RBD - Restaurant Brands

[Snoopy]

Dr Who to best of my knowledge Starbucks are company owned (Yum Brands) in Australia and NZ is a franchise & Yum Brands gets an income even if RBD is going down the tubes

Correct Possum, bar one small detail. The parent company (master franchise holder) for Starbucks is actually called Starbucks and they are based in Seattle USA. The Starbucks operation is nothing to do with Pizza Hut or KFC or YUM Brands (the master franchise holder of those latter two brands).

Oh and the bit about RBD 'going down the tubes'. When they start making an operational loss get back to me. You need to get real.

SNOOPY

[Snoopy]

What I find significant with the massive closure of Australian Starbucks is that the incredibly strong Aussie dollar would surely be a beacon of good news to a weak US Dollar based Starbucks....assuming any money was being made?

Historically, global US based companies like McDonalds and Coca-Cola (and I would have thought Starbucks) have been investment havens for a weakening US Dollar and weakening US economy as they all have incredibly strong, vibrant, and growing foreign(Non-US) markets.

Australia is about as insulated as you can get globally from the various economic and financial woes the globe is facing with its immense commodity wealth and diversified economic base.......if Starbucks is pulling the pin the level of my confusion in attemting to understand what is going on has sunk to an even darker shade of opaque

This HeraldSun article of July 30th 2008 has more on the financials

http://www.news.com.au/heraldsun/sto...00-664,00.html

and in particular this bit:

---------

Its Australian operation relies on huge loans from its parent company in the US.

Despite opening five new stores and selling $64 million worth of coffee and food in Australia last year, it posted a net loss of $36 million.

That was a $9 million bigger hole than the previous year.

--------

I think that lightens the 'opaqueness' lakedaemonian. Specifically:

1/ Starbucks are not making any money in Australia. In fact they are losing staggering amounts of money. I had to do a double take when I saw those figures. A $36m loss on only $64m in sales! This isn't a slow bleed to death. It is more like a massacre with 'General Starbucks' having replaced 'General Custer'. No wonder the US based management have acted.

2/ The expansion into Australia was debt funded from the US. So the Oz market is not globally insulated as you presumed. It is entirely funded from US debt. And you know what has happened to credit 'over there'.

Some more comparative figures between Oz and NZ are telling.

Average Annual Sales Per Store:

Oz: $A64m/84 stores = $A0.761m per Store

NZ: $NZ33m/44 stores = $NZ0.750m per Store

Those figures are surprisingly similar. Yet NZ Starbucks lost $NZ 0.5m last year (my after tax estimate after building in head office costs) verses an $A36m loss in Australia! All I can deduce is that costs in Australia are completely out of control.

Starbucks US management have decided the only way the Starbucks model can work in Australia is in the super high population density cities of Sydney, Melbourne and Brisbane.

Except if the brand is brought to New Zealand where the business model can successfully run in much smaller cities through superior management :-). That really shows how world class the Starbucks operation run by RBD really is....

SNOOPY

discl: hold RBD

PS The only downside for RBD shareholders is, the master franchise company in Seattle doesn't look to be in any state to buy out the Starbucks franchisee in *this* country anytime soon.

[Snoopy]

RBD should buyout Nandos and grow it nationwide. Nandos chickens are the best. BBQ chicken with yummy hot mexican sauce.

Anyone know what happened to the Nando's at Paraparaumu? It was in the old Pizza Hut building which last time I was visiting seemed to be having the roof removed. Meanwhile the neighbouring KFC was continuing to go well.

SNOOPY

[Snoopy]

I know a young lady who works behind the counter at KFC. She has been complaining that they are cutting her hours, and those of other staff. Anecdotal evidence they are not doing so well?

Or evidence that the tough talking Van Arkel is living up to his word and his lieutenants are carefully matching supply to demand? I remember being at my brother's over last Christmas and persuading him to order a late Pizza lunch at around 2:30pm. He rang the Pizza Hut order line. But was told the local shop didn't open until later (4pm IIRC).

Also, I've just received in the mail a Dominoes voucher offering large pizzas at 4.90.. This is about as cheap as i've ever seen them, I think. Further evidence of a downturn?
hiawatha

I got a $4.90 offer from Dominos too, through the mailbox. But the $4.90 model can only be hawaiian, is only available on Sunday and only at selected stores AND there is a 10% surcharge on public holidays. AND the coupon looks like it has a short shelf life, about two weeks. The 'regular' coupon price on the same leaflet is $7.90.

SNOOPY

[Snoopy]

Yum brands (im a holder) Came out with a very good result today , they are the owners of KFC taco bell and pizza hut and a few other high profile brands. They are achieving massive growth in china.

There was one dark cloud in their result

"Meanwhile, operating profit in the U.S. fell by 12 percent to $168 million, which the company blamed mainly on commodity inflation along with weak sales and profit results at KFC."

Looks like its not just here that KFC is under pressure

Ratkin, KFC's after tax profits grew by over 20% (by my spreadsheet) this year in New Zealand. The other RBD franchises may be 'under pressure', but KFC most certainly is not!

SNOOPY

[Snoopy]

That 9% fall BNZ economist Tony Alexander mentioned relates to the takeaways sector in the Retail Trade Survey from Stats NZ .... ie all takeaway outlets

He made no mention of RBD but as several have pointed out KFC and PH have a large share of this sector so total sector performance is some guide as to how RBD are and will do .... but the RBD will say that they are gaining share in the sector

RBD are expecting a decrease in sales as they progessively close their Red Roof Pizza Hut dine in restaurants. RBD do not release a breakdown of sales betwen their takeaway stores and their red roof restaurants. So I think we can assume Pizza Hut restaurant sales will be caught up in the takeaway food statistics. A decrease in sales can be a good thing if those restaurants that were closed were losing money.

A decrease in takeaway sales does not necessarily imply a decrease in profits. Indeed with Pizza Hut the sales decrease is planned for, and should be profit enhancing for RBD.

SNOOPY

[Snoopy]

Snoopy wrote:
"I have a bone to pick with you Bricks (or should that be a stone?)

WILL YOU PLEASE QUIT BUYING RBD SHARES!

I am waiting for the price to go lower into my buy zone, willing it down, down, down and it never does get there. So just quit buying will you!

Funnily enough for all the flack we have taken over the years Bricks, over the last two years RBD shareholders have done quite well as the rest of the retail market has melted down around them. Who would have thought two years ago that RBD would turn into the best (NZX) retail investment of all!

But in more bad news for my buying program, RBD was up another 2c today. Arrrgh!"

It looks like you have your wish Snoopy.

Yes I had a buy order in before I left for Aussie a month ago at 80c, but pulled it before I flew out. So I was quite happy to buy a few more today at 76c. If the price goes lower I will buy still more shares so long as the fundamentals remain sound.

It was interesting to hear Rod Duke today on the divergent performance of his Briscoe general merchandise stores and the Rebel Sports stores. The Rebel Sport stores were hit far worse with the retail downturn, because what they sell makes up discretionary spending.
Just in case no-one noticed, food is not a discretionary item.

I can't see any rational reason why the share price of RBD has gone from 90c to 76c in just over a month. The only reasons I can think of are a general lack of buyer interest in all fringe shares (because RBD has dropped out of the NZX 50), some rub off from the Starbucks closures in Australia (which will have no effect on the New Zealand Starbucks operation), and a general perception that RBD 'are not doing well' which is not true. Operational profits are forecast to increase this year, and RBD will be one of the few retailers to be in this situation.

If things go on like this I guess I will just keep buying shares until (eventually) I own the entire company. Then I will close down RBD head office, put the store managers on decent profit share incentive schemes and the company will be away. It should be easy to run the company myself. All I will need is to establish an Auckland presence, even a lease on a bedsitter on the North Shore should suffice! I will keep the forum posted on my 'takeover progress' ;-P.

SNOOPY

discl: hold RBD, topped up today.

[CAM]

"food is not a discretionary item"

correct......but takeaway food is possibly...I would hardly call pizza a necessity.
But I get your point. Shouldn't be hit as hard as retail stocks.
I remember from an economics class many years ago that spend on things like ice cream (along with luncheon) went up in tough times because it was an affordable "luxury". Maybe takeaway foods are the same in this day in age.

p.s. good luck with your takeover efforts!!
I think the best spot for a drive through takeaway is Te Kuiti

[Snow Leopard]

Exactly 5 years ago Restaurant Brands closed at $1.30.
Unless I have missed a share split or something then in the intermediate 5 years one would have received 42c (10c, 10c, 10c, 5.5c & 6.5c) in dividends and your shares closed today at 75c.

Interestingly enough Mainfreight closed at $1.30 each as well.
You would have received 84c in dividends (6.5c, 6.5c, 12c, 15c + 28c special, 18c) and your shares closed today at $6.89.

regards
Paper Tiger

[Nitaa]

Snoops. You gonna be right one of these days. You remind me of exactly the way Bel... did during Felex. Virtually owned 5 8ths of stuff all.

Good luck all the same