VIL - Veritas Investments Limited

[Snoopy]

For those worried about meat quality , they source from the same places as supermarkets.

What are you saying? Foodstuff's and Countdown's central butcheries supply the Mad Butcher's meat?

SNOOPY

[percy]

In case they dont read this thread i have sent percy's postvto HQ? i can see HQ visiting Woolston today if they working or the Operations Manager there Monday

They seem quite keen to run consistently high standards across the franchise ....that Woolston operator will get told off

You should go back in a few weeks Percy to see if things changed .that be a god test.

Now that I have opened my big mouth,I better try and get to visit all ChCh Mad Butcher shops.And will revisit Woolston store,situated cnr Ferry Road and Aldwins Road.
What I do love about butcher shops is all the old guys eyeing up the window displays.lol.

[winner69]

Having a look back at the prospectus I see that Ferry Rd shop is more than a butchers shop. That one and Papanui are HAarvest Marts as wel and sell vegies and other stuff - a minimarket they called it. it is said that it brings in sdditional traffic, ie more meat sales

They were going to monitor and might extend the concept to other mad stores.

Maybe the focus has gone off meat at ferry Rd and that is why Percy calls it a dump

Some would sayvstick to know what you do best and leave the combination of cabbages and sausages to the supermarkets.

[winner69]

What are you saying? Foodstuff's and Countdown's central butcheries supply the Mad Butcher's meat?

SNOOPY

Maybe the same place is the farm!

[Harvey Specter]

For those worried about meat quality , they source from the same places as supermarkets.

What are you saying? Foodstuff's and Countdown's central butcheries supply the Mad Butcher's meat?

Maybe the same place is the farm!

I can confirm that all Bacon is sourced from a pig, and the steak from a cow.

The source of the sausages will be a mystery that will never be solved!

[noodles]

What are you saying? Foodstuff's and Countdown's central butcheries supply the Mad Butcher's meat?

SNOOPY

No. Mad butcher do their own butchering. Just the same approved meat suppliers. Tegal etc

[noodles]

You probably go to real butchers like what this young woman's one - good on her for keeping the old business going

http://www.stuff.co.nz/business/smal...butchery-trade

I go to real butcher in Island Bay .... real meat not injected with water or whatever. Maybe I not really the MAd Butcher target market

Mad Butchers I have been in to seem pretty tidy - clean and well laid out and would you believe it full of meat and stuff all at pretty good prices. Good place to go if you want bulk sausages and meat patties for the staff bbq.

An interesting view from Mad Butcher on the independent butchers (see investment statement pg 22) http://www.veritasinvestments.co.nz/...-statement.pdf

"The number of independent butcher shops in New Zealand has steadily
decreased over the last 40 years. In
1971, there were over 5,173 butchers in
New Zealand.12 In 2011, the number of
fresh meat, fish and poultry retailing
stores was 661, down from 764 stores
in 2000.13 Veritas believes that a large
proportion of this decline is attributable
to the decrease in the number of
independent butcher shops. Although
independent butcher shops typically
have a loyal local customer base, provide
expert service and offer high quality
and customised meats, in most cases,
Veritas’ view is that their inability to
purchase in bulk and therefore compete
on price is likely to lead to the continued
contraction of independent butcher
shops as a group over the longer term.
"
They go on to say...

" Independent
butcher shops, at the other end of the
spectrum, offer the flexibility to meet
consumer tastes and customer intimacy
but operate with low volumes, limited
purchasing power and limited brand
recognition"

It seems Mad Butcher has an economic moat

[warthog]

The source of the sausages will be a mystery that will never be solved!

As the hog's grandhog used to say "it's a mystery, like any good sausage!"

[winner69]

An interesting view from Mad Butcher on the independent butchers (see investment statement pg 22) http://www.veritasinvestments.co.nz/...-statement.pdf

"The number of independent butcher shops in New Zealand has steadily
decreased over the last 40 years. In
1971, there were over 5,173 butchers in
New Zealand.12 In 2011, the number of
fresh meat, fish and poultry retailing
stores was 661, down from 764 stores
in 2000.13 Veritas believes that a large
proportion of this decline is attributable
to the decrease in the number of
independent butcher shops. Although
independent butcher shops typically
have a loyal local customer base, provide
expert service and offer high quality
and customised meats, in most cases,
Veritas’ view is that their inability to
purchase in bulk and therefore compete
on price is likely to lead to the continued
contraction of independent butcher
shops as a group over the longer term.
"
They go on to say...

" Independent
butcher shops, at the other end of the
spectrum, offer the flexibility to meet
consumer tastes and customer intimacy
but operate with low volumes, limited
purchasing power and limited brand
recognition"

It seems Mad Butcher has an economic moat

I wouldn't go that far noodles. I doubt if they even see the independent butchers as a threat and in some cases would dearly love to have some of them join up.

The Mad Butcher chain is no more than 37 independent butchers who have joined a buying group. The success of Veritas depends on the success and viability of these independent butchers who have invested their capital in a expensive butchers shop and pay the rent and pay the staff and essentially take all the risk .... while the franchisor skims as much off the top as he can

Look at the financials the franchisor seems to make a 16% margin on the carcasses and gets a rebate close to 20%. Makes you wonder what price the butcher actually pays for the carcass compared to his competitors - I would hazard a guess it is not that great.

I don't know what the total sales of the butchers are (rough sums maybe $50m) and what rgeir operating profit is on that but benchmark figures would suggest about 5% before tax. What the butchers make themselves doesn't really matter to Veritas shareholders - its the $170,000 average contribution each makes to Veritas EBITDA

Maybe a moat - but only as good as the butchers themselves remain viable (say against the supermarkets) and that seems to come down to how greedy The franchisor is - skimming too much of the top and seeing butchers going broke in the process.

But as long as they remain greedy and get away with it Veritas probably a reasonable investment, but not because they have an economic or competitive moat.

[Harvey Specter]

Any economies of scale is probably offset by the franchise fee's. And they are all competing against supermarkets who have much greater economies.