RBD - Restaurant Brands

[winner69]

Herald reporting closure of Carl's Jr store in Otahuhu as it is no longer financially viable. http://www.nzherald.co.nz/business/n...ectid=11779625

Hope it's not the 1st of many! Now they done the exercise there must be a hit list - improve quickly or out

How much to set one of these up?

Was this one of many they purchased from Fosgren?

[Beagle]

Herald reporting closure of Carl's Jr store in Otahuhu as it is no longer financially viable. http://www.nzherald.co.nz/business/n...ectid=11779625

I predict Avondale will be next. At first the customer service and attitude of the staff was fantastic and the chips were piping hot every time and the burgers great but their consistent inability over the last 18 months or so to serve hot fresh chips has annoyed me to the point I am extremely reluctant to go back. When I do there's hardly anyone there so the message has clearly got out that staff are simply not interested in decent service standards. Unless management learn that people don't want soft lukewarm fries and don't want to see heaps of others people's used wrappers on tables that aren't cleaned promptly the chain will struggle. I prefer Wendy's for their more reasonable prices, fresh good quality burgers, better attitude by service staff, cleaner tables, hotter fries e,t,c,
Don't start me about the grease and general unhealthiness of eating KFC.

[Snoopy]

Hope it's not the 1st of many! Now they done the exercise there must be a hit list - improve quickly or out

How much to set one of these up?

Was this one of many they purchased from Fosgren?

I am guessing the answer to your last question is 'yes'. That's because IME, Restaurant Brands tend to operate their unprofitable stores until the lease is up, then close them. The leases would not have expired yet on any RBD company built store.

To set up a new build store from scratch I am sure costs over one million. But Carl's Junior as a chain is not profitable, once all those head office costs are apportioned. So closing down the loss making arms will be good for the RBD bottom line. The market likes the closure anyway. RBD up 6c in a weak market as I write this. Perhaps only selling the store to Veritas as a good franchise turnaround story would have brought a more favourable reaction?

SNOOPY

[winner69]

I am guessing the answer to your last question is 'yes'. That's because IME, Restaurant Brands tend to operate their unprofitable stores until the lease is up, then close them. The leases woudl not have expired yet on any RBD company built store.

To set up a new build store from scratch I am sure costs over one million. But Carl's Junior as a chain is not profitable, once all those head office costs are apportioned. So closing down the loss making arms will be good for the RBD bottom line. The market likes the closure anyway. RBD up 6c in a weak market as I write this. Perhaps only selling the store to Veritas as a good franchise turnaround story would have brought a more favourable reaction?

SNOOPY

Looking back Otahuhu was a new store which RBD developed. Opened in late 2013 being RBD Q3. (Some substantial closure costs then?)

Since the initial razzamataz for the last year or so Carl's Jnr stores have averaged $36,000 per week (plus or minus a few hundred). Maybe some growing while others decline.

How sustainable are 7 day a week stores doing ~$1.8m pa?

Could be becoming a bit if a problem for RBD?

[winner69]

Snoopy - Carls barely breakeven at Concept EBITDA level and then there's over $3.0m annual depreciation and other HQ costs.

Concept assets $26m last accounts (book value) so your $1m per store setup might be a bit light.

I'm getting worried ...but small fry in big picture anyway

[Raz]

The CJ on Church corner, Christchurch is on another level of grossness..will run it lease out also me thinks.

[Snoopy]

As Christchurch Westies will know (or maybe they won't, because it opened so quietly), the first Carl's Junior Store in the South Island opened at the Bush Inn Centre, beating Hornby by a few weeks. A coupon leaflet arrived in the mail yesterday. So I took the opportunity to make my first ever visit to a Carl's Junior (for lunch).

I wasn't quite sure what I ordered from the picture. What came was 'pulled pork' on a bed of potato "thingies" (round double layer potato slices with holes in them, with a barbecue seasoning and cheese and sauce on top). My coupon gave me a drink too so I chose L&P, without ice.

Big mistake on my part! The drink came first and the sugar shock was would have floored even the fast food faithful. Did we really invent that drink in Paeroa? Or is the stuff you buy now a Coca Cola corruption of the original? Or maybe the person who put the syrup into the bulk mixer confused tablespoons and teaspoons? Just make sure if you order L&P, you order ice to make it palatable!

Was pleasantly surprised to see the target demographic ('hungry young men') wasn't really working. OK I tell a lie. A group of four hungry young punks came in just as I was leaving. But the majority of the customers looked 30+, with just as many hungry(ish) young(ish) women as men at the table. I reckon one or two of those customers might have even started their age with a 5! All good for shareholders though. Happy to see a broad demographic of customers. There was music blaring out, but it wasn't headbanging enough to clear the site of oldies. Those high back American milkbar style benches muffle the background noise. So you can have a conversation if you want. Plus there is the option to sit outside at the high bench on a nice day too.

The food? I'll go back one day soon and try a burger. But my pulled pork platter, was flavoursome and distinctive, served hot with minimal delay, even if you wouldn't serve such a concoction at a cardiologists convention. Ok I did strike a relatively quiet time. And I now admit that I smuggled in a home grown salad to balance off the all American taste. Not big enough to avoid a heart attack. But big enough to ensure I made it home before any cardiac arrest.

[menu note: Not sure if replacing the burger buns with lettuce leaves quite cuts it as the official healthy menu option. Has any customer ever ordered that?]

The service was pleasant and efficient. What is more the staff had initiative. If they weren't busy behind the counter they were out the front of the restaurant cleaning up. Top marks to the store manager.

I happened to walk out past the Burgerfuel competition that sits in the same shop row. It wasn't quite as busy. But when the novelty of Carl's wears off, the Upper Riccarton Arena will make a fascinating contest.

The CJ on Church corner, Christchurch is on another level of grossness..will run it lease out also me thinks.

Raz can you expnad a bit on your experience? I dare say that neither you or I are in the target demographic for Carl's J. But my experience, quoted above, was obviously rather different to yours.

SNOOPY

discl: hold RBD

[winner69]

At this rate RBD share price will be 6 bucks soon

Hell's bells or whatever

Never seems to go under a long term trend line

[Snow Leopard]

Not a share that has ever particularly appealed to me and my experiences of eating in Taco Bell in the days when I worked in California were discouraging.

But putting those negative influences aside and still the Tiger senses danger !

So first that bit of NSW and now Hawaii, Guam and Saipan, the latter I have to admit I had to search Google Maps to find.

Suspect the board is going through the classic business is running well, top of the share price cycle, lets do something stupid instead of concentrating on the company they already have phase.

A few years before I will know if I am right.

Best Wishes
Paper Tiger

At this rate RBD share price will be 6 bucks soon

Hell's bells or whatever

Never seems to go under a long term trend line

Well a few months later and yes risks abound with this.

Running to their shareholders for urgent new capital last year and then blaming an unexpected Christmas/New Yeat holiday for being late on the deal.

Best Wishes & Happy CNY
Paper Tiger

[Snoopy]

Well a few months later and yes risks abound with this.

Running to their shareholders for urgent new capital last year and then blaming an unexpected Christmas/New Yeat holiday for being late on the deal.

The 'dreaded Pizza Weevil', I am sure refers to RBD's ill fated foray into Victoria, taking over a state franchise that had gone bust. Millions further lost, this time for RBD shareholders, and the relics sold off to private operators was the result. A little bit different this time though. The American Pacific Pizza operations are doing OK, and the successful managment team in those territories remains in place. Plus unlike Victoria, the Pacific is not overrum with expat Italians who make darn fine Pizza which puts anything the Americans do to shame.

I don't particularly like this 'fast track to new capital' system that is now legal in New Zealand that RBD used to raise the cash to buy into the 'American Pacific'. There was something reassuring to me about a period of old school rights trading and discussion in the market. However, although the rights could not be traded, at least they were issued on a pro-rata basis (unlike for example Heartland Bank). That meant that shareholders who did not act still got some benefit.

Being significantly overweight in RBD myself before the capital raising, I took the opportunity to become 'worringly overweight' by taking up all my rights. This has paid off big time for me as the share price regains levels way above the discounted rights price level at which I bought in!

There are certainly causes for concern goiung forwards, with the much vaunted roll out of Carl's Junior in NZ seemingly not going to plan. And I wouldn't necessarily advise buying in at these lofty ( ~$5.60) share price levels. But while the KFC profit generating engine in New Zealand continues to fire, I am happy to hold.

SNOOPY