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John Gordon

 
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  • A Long-Term Value Case For Wendy's, Part III [View article]
    Very comprehensive review. While SOTP is interesting narrative, the real fundamental catalysts for WEN are (IMHO):

    (1) getting the WEN quality value promise reinforced in the consumers mind.
    (2) remodeling stores and store experience platforms, both company owned and franchised. The franchise economics will be the most difficult because of the CAPEX required.
    (3) getting breakfast to work.
    (4) more new product new news.
    (5) the then resulting same store sales, restaurant margins, expanded and viable franchising.
    (6) consolidating its position before weaker competitors do so.

    John A. Gordon
    Pacific Management Consulting Group
    restaurant analysis and advisory
    http://bit.ly/m8ad9
    Oct 26 03:01 PM | 3 Likes Like |Link to Comment
  • Analyzing Companies Is A Complex Affair: Don't Use EBITDA [View article]
    Excellent article. Financial analysis becomes flawed when all relevant revenues and costs aren't considered. Overreliance on EBITDA causes distortions.
    Oct 19 04:32 PM | 1 Like Like |Link to Comment
  • McDonald's: Are Analysts' Q3 Estimates Too Optimistic? [View article]
    Very nice displays. However, I would recommend you examine the MCD real estate/brand component and G&A as well to pin down MCD more precisely.

    John A. Gordon
    restaurant analysis and advisory
    Pacific Management Consulting Group
    http://bit.ly/m8ad9
    Oct 18 09:09 AM | Likes Like |Link to Comment
  • Domino's Pizza Beats Earnings, Buy To Profit From International Growth [View article]
    Writer: understood, but $DPZ does not have low debt. While its a franchise model, its LT debt to EBITDA is app. 5X.
    Oct 17 09:59 PM | Likes Like |Link to Comment
  • Sonic Management Discusses Q4 2012 Results - Earnings Call Transcript [View article]
    Seems to me Sonic has trouble relaying even good news, over the years, this quarter included. Whats the point in not breaking out sales comps exactly?

    Disappointing that not one question or discussion on franchisee store level economics, for a chain that is 90% franchised.

    130 bpts leverage on labor costs pretty large, wonder what is really getting cut.

    Lots of initiatives underway and company stores discussion but what about franchisees? Will they/can they use the service tool and enhance POS tools? Larry Miller's Qs on franchisee comps shortfall vs. company stores and zees use of service tools most telling.
    Oct 17 05:56 PM | Likes Like |Link to Comment
  • Follow Einhorn In The Chipotle Short? [View article]
    In terms of his fundamental analysis, writer very clearly isn't familiar with the restaurant space and what drives sales and customer traffic long term. He way overemphasizes price, and has the relevant customer motivations mispegged.


    John A. Gordon
    Pacific Management Consulting Group
    chain restaurant analysis and advisory
    http://bit.ly/m8ad9
    Oct 12 10:50 AM | 1 Like Like |Link to Comment
  • Long-Term Investors Should Play With Dave And Buster's IPO [View article]
    Crash and burn--second time. Sometimes the info in the S-1 really is just marketing.

    Too much debt from earlier PE acquisitions and dividend taking. Third private equity failure or crash and burn (IRG) so fat this year.

    There are only so many 49K sq. foot sites in the United States in great sites that are developable for these sites. But international is a different story.

    John A. Gordon
    restaurant analysis and advisory
    Pacific Management Consulting Group
    http://bit.ly/m8ad9
    Oct 4 11:03 PM | Likes Like |Link to Comment
  • McDonald's Could Be Selling Coffee Beans: Should Starbucks, Dunkin' Donuts Be Scared? [View article]
    Answer: No. $SBUX and $DNKN business models are much more complex than a one single business line effect. But opening up a CPG channel for MCD is new news and could be a catalyst for nearly 100% incremental margin after startup and investor interest.
    Oct 4 10:22 PM | Likes Like |Link to Comment
  • McDonald's Dividend Depends On How Well Its Franchisees Do [View article]
    Likewise, I agree, well written article. Not that $MCD is perfect, in all matters all the time, but it was built using the rule of three in many of its business structures: 3 components of operating income, 3 components to marketing, etc. The real estate was a way initially to attract investor funding and provide structure for franchisee agreements.

    Hard and soft costs to open a full sized unit well are over $2M, not counting debt service, franchisee G&A, and outyear CAPEX. Most franchisors leave that out of the marketing pitch, and the ROI has to have fully loaded costs to be accurate..

    MCD is publicly traded and is subject to the pressures of The Street.
    Oct 4 10:14 PM | 1 Like Like |Link to Comment
  • Jack In The Box Overvalued Despite The Recent Hype [View article]
    Jason: thanks for the numbers and the points. I wish the Street valuation was so simple as to crank out a formula and the same price pops out.

    Same store sales, unit growth, ROIC, perceived momentum and the ever present PE ratio are the drivers to restaurant perceptions.

    John A. Gordon
    restaurant earnings and economics experts
    http://bit.ly/m8ad9
    Oct 1 10:19 PM | Likes Like |Link to Comment
  • Shares of Darden Restaurants (DRI +4.8%) trade higher after the company records a narrow earnings beat with its FQ2 results. Nothing was spectacular from the report, but reaffirmed guidance and a pickup in traffic late in the quarter buoyed the spirit of investors. [View news story]
    $DRI Q1: amazing favorable cost leverage, esp. labor seen in Q1; implied industry traffic100 bpts slower in Sept to date.
    Sep 21 12:07 PM | Likes Like |Link to Comment
  • How McDonald's Could Lose Over $140M In Revenue [View article]
    In the US, about 81% of units are franchised. The New York City market mix will vary of course. It is principally a revenue loss to franchisees, but also to $MCD, as it receives royalties.

    The drink count noted looks very low, perhaps it was for the evening shift only.
    Sep 18 04:20 PM | Likes Like |Link to Comment
  • Noble Roman's Inc: Who Knew Pizza Could Be So Profitable [View article]
    I really appreciate that writer is long Noble Roman's. But as is often said, buyer beware.

    Growing up in Indiana and a IU Bloomington grad (where Noble's started in 1972), I know Noble. It was a small Indiana centric pizza operator, with a regional identity. For one reason or another, throughout the 1980s and 1990s, they lost it operationally and got out of the operating store business. As writer noted, they morphed to a franchisng and supply chain business in the late 1990s and 00s.

    Whether Noble actually has real open "stores" is debatable. When Noble refers to locations, they are referring to points of distribution, or PODs. Whether they count a sign or pizza box or actual products sold as a POD is a great question.

    Noble's 2000 era franchsing effort ended in disaster: EVERY one of their franchisees at a point sued in the mid 00s. It did divert management's attention. The franchisees lost the action via a series of rulings in 2009-2011, for a number of reasons. None are current franchisees, that is, their stores closed.

    It is a family operated operation. Its what you get.

    Hope springs eternal. Do due diligence.

    John A. Gordon
    chain restaurant earnings and economics expert
    http://bit.ly/m8ad9
    Sep 7 02:02 PM | 2 Likes Like |Link to Comment
  • McDonald's: Don't Look Back; Burger King Is Gaining On You [View article]
    MCD v. BKW: they are really in two different classes, almost not comparable.

    If this article was written ten years ago, perhaps. But BKW is at least ten years behind, likely twenty years, with US and world-wide store store level AUVs two times or more higher than that of BKW. BKW suffered through a decade of private equity and poor internal management suboptimization. MCD is remodeling with existing cash flows, BKW is hoping to remodel VERY OLD stores based on franchisees money that hasn't been invested (or found) yet.

    And BKW will have to get past Wedny's first. And CKE Restaurants. And others. And it has to deal with its own in house retail guru, Bill Ackman, he who of Borders, Target and JCP fame.

    BKW has some same store sales momentum in the US right now, but I'd hope so, given the large number of new products and the ad fund investment.

    Let's watch the numbers.


    John A. Gordon
    chain restaurant analysis and advisory
    http://bit.ly/m8ad9
    Aug 14 10:13 PM | 5 Likes Like |Link to Comment
  • IPO Preview: CKE [View article]
    CK IPO was pulled at the last momement Thursday evening.

    Restaurant space momentim has cooled, with 50 days of earnings misses and soft sales from a range of companies. And CK would have been the 5th restaurant IPO in the last 60 days.

    As IPO Desktop indicates, CK's legacy interest costs would have depressed earnings (even thought they were improving), and resulted in a difficult, costly PE ratio. In addition, the debt/EBITDA ratio would have been high. Same store sales were positive and improving but only a low single dibit range.

    John A. Gordon
    chain restaurant analysis and advisory
    http://bit.ly/m8ad9
    Aug 10 10:45 AM | Likes Like |Link to Comment
COMMENTS STATS
173 Comments
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