AM
quote:Originally posted by Phaedrus

George, RBD not worth buying into at the moment? That's my opinion as well. Too risky.


DEAR Phaedrus thanks for your opinion again and AGAIN.. [8D]

winner69
13-11-2006, 06:01 PM
Half year report out in all its glory .... confirms Pizza Hut losing money .... ie running at a loss .... margins even thinner than a crusty pizza

Starbucks at best breaking even


Nothings really changed with the operations would put you off buying RBD at the moment .....but possible other reasons could come into play to make a buck

lager
14-11-2006, 11:09 AM
Good potential for a takeover but you will never know what's gonna happen in future.

http://subs.nzherald.co.nz/organisation/story.cfm?o_id=173&ObjectID=10400684

Bling_Bling
14-11-2006, 01:53 PM
If Bling had $1 for every potential T/O rumours and offers that did not coem to fruit, Bling will be a wealthy man. :D Well, wealthier than wealthy [:p][:0]

lager
14-11-2006, 02:02 PM
Buying shares is a form of gambling. It's also un-predictable.

Bling_Bling
14-11-2006, 02:09 PM
quote:Originally posted by lager

Buying shares is a form of gambling. It's also un-predictable.


Not quite. In the short term the stock price can move like a tidal wave, but the fundamentals always gets realised in the long term. If not, it would be a takeover target.

BRICKS
15-11-2006, 08:15 AM
WELL keep up all this STUPID talk again about nothing but RBD is not about to shut its doors just yet,, again its on the ground always a good time to BUY the only direction is UP.. [8D]

Bling_Bling
15-11-2006, 08:44 AM
I dont really see any potential for a turning around RBD unless they introduce new and exciting brands to NZ. Dominos is eating Pizza Hut for breakfast. The coffee industry is very competitive. KFC is the only gem in RBD's portfolio, cos Red Roast is no competition.

marinesalvor
15-11-2006, 09:01 AM
Red Rooster, Nandos and Oporto are all eroding KFC market share - especially as people want healthier chicken...

lager
15-11-2006, 10:19 AM
Red Rooster, Nandos and Oporto are all different variety of ways chicken are cook. They are not has healthy as one would expect. It's the way we eat, moderation is the key.

BRICKS
15-11-2006, 10:34 AM
BRING on all the hate talk about RBD because all the brands mentioned none of you can invest in same,, so yap about the one you CAN.. [8D]

lager
15-11-2006, 11:07 AM
I have nothing against RBD. It is a good buy with great potential for a takeover.

BRICKS
15-11-2006, 11:10 AM
quote:Originally posted by lager

I have nothing against RBD. It is a good buy with great potential for a takeover.


WELL BUY some note the price is up TODAY.. [8D]

lager
15-11-2006, 11:59 AM
Got 24K, is that good enough.

BRICKS
15-11-2006, 01:02 PM
quote:Originally posted by lager

Got 24K, is that good enough.


GOOD LUCK .. [8D]

Happy Camper
15-11-2006, 10:54 PM
This Happy Camper expects to see KFC advertised whilst travelling through cyberspace, but this is taking it to the next level (http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10410854).

Cheers

BRICKS
16-11-2006, 08:38 AM
quote:Originally posted by Happy Camper

This Happy Camper expects to see KFC advertised whilst travelling through cyberspace, but this is taking it to the next level (http://www.nzherald.co.nz/section/story.cfm?c_id=3&objectid=10410854).

Cheers


GOOD ONE.. [8D]

lager
17-11-2006, 08:33 AM
Wow!, that is a great advert.
Let's hope they make one in NZ too.

BRICKS
29-11-2006, 07:22 PM
TODAY we visited the NZX new HQ building in WELLINGTON and to NO surprise its as bare as a B** for the public just two small meeting rooms and you can sit and watch CNN and talk to your self NO one worry you,, Reminds me of RBD NO one talks about it except to tell you its crap food and the till still jingles and you can BUY for 92 CENTS.. [8D]

lager
30-11-2006, 03:33 PM
Thanks Bricks, my 24K shares was a good investment.
At time of writing it is trading at $1.02.

biker
30-11-2006, 07:04 PM
This would have to be good news,and I like the sound of the last two paragraphs.The Victoria sales should be a nice catalyst.

RBD
30/11/2006
GENERAL

REL: 1430 HRS Restaurant Brands New Zealand Limited

GENERAL: RBD: RESTAURANT BRANDS ANNOUNCES EXIT OF PIZZA HUT VICTORIA

30 November 2006
NZX

RESTAURANT BRANDS ANNOUNCES EXIT OF PIZZA HUT VICTORIA
Market update - approaches received

Restaurant Brands today announced that it had reached agreement with its
franchisor Yum to accelerate the company's sale or exit from all of its 50
Pizza Hut Victoria stores. This is expected to be achieved by the end of the
current financial year (February 2007).

The company said it had sale and purchase agreements for 35 stores, 14 of
which will be transferred to new owners in the next few days. In addition
the company has agreed with Yum to assist in the company's exit of 10 stores
early. Expressions of interest from prospective purchasers have been
received for the remaining 5 stores, which are also expected to be sold by
financial year end.

The total cost of the full exit from Victoria is expected to be NZ$9.0
million which includes the $2.6 million write-down of assets taken at the
half year. The balance of $6.4 million will be taken up in the second half
results and includes the write-off of $4.1 million of residual asset values
(as advised to the market at half year) plus the sale and closure costs of
stores, fees payable to Yum and provision for outstanding lease liabilities.
The net cash cost is $1.3 million. As a result of the decision to exit this
business, Pizza Hut Victoria was classified as a discontinued operation at
the half year. The full exit will improve Restaurant Brands operating
earnings by approximately $3.0 million in the 2007/08 year.

"We are pleased to have reached an agreement with Yum that allows us to exit
this business more than a year before our franchise agreements end. This
allows us to concentrate our efforts fully on the transformation of KFC,
growth of Starbucks Coffee, and revitalization of Pizza Hut in New Zealand,"
said Restaurant Brands Chief Executive Vicki Salmon.

The company also said that a number of parties have approached the Board of
Directors and expressed interest in their potential participation in the
future of the company.

Restaurant Brands is responding to these approaches and will keep the market
updated of any developments as appropriate.
- ends -

lager
01-12-2006, 08:41 AM
Thanks biker, the last 2 paragraph could signal a potential takeover.

Snoopy
01-12-2006, 10:53 AM
quote:Originally posted by biker


The full exit will improve Restaurant Brands operating
earnings by approximately $3.0 million in the 2007/08 year.


First half profit excluding non trading items was $3.1m. If RBD can match that in the second half we are looking at a normalised profit of $6.2m for the year.

Operating earnings still require interest and tax to come off them. So RBD is projecting total earnings for FY2008 to be $8m or so (8.2cps)???

Not really that inspiring. Until we get some certainty around the costs of PH and KFC franchise renewal, and that the Pizza Hut business has stabalized, I would say $1.30 is fair value. That gives a gross yield of 9%, based on an annual dividend of 8cps. Discount that by 10% because these results are a year away and we are looking at a 'fair share price' of $1.17.

Personally I always like to buy below fair value, so could I be tempted at $1.10? Possibly if I didn't hold a good whack of these shares already.


quote:
The company also said that a number of parties have approached the Board of Directors and expressed interest in their potential participation in the future of the company.

Restaurant Brands is responding to these approaches and will keep the market updated of any developments as appropriate.


Not quite sure what this all means. The Hell Pizza boys given a management contract for operating Pizza Hut? Some kind of partial private equity takeover? In any event I think it would be a great shame if the result was RBD becoming delisted.

SNOOPY

lager
01-12-2006, 02:00 PM
More good news for RBD.

http://www.stuff.co.nz/stuff/0,2106,3884205a13,00.html

biker
12-12-2006, 10:33 AM
Not too much bad news here it would seem.

Go RBD




RBD
12/12/2006
QUARTER

REL: 0930 HRS Restaurant Brands New Zealand Limited

QUARTER: RBD: Q3 Sales Annoucnement

Restaurant Brands Third Quarter Sales

Restaurant Brands today announced total sales for the 12 weeks ended 4
December 2006 of $67.8 million, an increase of 2.7% on the equivalent period
last year. Total same store sales increased 3.6%.

Chief Executive Vicki Salmon said an exceptional performance from the
company's transformed KFC brand contributed to the strong quarter.

"We continue to be pleased with the results of our investment in KFC, which
is resulting in improved sales performance across all stores, not just those
that have been remodeled," said Chief Executive Vicki Salmon. "While still a
tough environment, we believe that Pizza Hut New Zealand sales have
stabilised over the past six weeks as a result of the changes we have made in
this business."

Third quarter sales results do not include Pizza Hut Victoria which was
classified as a discontinued operation at the half year.

KFC
Successful promotional activity and the ongoing positive impact of
transformation contributed to a surge in KFC sales during the quarter. Total
sales increased 7.8% to $42.2 million, with same store sales increasing
10.9%.

This was achieved despite the closure of four stores undergoing
transformation for much of the period.

"Our transformation strategy, which reaches well beyond a store remodel to
include operational improvements and new menu items in all stores, is clearly
paying off," said Salmon.

Successful new product releases including Boneless chicken and Hot Rods also
contributed to the strong sales performance.

During the quarter, four stores reopened following transformation, two in
Auckland, and one each in Christchurch and Palmerston North, bringing the
total number of transformed stores to 21.

A new store at Rototuna (Hamilton) opened at the end of the quarter bringing
store numbers to 87.

KFC year to date sales totaled $138.1 million, up 6.3% on prior year and 6.8%
on a same store basis.

Pizza Hut New Zealand
The competitive environment continued to impact Pizza Hut New Zealand sales,
which declined 9.8% on the prior year. On a same store basis, sales declined
10.9%.

A number of operational improvements were made during the quarter resulting
in a reduction in staff turnover and an improvement in customer satisfaction
surveys.

"We believe this business has now stabilised and are working hard to return
it to positive sales territory," said Salmon.

Year to date total sales are $62.5 million, down 11.0% on prior year and
13.0% on a same store basis.

Store numbers declined by one over the quarter with the closure of one
dine-in restaurant at lease end bringing store numbers to 105.

Starbucks Coffee
Starbucks Coffee continued to deliver sales growth in the third quarter, with
same store sales up 3.8% and total sales up 11.4% to $7.1 million.

"We are pleased with the consistent growth being achieved from this business.
This quarter saw Starbucks Coffee achieve the twelfth consecutive increase
in same store sales," said Salmon.

Year to date growth was 12.7% to total sales of $23.4 million. Sales were up
2.9% on a same store basis.

Store numbers increased by one to 46 with the opening of a new store in
Symonds St, Auckland.

Discontinued Operations
As announced on 30 November, the exit from Pizza Hut Victoria will be
completed by the end of the financial year in February 2007, ahead of
originally scheduled and more than a year before the end of many of the
franchise agreements.

Year to date total sales declined 7.3% to $A18.4 million with stores being
sold to new franchisees.

Continued Interest

In its release on 30 November, the company indicated that it was in
discussions with parties who had approached the company and expressed an
interest in participating in its future. The

BRICKS
12-12-2006, 10:44 AM
IS it time to double my HOLDING yet.. [8D]

winner69
22-12-2006, 06:22 AM
quote:Originally posted by BRICKS

IS it time to double my HOLDING yet.. [8D]


That you buying in 50,000 lots over the last few days?


Looks like some action on the horizon .... last minute pre-Xmas negotations under way or is the buyout a New Year thing

BRICKS
22-12-2006, 08:45 AM
WELL another BRICKS success TIP.. [8D]

lager
10-01-2007, 09:18 AM
Any more news from Vicki Salmon with regards to this earlier report.

"In its release on 30 November, the company indicated that it was in
discussions with parties who had approached the company and expressed an
interest in participating in its future. These discussions are continuing
and remain at an early stage. The company will keep shareholders informed as
appropriate."

Steve
10-01-2007, 09:29 AM
It would appear that once again it has come to nothing...

biker
10-01-2007, 12:00 PM
Patience people. End of the financial year is Feb,Pizza hut Aust sales to be completed etc. In 2-3 months we could see a very different RBD or a blank where it used to be on the NZX.I bought a resonable chunk at around a dollar and I'm still accumulating at these levels.Still giving a reasonable yield at these prices and good cash flow.