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John Gordon  

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  • Activists Vs. Darden: Look Beyond The Real Estate [View article]
    ARG1, I'm a fundamentals analyst and motivated only by making the right analytical call. DRI price movements the last 10 trading days haven't moved at all, even with today's uptick.
    Apr 22, 2014. 08:40 PM | Likes Like |Link to Comment
  • Activists Vs. Darden: Look Beyond The Real Estate [View article]
    Right, understood your point and sentiment.

    Now, hope you will lay out proper long term value logic, looking beyond the real estate, including, whether a private equity solution is not appropriate for Darden itself.
    Apr 22, 2014. 12:41 PM | Likes Like |Link to Comment
  • Ignite Restaurant Group: Hidden Value In The Company's Attractive Assets [View article]
    Shaun: the Market is not so precise and does not view individual company components together well, and a revenue based multiple is a poor yardstick. That seems to be causing the large Macaroni Grill negative value.

    John A. Gordon
    chain restaurant analysis and advisory
    Apr 17, 2014. 11:00 AM | Likes Like |Link to Comment
  • Darden Restaurants Fiasco Continues As Lawsuit Is Filed And Shareholders Demand Vote [View article]
    Actually, both Darden and the Activists have not made compelling points. One must look beyond the real estate, which is the focus of the activists and imagine other equity ownership outcomes where a Red Lobster spinoff might make sense.

    The ownership scenarios proposed by Activists are not the only outcomes. Appearances are deceiving and one must take a longer view.

    Unlocking value is Wall Street speak for financial engineering. Its rarely right for the long term.

    See my article, Darden: Look Beyond the Real Estate,

    John A. Gordon
    chain restaurant analysis and advisory
    Apr 16, 2014. 12:08 PM | 1 Like Like |Link to Comment
  • Don't Sell McDonald's Stock Because Of 2 Minimum Wage Myths [View article]
    Tim, I'd recommend thinking more about restaurants as integrated whole systems, rather than just separate company owned and franchisee pieces.

    Everything affects everything else.

    MCD is a (1) real estate operator (2) franchisor and (3) company operated unit business. The business model has to be strong enough for franchisees to absorb periodic wage increases....because if they can't, restaurants don't get remodeled and in time lose sales, market share, MCD loses royalty and real estate margin. You get the drift.

    The Q for MCD the franchisor... is the business model being improved so the wage hikes are workable?

    John A. Gordon
    chain restaurant analysis and advisory
    Mar 24, 2014. 11:48 PM | 2 Likes Like |Link to Comment
  • 4 Potential Hurdles For The Restaurant Industry [View article]
    Hi Heather: Thanks for commenting on these complex topics. I'm just trying to track through some fine points:

    Regarding the Ellison et al calorie study, how did they relate the number of calories to the number or type of entrees? As you can imagine, restaurant menu mix is quite complicated. A 2011 Starbucks/NYC labeling/calorie study showed a very tiny decline in the number of calories ordered, but that may or may not relate to product mix and average ticket.

    Was the 2%/4% revenue shift pre and post a control?

    Regarding the projected increase in the tipped wage, am trying to understand the basis of the calculation. Until there is a federal minimum wage change and/or federal tip credit change, the tip credit effect has to be a complex calculation of what the states do, unless there is over riding federal changes.

    John A. Gordon
    chain restaurant analysis and advisory
    Pacific Management Consulting Group
    Mar 6, 2014. 11:50 PM | Likes Like |Link to Comment
  • McDonald's: Business Model, Valuation And Minimum Wage Legislation [View article]
    Tom, very interesting piece and academic research. One question and two comments:

    Question One: Who is the author of the undated/untitled restaurant academic paper?

    Comment One: The effect on franchisee restaurant operating margins likely will be much greater than 1 percentage point. There will be pass through of course, but it will depend.

    Comment Two: many factors have changed since the academic research time reference. The ratio of franchisee to company stores have changed, the number of restaurants has risen and the presence of dollar menus and the like all works to make this murky. The pass through has to be tested in today real world.

    John A. Gordon
    Pacific Management Consulting Group
    chain restaurant analysis and advisory
    Feb 28, 2014. 08:58 PM | Likes Like |Link to Comment
  • The REIT Answer For Darden Is Its Coveted Real Estate Portfolio [View article]
    Another long read on Darden (DRI) and REITs that does not discuss: (1) whats the change in the restaurant operating model due to spinning off restaurant real estate (2) that there are no restaurant REITS to serve as a proper benchmark.

    John A. Gordon
    Pacific Management Consulting group
    chain restaurant analysis and advisory
    Feb 14, 2014. 02:51 PM | 2 Likes Like |Link to Comment
  • Expect Darden Shareholder Pressure To Intensify [View article]
    I know its popular to pile on DRI currently but a deeper analysis than the above is required. DIN is a very poor peer for DRI. EAT may work, but, BLMN is closer.

    John A. Gordon
    chain restaurant analysis and advisory
    Jan 24, 2014. 11:20 AM | 3 Likes Like |Link to Comment
  • Dunkin' Brands: Effective Management = Higher Yields [View article]
    Writer raises interesting questions, but a much longer, more detailed look is necessary if comparing DNKN v. SBUX, or any company owned versus franchised model.

    Two comments:

    (1) the stock trend is important, but only so relevant and representative to what's going on the fundamentals of the company. SBUX's EPS and SSS trends have been generally better, and its free cash flow exceeds that of DNKN by a factor of four.

    (2) the value of a corporate directed franchisee advisory council is not that it exists, but how it influences franchisor stewardship and provides a useful platform for franchisees to own, invest and be more successful. That is a much more complicated story.
    Dec 26, 2013. 03:41 PM | Likes Like |Link to Comment
  • Wendy's Turnaround Reaching An Inflection Point [View article]
    Writer and readers, just to clarify: "pre tax cash on cash ROI" as noted above is not a good metric because it does not count or match all of the cash outflows (debt service, taxes, CAPEX, overhead) associated with the initial investment to the inflows. its not even a cash on cash view. Only by a full allocated view will the total cost of capital be evaluated.

    Back to WEN: it has a lot of potential: higher AUVs than others and a strong fresh food heritage. The inflection points comes when it consistently generates same stores sales via traffic gains, finds ways to get the franchisees remodeled economically, gets breakfast working and powers up international development. Not yet, but I hope for the best.

    John A. Gordon
    Dec 17, 2013. 03:58 AM | Likes Like |Link to Comment
  • Wendy's Turnaround Reaching An Inflection Point [View article]
    Thanks for writing. Two factual notes however:

    (1) the 20% AUV reimaged sales gain is not likely or probable over time. 20% was the early test results, but the real test cells aren't being repeated due to expense. Assume less. And assume the sales lift is more of a shorter lift duration, not over many years.

    (2) the franchisee "11% ROI" is not correct. This is more akin to a simple, unlevered cash on cash return and does not include the cost of debt service (principal and interest), taxes, and future years CAPEX.

    Because of the heavy CAPEX nature of restaurants, its vitally important to use fully loaded costs to rough out a true ROI.

    John A. Gordon
    Pacific Management Consulting Group
    chain restaurant analysis and advisory
    Dec 16, 2013. 02:04 PM | Likes Like |Link to Comment
  • Cosi Inc.: A Troubling Earnings Report [View article]
    Shaun: why in the world would any company hope to push a broken brand to its franchisees? Who do you think pays the bills to sustain unprofitable operations? The franchisor (COSI) should perfect or fix the model BEFORE franchising.

    John A. Gordon
    Pacific Management Consulting Group
    chain restaurant analysis and advisory
    Nov 25, 2013. 11:49 PM | Likes Like |Link to Comment
  • Investors Should Follow Darden Restaurants For Break-Up Value [View article]
    Chris: this is an interesting question, but I don't believe BWLD or BJRI are good peers. A good peer has similar market penetration potential, economic returns and capital structure.

    The DRI Speciality Restaurant Group (SRG) is different than those two. The average checks and thus market potential is much different. BWLD and BJRI have around a $15 averege check, the SRG excluding Yard House is way over $80, as but one example.

    To be sure, DRI needs to layout the internal synergies, and fully allocated free cash flow for the brands. But there is little chance we can accurately guess this internal information.

    John A. Gordon
    chain restaurant analysis and advisory
    Oct 10, 2013. 01:19 PM | Likes Like |Link to Comment
  • Is Chipotle Going To Serve Breakfast? [View article]
    The restaurant business is the sum of proper execution of thousands of small details. All of the following details must be considered before breakfast can be seen as an option:

    (1) Is there cannibalization of likely higher gross profit cents/item lunch/dinner items to lower cents/item breakfast items?
    (2) Incremental labor/marketing expense for the most highly priced to perfection company ever. Think: the Wendy's experience (WEN).
    (3) CMG has not one drive thru. At breakfast, price and speed are essential.
    (4) The most important factor: the Steve Ells factor. Is it right for the concept?
    Oct 7, 2013. 06:24 PM | 2 Likes Like |Link to Comment