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John Gordon

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  • 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
  • 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
    http://bit.ly/m8ad9
    chain restaurant analysis and advisory
    Jan 24 11:20 AM | 3 Likes Like |Link to Comment
  • Chipotle Mexican Grill: The High Multiples Are Justified [View article]
    Alex: a few points:

    (1) CMG is NOT getting a 70% return on each restaurant. The data table you included excludes CAPEX and G&A which brings down enterprise returns lower. Not your fault, but retail and restaurant companies make that same per store display error endlessly. Investors have to know that.
    (2) No forward lineal extrapolation model can possibly be accurate. In the restro space, market conditions, incomes, restaurant development and tastes and preferences change greatly. In my long restaurant analytical career, these lineal models never work out.
    (3) The 1.61 elasticity is a bit high, never seen it that high. Maybe 1.15.
    (4) When viewed over history, restaurant lifecycles are finite. Management capability to prolong the lifecycle can't be knowable at this point.

    John A. Gordon
    Pacific Management Consulting Group
    chain restaurant analysis and advisory
    http://bit.ly/m8ad9


    Mar 17 11:00 PM | 3 Likes Like |Link to Comment
  • 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
  • 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
    http://bit.ly/m8ad9
    Mar 24 11:48 PM | 2 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
    http://bit.ly/m8ad9
    chain restaurant analysis and advisory
    Feb 14 02:51 PM | 2 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 06:24 PM | 2 Likes Like |Link to Comment
  • Is Noodles The New Chipotle? [View article]
    Jargon: the table in the article uses parameters from each companies one full year prior to IPO, from their respective S-1s. It is true NDLS has far fewer units than CMG currently, but thats not the point. The point is to compare NDLS prior to its IPO and then CMG prior to its IPO.
    Jul 4 01:25 PM | 2 Likes Like |Link to Comment
  • Is Noodles The New Chipotle? [View article]
    Jay, look for the first analyst coverage to begin about 30 to 45 days out, lead by Cowen and Morgan Stanley, after the initial research is done. That's when the websites will pick up more data. One of the key matters to consider is whom is NDLS's best peer?
    Jul 1 05:12 PM | 2 Likes Like |Link to Comment
  • Biglari Holdings, Inc: Sardar Biglari - Bet The Jockey Part VII [View article]
    Dana: CEO workship cults don't have a very long time working in this space....in a service business, it is the staff that delivers the value, not the CEO.

    Moving on...seems like you are saying that because of the CBRL consolidation accounting, the $BH holdings have a "more reasonable valuation", even though they have no control of those earnings except via dividends or stockownership rights.

    I'd recommend you keep the earnings metrics clean and simple, and not muddy the waters.

    John A. Gordon
    Pacific Management Consulting Group
    http://bit.ly/m8ad9
    chain restaurant analysis and advisory
    Mar 18 12:47 PM | 2 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: The Correction Has Just Begun [View article]
    INTC is not a proper peer of MCD.

    John A. Gordon
    chain restaurant analysis and advisory
    http://bit.ly/m8ad9
    Mar 11 11:30 AM | 2 Likes Like |Link to Comment
  • Darden Restaurants' CEO Discusses Q3 2011 Results - Earnings Call Transcript [View article]
    The Darden (DRI) earnings calls are always interesting.

    Looks like the company's strategy of prereleasing estimated Q3 same store sales and earnings on January 31 was successful in that it created a secondary story and blunted the inevitable Olive Garden/Red Lobster story.

    While both Olive Garden and Red Lobster posted negative traffic (weather), Red Lobster outperformed both Mitchell's (RUTH, SSS -2.1%), and McCormick and Schmick's (MSSR, SSS minus 1%).

    DRI has extracted well this year, with sales being up $260M and EBIT up $75M, for first three quarters, for a corporate EBIT flow through of 29%.


    John A. Gordon
    Pacific Management Consulting Group

    Chain Restaurant Earnings and Economics Experts
    pacificmanagementconsu...
    Mar 28 12:56 PM | 2 Likes Like |Link to Comment
  • CKE Restaurants Results Raise Too Many Questions [View article]
    We'll have more comments on CKE soon, after the earnings call, but:

    (1) when revenue falls, I'd expect operating income to be down, unless more can be squeezed out of restaurant margins or G&A. Companies can only go so far in doing that, and this may signal that point.
    (2) Carl's, with its California centric store base, will AUV underperform, with state unemployment at 12% and underemployment another 17%. Hardee's, being more mid-west and south oriented, had a more moderate sales decline.
    (3) Almost every single QSR operator, save McDonald's is posting same store sales declines, and will do so for some time to come.

    John A. Gordon
    Chain Restaurant Earnings and Economics Experts
    pacificmanagementconsu...
    Mar 25 09:02 AM | 2 Likes Like |Link to Comment
  • Bullish Option Strategy Bets on Yum [View article]
    Perhaps the issue is that nothing notable is happening from a YUM earnings fundamental standpoint looking forward.

    In its October 2009 earnings call, YUM reported its three major concepts each with negative same store sales (Pizza Hut -14%, Taco Bell and KFC -2%). Its $.12 EPS excess came from commodity costs, G&A savings, etc. You can do cost savings for only so long, and indications are the bulk of the commodity decreases are behind us, with some inflation on the horizon.

    YUM has built an amazing company operated business model in China, but the Street still looks for US sales momentum.


    John A. Gordon
    Chain Restaurant Earnings and Economics Experts
    pacificmanagementconsu...
    Jan 5 01:53 PM | 2 Likes Like |Link to Comment
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