RBD - Restaurant Brands

[Onthemoney]

When they hock off a Pizza Hut store to a private owner do tey collect any ongoing franchise fees from thr new owner

If so where does this shoe in the accounts .... anybody know

Hocking off something making a loss .... but still clipping the ticket on the way through for use of the name should be +ve for RBD .... yes?

Their situation may be different with Yum needing their franchise fee as well.

[Snoopy]

When they hock off a Pizza Hut store to a private owner do they collect any ongoing franchise fees from the new owner

If so where does this shoe in the accounts .... anybody know

Hocking off something making a loss .... but still clipping the ticket on the way through for use of the name should be +ve for RBD .... yes?

Winner the reason that certain Pizza Huts are being sold is that RBD management have the view those business units cannot be profitable under the RBD corporate model. When a PH is sold off by RBD, then RBD wipes its hand of it and the new owner pays any franchise fees due to YUM directly.

However with a national chain like this there is a single NZ nationwide marketing umbrella that covers all NZ PH outlets. I believe that RBD does control this. So some of those YUM franchise fees will find their way back into RBD coffers as a way for those new franchisees to pay their share of the nationwide advertising costs.

The answer to your question is yes there should be some ongoing economies of advertising scale benefits to RBD as a result of these new franchisees pumping up the RBD marketing department. I suspect it will show up under that catchall header 'other income'.

Nevertheless the real benefits once a PH is sold will flow mainly to master franchise holder YUM, not RBD.

SNOOPY

[winner69]

Thanks for that Snoops ... hadn't thought of the franchise reverting back to YUM .... so I won't be looking to find out out how much fees RBD might have been collecting

[percy]

Yum Brands used to charge franchise fee of approx 10% of gross turnover.

[KJ]

I thought that their FY result was a bit disappointing.

The coy needs to be a bit more accurate when releasing information or folk will stop taking them seriously.
(1) NP for the year-20m-wrong!
(2) Second Half profit would would be no worse than same period last yr-wrong!

In fact there is a worrying trend developing:
2011
First Half NPAT 13.9m
Sec Half 11.2m

2012
F Half 8.6m
S Half 9.8m

While I like the coy for its Div yield I hope that they can make a go of CARL- P Hut & Starbucks are nothing to get excited about.

[emearg]

If the Carls Brand is going to be so great perhaps they should convert all their Pizza Hutt stores in Carl Juniors?

I presume YUM won't let them.

There would be big write offs involved but that might be better than continuing to flog an almost dead horse just because they have to...

[winner69]

RBD must be the most frustrating stock to follow if growth is what poeple want .... growth is non existent .... but the likes of Snoopy have the right appraoch to make money out of RBD .... just hold long term collect the divies and don't worry about the quarterly sales or the annual profits .... waste of time

Chart below is RBD revenues over the last 10 years .... everything they have done .... bought, closed, revamped, expanded etc .... and still where they were 10 years ago ... a $300m company (even 3% pa growth would have it a $400m company by now!!)

Maybe obe should keep an eye on performance. Du Pont came up with an interesting ratio and interestingly the RBD shareprice follows this ratio pretty well. RBD did well on most measures from 2008-2011 but 2012 has seen the three things that the Du Pont ratio measures fall back a bit .... like operating efficiencies (profit margin) is down ..... asset use (sales per asset) is not as good .... and financial leverage is a bit worse (increasing shareholder equiyt without growing the business)

Wouldn't want to see these trends continuing .... but then the likes of Snoopy will still be doing OK as he collects his divies year after year

[Snoopy]

If the Carls Brand is going to be so great perhaps they should convert all their Pizza Hutt stores in Carl Juniors?

I presume YUM won't let them.

There would be big write offs involved but that might be better than continuing to flog an almost dead horse just because they have to...

Those PH store contracts are renewed on a ten year basis emearg. So it would take some time for RBD to roll out of their contracts. Also most of those PH premeses are rented off independent landlords. They might have to agree on changes to their lease. Furthermore I think YUM would have some restrictive trade agreement about turning their visible site into the competition. I recall some shareholder putting the question to RBD management about ditching KFC and setting up their own chicken brand when the multimillion dollar ten year concept costs were up for renegotiation and this is where I seem to recall the restraint of trade clause coming out.

I am not sure PH is dead. I can't see why it couldn't do as well as Dominos is doing, if the concept is appropriately managed. But short of head hunting Don Rae from Domino's Australia, I am not sure where RBD can look for their Pizza management talent.

SNOOPY

[percy]

Going by the bun fight between Western Australian frachisee and Yum Brands,Yum Brands have restraint of trade clauses,and in Western Australia they are refusing to renew franchise agreements for existing stores.

[winner69]

and even with this they can't make money
http://www.nzherald.co.nz/nz/news/ar...ectid=10797343

Probably claim they are doing a public service by keeping boy racers off the street!