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June 29, 2012

Strange McBedfellows II

In this political environment we suggest McDonald's franchisees take another look
at how their political contributions are being spent.

Revisit our posting on this issue here
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June 25, 2012

McDonald's or Burger King? Ask Jim Cramer...


I'm loving this ... CNBC's Jim Cramer comments on Burger King's expansion plans. He states:

"Burger King clearly knows how to play the trading game. They just put out a release saying they are going to build 1000 stores in China. 

What a great way to juice a stock since you don't actually have to build them. 
You just have to talk about them."


Thanks for telling the truth Jim!

CNBC video is HERE
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June 23, 2012

Burger King, the Cash Cow

In my humble opinion - in five years we will no longer be referring to Burger King
as a major player in the QSR industry. Here's the history of the "financial engineering"
that is destroying that company.

>>> The New York Times Comments

 “Burger King has had 13 chief executives in 25 years"
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June 19, 2012

Store Wars With Burger King?


Today McDonald's execs presented at an investor conference admitting
that customer traffic will be difficult to grow near term. So, if they can't
make investors happy with increased same-store-sales it's necessary
to increase the number of outlets.

Management announced they will open 1,300 new stores in 2012. How
does that compare to recent years?

Here's the global and USA rate for the past four years:

2008 - 590 (56 USA)

2009 - 511 (62 USA)

2010 - 259 (47 USA)

2011 - 773 (71 USA

These are the number of stores operating at year's end so it includes the
net of openings less closings. We assume the 1,300 discussed by
management is an increase in the total numbers of stores operating.
Hopefully very few of these new stores will be in the over saturated USA.
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Not Enough Company Stores?

“Too many franchisors are bailing out on running the company restaurants
and that is going to be a problem down the road. Maybe it coincides with 
so many deal guys getting into the restaurant business. A deal guy can’t 
tell a grease trap from a mop sink, but sure knows that collecting royalties 
is better than paying them”

‐ John Hamburger, Restaurant Finance Monitor, May 22, 2012
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June 1, 2012

McDonald's Equity "Sweet Spot"


Most McDonald's Operators have seen a recent brochure advertising three stores 
for sale.

I've argued for years that there is much more to pricing McDonald's stores than cash
flow ratios.While not passing judgment on the asking price of these stores this package
does have a "Sweet Spot".

The "Sweet Spot" is the length of the remaining franchise terms (12 yrs, 10 yrs, 14 yrs).
These years give a buyer some time to justify required reinvestments triggered by the 
sale before having to worry about a rewrite.


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