Quote:
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]