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John Gordon

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  • Can Tim Hortons Take Manhattan? [View article]
    The time and expense of expanding within the United States, with its general restaurant over-penetration, sluggish (at best) sales and economy can't be over-emphasized. In 2008, Tim Horton's closed some US stores in Southern New England, for example.

    Still, grabbing the high profile NYC Riese sites, plus Horton's much higher AUVs versus Dunkin ($1.7M vs. $850K) is notable. If Horton's can expand on the West Coast, from Seattle and further south along the US west coast, it could block a Dunkin's prime expansion zone.

    John A. Gordon
    Chain Restaurant Earnings and Econmomics Experts

    Jul 14 11:26 AM | Likes Like |Link to Comment
  • Could McDonald's New Angus Burger Be Considered a Green Shoot? [View article]
    Most likely not evidence of a "greenshoot".

    McDonald's employs a so-called bar-bell menu strategy, which is a mix of higher end and lower end products, to be able to attract a wide range of customers. It's been in test here in company stores in CA for some time. It is part of their overall menu planning and design.

    McDonalds is testing "one hour of free wi-fi with purchase a a McCafe" coffee which could be interesting.

    John A. Gordon
    Chain Restaurant Earnings and Economics Experts
    Jul 12 09:49 PM | 2 Likes Like |Link to Comment
  • Negative Trends Could Hit Jack in the Box's Bottom Line [View article]
    Jack in the Box (JACK) HQ is here in my hometown of San Diego, and we watch their test stores closely.

    JACK's concentration of units in CA, particularly inland CA regions that have experienced the greatest housing fallout, is a factor to watch. In addition, JACK is refranchising many company units, to flip its 30/70% franchisee/company unit ownership mix, and credit market conditions mean that will play out for some time.

    John A. Gordon

    Chain Restaurant Earnings and Economics Experts
    Jul 9 11:18 AM | Likes Like |Link to Comment
  • Burger King: $1 Double Cheeseburger May Change the Game [View article]
    Burger King will have to model it, test it, promote it, in a meaningful way, and get support from their franchisee marketing council, to do this right.

    McDonald's has plowed this ground last year.

    Franchisees don't have the same resources that the company does, and are much more margin oriented.

    We doubt this is a game changer...but it could be a popular menu item. PS, the picture attached with the FT post is not at all representative of what the menu item could be.

    John A. Gordon

    Chain Restaurant Earnings and Economics Experts
    Jul 9 10:46 AM | Likes Like |Link to Comment
  • Jamba's New CEO Providing a Boost [View article]
    JMBA has a long way to go, and franchising non-core markets
    may not be the best strategy for this economy. While the company has noted that the stores have positive contribution margins, that might not be enough to counter lower G&A leverage and higher credit costs that franchisees traditionally suffer.

    JMBA new product related, I have been watching a test store in San Diego near the office, that is selling the test sandwiches/wraps/salads. The sandwiches, salads and wraps are of reasonable value and flavor profile, good POP and are selling. However, due to the price (about $5.50) and the price of the regular smoothie (about $3.95), the existing $2 instant discount efforts will need to continue. $7 at JMBA for lunch is about the same as many of the casual dining operators, right now.

    John A. Gordon
    Pacific Management Consulting group

    Chain Restaurant Earnings and Economics Experts
    Jun 30 11:23 PM | Likes Like |Link to Comment
  • Sonic: Now Offering Juicy Returns [View article]
    While Ockham's valuation point is noted, SONC has not driven enough traffic, to offset the discounting and downward average check shifts associated with its drinks and $1 value meal menu promotions. If it had, its comparable sales would be up. SONC comparable sales were down 5.4%.

    These promotions were not too successful, as Ockham implies.

    SONC has a high concentration of its stores in Texas and Oklanoma, which until this quarter, had been relatively less affected by the spreading recession. Therefore, one must wonder if some of the sales problem is self-inflicted by too narrow marketing.

    John A. Gordon

    Chain Restaurant Earnings and Economics Experts
    Jun 25 10:20 AM | Likes Like |Link to Comment
  • Sonic Corporation F3Q09 (Qtr End 05/31/09) Earnings Call Transcript [View article]
    Interesting now that both SONC (Sonic, QSR) and DRI (Darden, casual dining) have reported weaker sales trends lines for May. This also roughly tracks to the monthly RBC Operator/Buyside Survey operator sentiment conducted by Larry Miller, where 6/10 QSRs were negative.

    This was a more positive tone earnings call than earlier calls. It was great to see that both the company has rolled out and is working several new product mix management tools, and that the analyst's discussion focused on product mix. Also, some franchisee orented questions were asked too. With 85% of the company base there, their success is key.

    Important phrase to ponder: rebate checks vs, weather vs. change in promotional mix to explain the weaker May results.

    John A. Gordon
    Pacific Management Consulting Group
    Chain Restaurant Analytics
    Jun 24 01:00 PM | Likes Like |Link to Comment
  • Starbucks vs. McDonald's: Filtering Through the Coffee Wars [View article]
    Author is making his point boosting SBUX, but is stretching a bit, and has left a few impressions garbled:

    (1) McDonald's returned to its roots in 2002-2004 period and picked up sales momentum thereafter, but not solely due to its new coffee products worked in the 2007/2008 timeframe.

    (2) McDonald's IS NOT a coffee shop. 80% of its sales are in the non-breakfast daypart, and coffee sales are just a small percentage of overall sales base (I'd estimate around 5% or so). SBUX, on the other hand, is considerably more coffee sales centric (70 % plus).

    (3) Coffee is and was a profit center. The gross margin on a coffee beverage is perhaps 75% (or more). Coffee is a so called gateway product, which can lead to other meal situations and add on sales.

    John A. Gordon
    Pacific Management Consulting Group
    Jun 22 05:21 PM | Likes Like |Link to Comment
  • Wendy's/Arby's Group, Inc. Q1 2009 Earnings Call Transcript [View article]
    Wendy's Breakfast Daypart Critical

    While we are all for doing things right, Wendy's (WEN) lag in getting a working breakfast daypart is a real issue, particularly since many QSR daypart operators are running 20% of daily sales mix at breakfast. That legacy has to go back to the prior management group.

    The QSR majors have been working breakfast for almost 30 years.
    As a brand new QSR General Manager I conceptually struggled with it in in 1980, but its part of our lifestyles now.

    It's perhaps the only daypart showing traffic growth. Keep in mind that many QSR locations are in daytime oriented locations. You've almost got to have breakfast to help make the other dayparts viable.

    Breakfast should be a lower average check but higher percentage profit mix daypart, so it will change the margins perception, and needs to be figured into earnings projections.

    John A. Gordon

    Chain Restaurant Earnings and Economics Experts
    Jun 11 05:04 PM | Likes Like |Link to Comment
  • Buffalo Wild Wings: Growing Despite a Recession [View article]
    Seems that writer has perhaps has never been in a Buffalo Wild Wings unit.

    It's difficult to compare BLWD to a Brinker (EAT) or Darden (DRI) concept operation: AUV, capital investment, investmnent strategy all vary because the concept varies.

    Also, it is very problematic to categorize the fast casual and casual dining operators into high growth and no-growth cells. Even so, interesting to note how little the valuations differ, right? And I would not include PEET in any like analysis. Its a coffee shop and wholesaler. Alot in going on in each of these companies.

    But, for now, BWLD has a nice momentum underway, good sales comps and nice valuation, and perhaps a niche somewhere between casual dining and fast casual, which could be unique and priceless.

    John A. Gordon
    Restaurant Economics and Earnings Experts
    Jun 7 11:50 PM | Likes Like |Link to Comment
  • U.S. Restaurant Industry Outlook Remains Negative [View article]
    Restaurant equity price outlook, being more sensitive to day to day developments, might be in better shape in the near term.

    Restaurant sales and traffic fell in step function throughout 2008. Many chain restaurants should post better comparable sales trends after June, so long as their marketing is sharp, value oriented, they introduce new products in their R&D pipeline, and disposable income doesn't plunge again.

    John A. Gordon
    (619) 379-5561

    Restaurant earnings and economics analysis
    Jun 3 01:39 PM | Likes Like |Link to Comment
  • Same-Store Sales: Drugstores, Supermarkets, Fast Food Weathering Recession [View article]
    Marketing Charts presents a nice article, but the limitations of the use of same store sales as a metric must be noted.

    Both retailers and restaurant operators have core underlying inflation, of raw product for resale costs, labor, and other operating expenses. Therefore same store sales must be more than a little postive to cover these inflationary factors.

    Additionally, same store sales at minimum is the sum of three components: price, mix and volume influences. Retailers raise prices (when they can) and same store sales should go up by some like amount. All three same store sales components should be noted in analysis.

    John A. Gordon
    Pacific Management Consulting Group

    An analytically focused restaurant management consultancy
    May 6 10:57 AM | Likes Like |Link to Comment
  • Buffalo Wild Wings: Costs Are Getting Out of Control [View article]
    I suppose when you are a short, Its always easy to look for (and hope for) the negatives. Ourselves, we do not take stock positions, and supply independent restaurant analysis only.

    The company's real earnings fundamentals are good, much better than almost anyone in the restaurant universe right now. Consider all of the following:

    Postive same store sales--company stores +4.5%, zees 2.5%
    Company is adding new units--36 on year to year basis, 18-22 new units (company plus zees) in next quarter.
    $2.2M store level AUV isnt bad
    Depreciation up but this is a noncash expense--its a good thing, folks! It is a source of cash
    Price increase of 4% planned (for Chicken wings and other commodity movements).

    For now, BLWD is in that rare position where it is growing stores and comp sales in a very bad economy. Lets take it !

    Stock Price: little has happened since week ending 2 February (price $22.67) to week ending 16 March ($36.46) other than the rest of the restaurant universe continues to move sideways or down in real earnings fundamentals.

    John A. Gordon
    Pacific Management Consulting Group

    An analytically focused management consultancy

    Mar 23 11:30 AM | 1 Like Like |Link to Comment
  • Darden Surges on Positive Earnings Report [View article]
    Several chain restaurant operators have reported less of a decline in comparable sales versus prior year, in late February and March, to date.

    While I for one certainly hope business conditions improve WORLDWIDE, chain restaurant investors should keep in mind that 2008 was NOT A GOOD YEAR (traffic, especially at casual dining operations, fell throughout the year, but especially in September-December).

    Comparing to a weak 2008 is not the most valuable metric, and all factors should be conidered in assessing sales and (more importantly) earnings.

    John A. Gordon
    Pacific Management Consulting Group

    An analytically focused restaurant management consultancy that does not take stock positions
    Mar 19 03:34 PM | 1 Like Like |Link to Comment
  • Average Consumer Not Cutting Restaurant Costs [View article]
    I like Geezeo, but the restaurant statistic DOESNT TRACK at all to chain restaurant same store sales. US Same store sales are flat to down almost EVERYWHERE (with one restaurant chain down 12%, another down 20% year over year, same stores.)

    Perhaps this Geezeo survey didnt include frequency?

    John A. Gordon
    Pacific Management Consulting Group

    About us: we are an analytically focused restaurant maangement consultancy.
    Mar 13 02:20 PM | Likes Like |Link to Comment