Shankar N

Long/short equity, value, long only
Shankar N
Long/short equity, value, long only
Contributor since: 2012
Company: NA
Thanks for your comment, Taylor. We may well see several New Year's resolutions featuring a meal at Zoe's at least a few times a week!
Thanks for your input Just Some Guy. We have excluded majority franchised chains from the list. Looking forward to do another piece on majority franchised- full service chains soon.
Thanks Investor 2012. Didn't include Dave & Buster's Entertainment coz, it's a very unique offering. But agree with you that their numbers are not just good, but incrementally improving over the years.
What do you folks think about their Hacienda design for new and renovated outlets? Haven't had a chance to visit one yet. Do you think those draw more traffic, because it seems comps are up 3% in those units?
Thanks for taking your time to share the data JoeMiner.
I just hate share-buybacks, especially if the underlying business is strong. Love B-dubs for what they have done in the past and can do in the future. They should just allow Mr.Market to do whatever it wants and just concentrate on the long term growth. I keep thinking, 200 million=80+ additional units. Anyways, at-least they didn't take the Panera route and kick start a billion-dollar share buy-back program.
Thanks, funguy! Yeah, there's nothing stopping them. AUV's at a healthy 1.9 mill, margins and comps are strong and guest traffic is on the uptick as well. No reason they can't be! Did you see our first article about them here:
We've also submitted another one based on their Q3 earnings. Hopefully that should be out today as well.
100% with you about that being a myth. There's so much more potential here.
Absolutely, Paul! Interesting analogies can be drawn between WING and BWLD, for sure.
You're welcome, Patrick!
You could definitely be right about the new team at the top, but the company seems so entrenched in its troubles that it would take an Herculean effort to pull it back to break-even - leave alone profitability.
From that point of view, do you think 2-3 quarters is really enough? I mean, if they can show even a marginal improvement in their numbers that would be a breath of fresh air at this point, for sure, but we'd have to see something tangible during that time to be convinced.
Exactly our thoughts when we wrote this, Daviry...
"it seems to be a forced decision rather than organic one that has emerged from a well-thought-out win-win plan. In fact, it almost seems as if Yum US will breathe a sigh of relief when it starts becoming a pure-play franchisor rather than remain an embattled foster parent."
However, that "sigh of relief" may well turn into a grunt of frustration if they do (and they probably will) go forward with this.
At this point, we don't know much about the unseen forces at play on the ground in China. Dare we say it's political pressure that's sending Yum running with its tail between its legs?
Any further thoughts from anyone about this?
We'll definitely be covering that in an upcoming article on throughput. It seems their throughput kind of leveled out this past quarter but, to be fair, they haven't fully rolled out the second "make line" (serving line) at all locations.
I guess they're waiting to see how many transactions per hour they can push it up to a before they roll it out system-wide - I did note that the places they tried it at managed to make $500 more per day, so that's potentially a $25,000 addition straight to their average unit volume and $44 mill to their top line if they do go global with it!
Will do some additional research on delivery service for the article as well.
Keep those ideas coming. Loving them!
Yup, Nancy, the kind of focus they've been putting on their throughput over the years is tremendous...they didn't grow under the shadow of the Big Yellow Arch for nothing! :)
Growth will come, for sure. But perhaps now's just an opportunity for us to get in? More on that in a couple of days; we're doing a piece on exactly that.
Thanks for your insight!
Great idea, although to be honest the only thing keeping us from comparing a fast casual with a full-service like B Dubs is their different operational models. However, stock trends do have similarities irrespective of service segment so, yes, we'll consider it for sure.
We're also going to be doing a comparison between CMG and PNRA in a few days - specifically about the myth surrounding "missing the boat." Hope you enjoy that one.
In the meantime, your comments on any of our other restaurant pieces will be greatly appreciated.
Thanks again!
Thanks for the kind words, Roberts. While we haven't heard anything about a possible acquisition, it's definitely not off the table the way things are going.
International and domestic revenues for Q3 are both down YOY, as are comp sales for all for company-owned units except Outback Steakhouse...
...and they've even sold their corporate aircraft, apparently!
CEO Liz Smith has already admitted that their marketing programs failed them, and we all know that "increased efficiencies in advertising expenses" can only mean one thing!
However, they're still pushing unit growth - 6 overseas and 4 domestic; and they're repurchasing shares like crazy - $60 mill this quarter past and a further $100 mill, the authorization for which will expire in Feb 2016.
Smith is also confident that they'll meet their EPS goals for the fiscal.
Curious to know what our other readers are thinking about Bloomin'!
Thank you very much for the kind words, Long Investor. Yes, it's often these zoom-out views that reveal so much more than deep analysis.
We're actually doing a series of three more articles on Chipotle this month, so is there anything in particular you can suggest that we cover?
Thanks reisenberg.
I think I clearly mentioned in the summary "Bad Daddy’s margins need to be watched closely if you’re an investor. We feel that’s where the biggest leaks - and biggest improvements - can come from."
And Also "Estimates for average cash investment for each Bad Daddy unit are expected to be in the neighborhood of $700,000 to $1 million. That's considerably lower than what many other fast casuals are paying for their new units"
Thanks for your comments jcdm.
Thanks IdahoInvestor.
In fact if you look a bit closely, I am saying the same things as you are. Their supply chain has not been very profitable for them for a long time. They are probably holding on to it, so that it can help Pie5 grow. All I am suggesting is why not spin that off or move out of it, which I believe is the most likely thing to happen.
But if they manage to widen their margins in supply chain then the amount of money they can make in the future can be enormous.
Thanks Fighting Pragmatist.
My disclosure is already published. Can you please share yours?
Thanks for your time, Fighting Pragmatist.
So Shifting the inventory to third party is going to dramatically increase their margins on Supply Chain?
Thanks for your comments Paulie W. Can you please explain this to our readers,
Food and Supply Sales - 30.7 Million
Revenue from franchising - 4.5 Million
Income from Food & Supply + Franchising = 1.5 Million (before Taxes)
If in case you need some info, please spend some time to read this article, at least the second half if you can.
Thanks Again
Thanks JKB123.
As per their Annual Report
"In Fiscal 2014, our average per-person spend was $59, which we estimate is approximately three-quarters of that of the traditional high-end steakhouse category."
Yes. I agree with you that they are at the lower end of the check size spectrum, which is also one of their biggest advantages. They can keep slowly improving their check size and drag the restaurant level margins along with it.
Thanks for your comments LWCDGI. That's exactly the problem and the management doesn't seem to realise that they are lacking attractiveness quotient. Restaurants need to change and adapt. They are still stuck with the things that worked a decade ago and financial management/real estate assets can only help for a short time.
Thanks for your comments Shilohdog1.
Thanks for your comments Whatsup! I like the way the company is moving forward. It will be fascinating to watch how they expand. Are you long Habit?
I am not sure why NDLS is not shutting down their under-performing restaurants. They hardly closed their units in the last few years.
With their Average sales per restaurant stuck at $1.1 million, cutting off the outliers would have improved their AUV, while positively impacting their margins.
Thanks Phubby. I do agree with your thoughts. This was my thought process as I went through reading about them.
2.That's great!
3.Oh my God!!
4.Are you Serious? I don't believe it. Some thing is wrong. May be I am really dumb and missing something.
5.Read more and more, as much as you can find.
6. Whatttt? Oh my god!
7. Mmmmmm
8. Fine. What can we do?
9. The world is still flat then!
10. Sighhhhhhhh....
Thanks for the question ACarefulobserver. This is why they ended up in the Junk bond bucket. (
Moody's assigns a Caa1 CFR to Nathan's Famous; outlook stable:
The Caa1 Corporate Family Rating (CFR) reflects Nathan's high level of business risk due to product and customer concentration that includes significant reliance on a single agreement, very modest level of revenues and earnings and aggressive financial policy favoring shareholders. The ratings also reflect Nathan's high leverage and weak interest coverage pro forma for the proposed bond offering with debt to EBITDA of over 6.25 times and EBITA to interest expense of about 1.4 times for the LTM period ending December 28, 2014. The ratings are supported by the high level of brand awareness of Nathan's core product, premium beef hot dogs, the higher margin and less volatile earnings stream from franchise and licensing revenues, particularly the agreement with John Morrell, and adequate liquidity .
Spot on Observation DAHodgkins. You argument makes total sense. Nathan's is a good short term bet, not sure if I would buy and hold them on a long term, at least not until this management or a new one earns the trust factor. But I am worried that they might have lost it forever.
Interesting observation, Gingi. Unfortunately, what we’ve seen of their finances gives us the feeling that “publicly traded” doesn’t always mean “transparently managed”.
That’s the reason why this company is such a risk. After all, shouldn’t investors be jumping on the bandwagon of a solid company that is finally growing again? Just goes to show how important the faith of the investors in the management team is.
Thanks LongTruth for your time and thoughts. useful info.
Haha! Hope they are planning to beat the estimates and CEO wants to sit and watch the rally. That will be cool. He will have a nice vacation then....