RBD - Restaurant Brands

[Snoopy]

Looks like those carl jnr stores are going well ,
you would think with mc donalds and burger king , wendys sales etc running in the hundreds of millions carl jnr should do very well

Yes $100k per week per store revenue compares very well to KFC. From the 2013 AR, weekly KFC takings averaged over 89 KFC stores are:

$237.03m/(89 x52) =$51.2k per week.

So even if Carl Juniors drop back to half the turnover they are doing now, long term they could match KFC in the long term business plan. I think RBD just turned from an 'income' share into a 'growth' share!

SNOOPY

[BIRMANBOY]

Tell me it aint so....! I am morally at odds with "growth shares" so may have to consider sellling

Yes $100k per week per store revenue compares very well to KFC. From the 2013 AR, weekly KFC takings averaged over 89 KFC stores are:

$237.03m/(89 x52) =$51.2k per week.

So even if Carl Juniors drop back to half the turnover they are doing now, long term they could match KFC in the long term business plan. I think RBD just turned from an 'income' share into a 'growth' share!

SNOOPY

[Snoopy]

carls is going to take at least 3-5 years to make a difference while KFC is going nowhere and Pizza hut is shrinking.

The rerating that has occurred in the last 12 on this stock makes it too expensive and with its poor track record and management its not something I would invest in at these levels.

I agree that Carl Jr. will not be profitable for a few years. Management talk about losing $0.5m this year, but that doesn't include unallocated head office support costs. By my reckoning Carl Jr actually lost $1m this year, and I don't see it turning a profit in FY2014 either. However I am not too worried as that is what you would expect with establishing a new brand. I do believe that in 4-5 years that RBD share price will start with a '4' thanks to Carl Jr.

Pizza Hut OTOH may be shrinking. But because it is loss making this means the losses are shrinking. Perversely this is where the RBD (profit) growth is coming from in the near future.

SNOOPY

[Snoopy]

Not sure anyone has specifically commented on this, although it was out a month or so ago.

I have a somewhat different way of looking at this as I set of a spreadsheet to give me divisional after tax results. The main findings when I do that is that Carl Jr's lost $1m (expected in the start up stage).

KFC after tax profit was down by $1m.

Starbucks profit after tax after head office allocated costs has disappeared to nothing (although it was only $0.5m last year)

And if you normalize the ongoing goodwill write offs on the same basis as used to occur before 2006 (as I do) then Pizza Hut lost $4.7m. That sounds bad until you realize that using the same method PH lost $7m last year! Clearly there are still problems with PH.

SNOOPY

[bull....]

Pizza hut lost the plot , let dominos steal huge market share with therre promos while they did nothing although now they are engaging dominos on matching promos and can see the results coming thru.
I see big potential in carl jnrs as they have a good product and its different to others , long as they follow say mc donalds model of pushing the burgers out quickly in both drive thru and counter and not the the kfc model which seems to be slower in counter service favouring drive thru first.
Maybe extra sales for kfc if they speed up counter service might get more people going in who might make subsequent purchases instead of just thru drive thru

[bull....]

mc donalds sales up 2.5% worldwide , competitors continuing to copy there model

http://www.reuters.com/article/2013/...ssNews&rpc=408

[Snoopy]

Pizza hut lost the plot , let dominos steal huge market share with their promos while they did nothing although now they are engaging dominos on matching promos and can see the results coming thru.

Here is a question for the accountants on this forum. If Pizza Hut goodwill in the books is accurately valued, why was it necessary to write off $3.192m of goodwill disposed of as a result of selling off PH stores to owner operators during the year?

Does this not mean that the actual price received for those PH stores on a willing buyer, willing seller basis, meant that it was not possible to sell those stores with the value of that goodwill included? IOW, that $3.192m of goodwill on the books connected with those PH outlets being sold was really a figment of RBD management's imagination?

SNOOPY

[CJ]

Snoopy - did the goodwill right off relate to just the sold stores or is that they sold slight under carrying value so they revalued all the stores downwards (via goodwill right off).

I would be questioning their annual impairment reviews (and the auditors review of the review) if they were that much out on just the sold stores. Remind me how many they sold again?

[bull....]

Snoopy - did the goodwill right off relate to just the sold stores or is that they sold slight under carrying value so they revalued all the stores downwards (via goodwill right off).

I would be questioning their annual impairment reviews (and the auditors review of the review) if they were that much out on just the sold stores. Remind me how many they sold again?

yes i believe its relates to the sold stores only 8 looks like carrying value of the goodwill was 13 mil on those stores but they got 10 back thru sale so actual loss was your 3 mil.
there assumptions on valuations seem sound to me obviously auditors too

[Snow Leopard]

Here is a question for the accountants on this forum. If Pizza Hut goodwill in the books is accurately valued, why was it necessary to write off $3.192m of goodwill disposed of as a result of selling off PH stores to owner operators during the year?

Does this not mean that the actual price received for those PH stores on a willing buyer, willing seller basis, meant that it was not possible to sell those stores with the value of that goodwill included? IOW, that $3.192m of goodwill on the books connected with those PH outlets being sold was really a figment of RBD management's imagination?

SNOOPY

So Note 5 says they made a loss of $1M664 selling stores with $3M192 of booked goodwill attached. (Note 8 suggests originally about $13M but written down over prior years).

The entire amount was not 'written-off' but as a result of the sales the amount of goodwill owned by the company decreased.

The buyers paid more than $2M484 for PP&E valued by RBD at $958K so the buyers were willing to pay at least $1M5 for goodwill which appears as cold-hard cash.

Other than that all I will say is:
that I have never liked RBD as an investment;
this years annual report is a lot better than the 3D (glasses supplied, but not with the e-copy) version for 2012.

Best Wishes
Paper Tiger