RBD - Restaurant Brands

[bull....]

Quite a lot of questions at the meeting about CJ. Mostly from one shareholder. Chairman said that the Hamilton CJ was tracking at almost the same take as opening. There was a mention of 2% slowdown after opening but I was not very clear what that referred to or what time frame. Bull, did you get that? CJ opening week in Mangere was 2nd highest opening week world wide. Bit sad really. RBD are looking to CJ as a 2nd big engine over time (KFC being the big one).

Big takeup of $4.90 pizzas and $5 KFC lunch boxes were big helps to bottom line.

Non question of the day from the floor - video clips too loud. I kid you not.

Several kids present as well. Don't see that very often. KFC and pizza might have helped.

A couple at the top table looked bored and fidgetty. You'd think they could pretend to be interested for an hour or so once a year.

cheers for the feedback would have liked to go , did you get served kfc afterwards or pizza ?

you can play around with the CJ figure of 173k opening week figure and adjust it to a more normal figure ill us a 50k per week per store as an example for normal conditions

so 50k x 52 = 2.6m sales per yr
multiply this by say 20 stores and you get 52 million in extra sales

If you take the ceo comment of a 19.6% ebitda average you get 10mil odd extra ebitda not to shabby

[CJ]

They are targeting 40 stores with Revenue of $200m so that is $100k per week. This seems realised given they are large stores with drive through (I think). Going beyond this, they will probably start cannibalising their own sales.

I still think demographic will be key for them but they are all too well aware about this with KFC is my guess. Parody website (Not RBD but links to RBD site): www.kai.maori.nz

[bull....]

They are targeting 40 stores with Revenue of $200m so that is $100k per week. This seems realised given they are large stores with drive through (I think). Going beyond this, they will probably start cannibalising their own sales.

I still think demographic will be key for them but they are all too well aware about this with KFC is my guess. Parody website (Not RBD but links to RBD site): www.kai.maori.nz

200m at ebitda of 19.6% = 39mil
net profit is on average 72% of ebit roughly so will add nicely to net profit in time and possibly divs

[CJ]

200m at ebitda of 19.6% = 39mil

Remember that is EBITDA. These will all be brand new stores so there is a lot of capex that needs to be spent (at least $2m per store if they have fully ownership? which I expect they would do, folllowed by a sale and lease back later on) which will impact cashflow.

[Brfc]

i went to The AGM on friday in Wellington

Its was great way of really knowing whats happening within the Company with yours truely asking about 80%

of the questions from the floor plus i had one and one with 2 directors after the meeting whilst most people

where eating lots of free KFC/Pizzas !

From what i have obtain i think this a great investment for 2 reasons

Firstly at the Moment they have great Mature business which changes very little from year to year (KFC mainly )
which is great has this gives the company a steady earnings approx 51Mill Ebit every year which underpines the business and the share price/dividend in other words agreat cash cow each year with very little varation to the above and subsequently very little movement from the share price and the 7.81% yeild on a share price of 2.80.(in other words a great insurance for your investment )

Secondly the exciteing bit

as mentioned you have the safety of the above mature business plus you have a growth company (karls jnr ) all in one

Its early days for Karls Jnr they currently have 4 stores open but they have a target of 40 stores in NZ

Currently after lots of questions at the above meeting the Hamilton branch of Karls jnr after the intial opening as settled to approx 150k t/o pw (its first week was approx 170k the other 3 stores opening week was all over 100k pw) and with the other 3 stores avge approx 83k pw = a avge over the 4 stores being 100k pw

So now down to the numbers:

40 stores(a good thing is to achevie the 40 stores there will be no increase in debt as the increase in store numbers all come from the cash cow as mentioned above so no more debt to fund growt!) if they can maintain there avge of 100k pw with a ebit margin of 20 % = 20,000 pw ebit (the figure of 20% ebit is what they think they can acheive however it will take a liitle while to acheive this as the set up costs will be high to start with but once established this is the target)

However taking in account i have come up with the following : (please be aware these are the numbers that i have obtain direct they are of course subject to change and it will take time for the above numbers to come though.)

40 stores x 100 pw x 20 % ebit = 800k pw x 52 = 41.60 mill Ebit for Karls jnr

Put this figure on top of the existing ebit ie 41.60
51.5
------------------------------------------------------------------------------------------

93.10Ebit pa

Depreciation (25.14)

Gen/admin (target 4% of T/O) (20.00)

Interest (0.7)

Tax (13.2)

Profit 34.2


EPS 34.00

x pe 12.5 Target Share price = 4.25

dividend 34.00

Yeild if the above targets met on current share price will be 16.32 % in a few years on your inv today

All in all it is not going to happen overnight but taking the above factors in consideration my reccomendation is

to slowly buy the stock at current prices and if the Carls jnr doesnt work for any reason the share price is under pinned by KFC etc to approx 2.40 and since Friday i have been adding to my existing exposure to this stock.

[Snoopy]

They have great Mature business which changes very little from year to year (KFC mainly )
which is great has this gives the company a steady earnings approx 51Mill Ebit every year which underpins the business and the share price/dividend in other words a great cash cow each year with very little varation to the above and subsequently very little movement from the share price and the 7.81% yeild on a share price of 2.80.(in other words a great insurance for your investment )

Welcome to the forum Brfc, and thanks for the comprehensive thoughts on where you think RBD is going.

You say RBD has a cash cow via KFC. But RBD have indicated themselves that future store transformations are unlikely to see the returns the previous transformations have provided, simply because the bigger higher profile stores have already been done. Also I see management talk about a 'T2' transformation program for KFC stores which is yet unproven. Does this not sound like a recipe for more cash in to get less cash out?

SNOOPY

[Snoopy]

Its early days for Karls Jnr they currently have 4 stores open but they have a target of 40 stores in NZ

Currently after lots of questions at the above meeting the Hamilton branch of Karls jnr after the intial opening as settled to approx 150k t/o pw (its first week was approx 170k the other 3 stores opening week was all over 100k pw) and with the other 3 stores avge approx 83k pw = a avge over the 4 stores being 100k pw

So now down to the numbers:

40 stores(a good thing is to achieve the 40 stores there will be no increase in debt as the increase in store numbers all come from the cash cow as mentioned above so no more debt to fund growth!) if they can maintain there avge of 100k pw with a ebit margin of 20 % = 20,000 pw ebit (the figure of 20% ebit is what they think they can achieve however it will take a little while to achieve this as the set up costs will be high to start with but once established this is the target)

Well it would certainly be nice to see $100k turnover per week from each Carl Juniors store. However, I would suggest it is a little too early to garner what the longer term turnover of Carl Juniors might be, given it is so early in the franchises development. It would be nice to think Carl Juniors could go one up on KFC in this regard. But you should also remember that the 'other' franchisor (the Michael Jones consortium) have plans for 8 Carl Juniors stores in NZs largest market, Auckland. That surely is quite a big hole in the nationwide footprint of Carl Juniors, as far as RBD is concerned. Personally I would be happy if Carl Juniors could simply match KFC on a per restaurant brands store nationwide basis.

You quote a 20% EBIT figure as targeted for Carl Juniors, but then go on to say that set up costs will restrain this target while the Carl Juniors Brand builds up scale. If RBD's past accounting procedures are followed, almost all of these set up costs will form part of head office general and administrative expenses. That 20% EBIT margin, I think you will find does not include the apportioned cost Auckland based head office crew allocated to making Carl Juniors perform, nor any proportion of nationwide advertising and promotion that IMO should be included when assessing the true profitability of the Carl Juniors brand.

Nevertheless, apart from a couple of your assumptions being slightly too bullish, IMO, I don't have too much of a problem with your analysis. You may be in the market for more RBD shares, but I won't be selling you any of mine!

SNOOPY

[NZSilver]

On the rare occasion I have takeaways from bk, mds, KFC ect, we are talking 3-4x year total. Usually when I'm travelling with others. Yesterday I was in palmy and I though I would check out the Carl's jr for a quick dinner as I have been keeping an eye on RBD.

It was right opposite MDs, there was a good selection of food. You received a number and your order was brought to your table (something different for these kind of food outlets). The counter lady said they have been very busy.

The food wasnt bad taste wise but it wasnt anything special either (chicken Santa Fe) and nothing huge considering the small combo was $10.40. I havnt been to MDs for a while but I think it is better value $8 for a Big Mac combo?

Restraunt well lit up, easy to see and clean simple layout.

I believe there are currently 3 Carl's jr stores. I guess with their menus they are really trying to compete with bk and mds

I think if it was a really good burger I might be more inclined to buy some RBD, not convinced now however will keep an eye on them.

Would be interested to know what burger I should try next.

[winner69]

Carl's burgers look pretty healthy to me. Must try one when I can

http://www.stuff.co.nz/life-style/vi...s-Sexy-or-sick

[bull....]

Carl's burgers look pretty healthy to me. Must try one when I can

http://www.stuff.co.nz/life-style/vi...s-Sexy-or-sick

im going to the states so im gonna try one over there , then try one back here see if any difference