Monday, March 19, 2007

RBD: The Secret Recipe is out

I was completely unaware of this:


It bought bankrupt Pizza Hut restaurants in Victoria and a new Australian competitor, Eagle Boys, in New Zealand.

The first buy - encouraged by Yum! and sweetened with A$3 million ($3.41 million) in marketing spending - has been a millstone for years and is only now being disposed of after months of wrangling with Yum!


It makes the purchase of Pizza Hut VIC an even worse folly than it turned out to be-although I was ever hopeful that RBD would get it right.

I just have to ask myself why didn't the market know about this "incentive" before or did i just miss this info when it came out?

Wouldn't one have to ask oneself, if one was a RBD board member: " the chain is bankrupt AND they are giving us a monetary incentive to buy it, shouldn't we question seriously why YUM would be this accommodating?"

Was it stupidity, naivety or just plain lack of business acumen that would led RBD along this path and to their close demise as a whole?

I would pick lack of business acumen. Knowing the figures, margins,royalties to YUM and other costs they should have known whether it was a goer right from the onset AND secondly the point where they should have known to let go, sooner as it turns out.


Just an important point about the margins, perhaps Diabs experience should have been viewed with more scrutiny:

Even a Restaurant Brands board member, Australian entrepreneur Danny Diab, says he's had no problems running his privately owned Pizza Hutt franchises across the Tasman.

The differences between profit and loss for the business is that Diabs' PH don't have the extra layer of costs that RBD management bring to the table. Because margins are as thin as a Pizza Hut topping there is no room for fat at any level .

Of course Diabs hands-on running of his outlets, like Dominos' store owners, makes the difference in service and quality, although I would argue that DOM does it much better.

Cut management numbers and boost service levels, t he first things I would do if I
was CEO.


c Share Investor 2007


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Thursday, March 15, 2007

Restaurant Brands Saga Continues(CEO Leaves)

So...Vicki Salmon has been swimming against the river of opinion for her to go and finally she has. Has it has taken her 10 years to decide that the fortunes of RBD are gradually in decline or has she milked enough moola as a director and CEO, 1.2M over the last 4 years and around the same for the previous 6 years, that she figured it was time to go.

I have been critical of her since her placement as head chef at RBD and she has more than lived up to my low expectations of her. Under her stewardship profit has declined more than under her predecessor and service levels and food quality at KFC and Pizza Hut have resembled a similar flight path much the same as the proverbial flightless bird the kiwi.

I made a comment about her flashy dress-sense at the time of her placement as CEO, calling her in effect a "Flash Harry" ; all image and little substance. Her continual emphasis on how stores looked and how marketing was done was continually being let down by the complete disregard to service and the customer experience.

Competitors in this hard fought industry have overtaken RBDs past dominance of the QSR sector and real sales and profit continue to slip.

Analysts and financial commentators continue to trumpet Vicki's' "success" in the turnaround of KFCs' fortunes. What bloody turnaround would that be? 5M dollars more sold than their best year, behind when inflation is taken into account by 25-30% and even further behind when one considers recent stats indicating very healthy increases in the fast food sector.

How bad does one have to be as a CEO to be given the rooster?

Sadly , Vicki leaving/being pushed ain't gonna cut it either. When you consider the poor calibre of management ,just below Vicki, at board level and then the detritus that makes up region, area and store managers then as a share holder you would have to be worried that the management direction of RBD, will be, like the aforementioned Salmon, have RBDs' fortunes swimming weakly upstream.


c Share Investor 2007

Tuesday, March 13, 2007

Forex-Daily Updated Forex Data

I have an interest in Forex Trading and have been using "Easy Forex" as my client. Below is updated daily data supplied by them. It has links to the Easy Forex website if you are interested in going further. I would be interested in feedback on your experiences with trading currency, so drop me a post!!



c Share Investor 2007

Thursday, March 8, 2007

Restaurant Brands 2007 Sales Analysis

The latest sales release from RBD can be described best as, same crap different year.

Lets have a closer look:

KFC

KFC ended the financial year with the highest total sales ever at $182.7m, an increase of 6.3 per cent over the prior year. Same store sales increased 7.1 per cent for the full year, the highest annual same store sales growth.

In pure dollar terms yes KFC is 5m ahead of sales figures of 2002 , less than a 3% increase but when you factor in inflation, at a generous figure to RBD of 3%, that increase in sales is more than wiped out in one year. Extrapolate that 3% out over 5 years and you can see KFC is still hurting badly. I'm being generous to KFC and disregarding increased wages, utilities, raw product costs.

"The transformation of KFC is clearly gaining momentum as we combine store revamps with some innovative new products and a successful promotional calendar," she said today.

Now where did I hear that word "transformation" before. Yes! it was on the cover of the 2000 annual report, That was the buzz word for the year-looks like it was Vicki's' idea because she has wheeled it out again this year.

Transformation, specifically related to KFC in the 2000 report:

"..transformation of KFC with the introduction of innovative burger and snack products and store upgrades..."

AND

"...the KFC brand has been re-inventing itself...the continued store upgrade...provide(s) customers with the excitement of a vibrant,fast moving brand..."

All sounds eerily familiar to today's statement.

Vicki has a focus on marketing even in her press releases, I cant wait for this years report for some new buzz words.

Watch KFC in the face of competition from other chicken chains, notably Red Rooster. KFC is now offering whole roast chickens, as RR has always done. I put the idea of providing roast chickens to the head of KFC 7 years ago but he told me it wasn't viable because of the costs involved-oh how times change.


Pizza Hut:

Not much to be said really, the figures speak for themselves:

For the full year, total Pizza Hut New Zealand sales were down 10.5 per cent to $79.7m, with same store sales declining 11.8 per cent.

In the face of competition from Domino's, complacent RBD management have let this brand suffer so much the amount of dough in their pizzas can now be seen from space. I remember Vicki saying something like "...we are not worried about the competition..." when Domino's first came on the scene. Look at Domino's now, we have never been back to PH since Domino's opened and sales figures suggest alot of others have done the same.


Starbucks:

Ironically this brand used to be the straggler, now sales are increasing and all looks good. Except it still operates at a loss because operating costs are too high. Rent of some of those CBD outlets of theirs is killing the very reason for them being in business.


Summary:

The focus by Vicki and her troupe on style over substance-brand image is just that if there is trouble in the kitchen: high management cost, poor service. There was no mention, and there should be, of service levels and what they are doing to make them acceptable, so we can only assume by the service in front of house that they are doing a big fat nothing.

In the face of competition RBD is an immovable feast: complacent at best and slow to react . Witness the demolition of Pizza Hut by Domino's and then wonder what might happen to KFC in the face of a bigger Red Rooster or Church's Chicken of America(cover your eyes it ain't going to be pretty)

Looking through nearly ten years of RBD reports, one must come to the conclusion that RBD, while going up and down in fortune, as QSRs do, it keeps going further down when it is down and never quite reaching the previous peak when its fortunes are up.

The future does not look good and recent talk of takeover activity(doubtful according to todays spin) may only happen when the next valley RBD gets into is unable to be got out of by spending more shareholders money on a new marketing plan, when it is the S in QSR that is sadly missing from RBD management's secret recipe.


Restaurant Brands @ Share Investor

KFC finally flying
Starbuck's New Zealand Cup doesnt runneth over
RBD gives KFC a push
McDonalds playing chicken with KFC
Restaurant Brand's Pizza Hut faces increasing competition
RBD sales analysis
RBD saga continues: CEO leaves
The secret recipe is out
2007 FY profit analysis
Delivering increased profit in October 2007
No reason for optimism in latest sales figures

Related Amazon reading


Fast Food Nation

Fast Food Nation by Eric Schlosser
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c Share Investor 2007

Wednesday, March 7, 2007

Long Vs Short Term Investing

An interesting debate that was carried out on my share investor forum


The 2 opposing sides of this debate are encapsulated perfectly by a third entrant:

Brut wrote:,
Macdunk & Snoopy

I am new on this tread but I thought I'll add my 2 cents worth... It's great to have two opposing views on investing in the share market, if everyone agreed there wouldn't be a market. By this i mean, if everyone agreed (bulls & the bears) that XYZ stock was worth $5 a share, there wouldn't be a market (nobody would be buying or selling)
I personally like to invest 90% of my portfollio in long term stocks & I have 10% in speculative stocks that I trade. I'm probably not as experience as you guys, but I've learnt that you find a system that works for you & stick to it.
Goodluck to both of you!!!



... It's great to have two opposing views on investing in the share market, if everyone agreed there wouldn't be a market...

Share Investor:

Exactly, I couldnt have said it better myself. Snoopy and Macca are examples of the 2 opposite sides of your quote Brut.

Welcome to Share Investor!




The debate over the long and short-term thing rages on. I have a go at both approaches and both can be used in ones arsenal of investing tools, a Benjamin Graham and Warren Buffett approach if you like!!

Many investors say on or the other of these methods is right or wrong. Remember though, when investing do what is right for you dear reader.

Happy Investing,

C Share Investor 2007


Thursday, March 1, 2007

Sky City Entertainment Group Ltd: 2007 Half Year Profit Commentary

While there is plenty to be negative of over yesterday's first half year for Sky City Entertainment Group Ltd [SKC.NZX] ,there is positive as well(sometimes you have to ignore the negative because it is just that bad - sense the sarcasm in my turn of phrase...? )

First the negative. Clearly one of the contributors to the 23% profit slide was the luck of the high rollers-the luck went with them this time. That doesn't explain the whole picture though. There was also a 5% drop in revenue from the flagship Auckland Casino and since margins there are the highest of the groups casinos profit got hit.

Another large contributor to the profit drop was the cinema division, a division so devoid of promise and future growth and so demanding on CAPEX and time that it sickens me that management would hold onto it, what do i know though...

What we could say though is that it is only up from here, I cant see things getting worse-famous last words huh?

The positives are quite clear. Revenue is up at all other casinos, even Adelaide, and especially Darwin. Darwin, in my humble opinion, is a future star of Sky City, an area growing rapidly with no sign of any smoking Nazi's getting their way and banning smoking-very important for gamblers.

I would have to give the result a 4 out of ten. VERY disappointing.


Disc: I own SKC shares in the Share Investor Portfolio


Sky City Convention Centre @ Share Investor

Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
SKC Convention Centre power-point slide illustrations & SKC submission to Auckland City Council

Sky City Entertainment Group @ Share Investor


Share Investor's Total Returns: Sky City Entertainment Group Ltd
Sky City Entertainment Group Ltd: Presentation to Macquarie Group
Morningstar Revalues Sky City Entertainment Group
Guest Post - Michele Hewitson Interview: Nigel Morrison
Failed Sky City bid for Christchurch Casino good news for Shareholders
Sky City Entertainment Group Ltd: Christchurch Casino bid falls short of Investment Criteria
Sky City Entertainment Group Ltd: Never mind the width feel the volume
Sky City Annual Meeting & 2011 - 2012 Profit Forecast
Stock of the Week: Sky City Entertainment Group Ltd
Sky City set to lose National Convention Centre bid
Sky City Entertainment Group: Australian Acquisition on the Cards?
Sky City Entertainment Group Ltd: 2010 Full Year Profit Analysis
Sky City Entertainment Group 2010 Full Year Profit Preview
Chart of the Week: Sky City Entertainment Group Ltd
Share Investor discusses Convention Centre proposal with CEO Nigel Morrison
Share Investor Q & A: Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Sky City Convention Centre Expansion a Money Loser: Part Two
Sky City Convention Centre Expansion a Money loser
Sky City Entertainment Group Ltd: Download full Company analysis
Sky City 2010 full year profit looking good
Long Term View: Sky City Entertainment Group Ltd
Sky City Entertainment: CEO Nigel Morrison discusses 2010 Half Year
Sky City Entertainment Group 2010 Interim Profit Review
Sky City to focus on Gaming
Sky City debts levels now more manageable
Insider Trading on Sky City shares
Sky City Profit Upgrade: Always on the Cards
Sky City's Current Cinema "Boom" a Horror Story in Disguise
Stock of the Week: Sky City Entertainment Group
Are Insiders selling Sky City Stock?
Sky City Entertainment 2009 Interim Result Preamble
2008 Sky City profit analysis
Sky City share offer confusing and unfair for smaller shareholders
Sky City Entertainment 2008 Full Year profit results , NZX release, 2008 full year presentation, result briefing webcast, financial statements
Sky City 2008 profit preamble
Sky City outlines a clear future plan
As recession bites Sky City bites back
Sky City Assets: Buy, sell and hold
Why did you buy that stock? [Sky City Entertainment]
Sky City Share Volumes set tongues wagging
Sky City half year exceptional on cost cutting
NZX Press release: Sky City profit to HY end Dec 2007
Sky City Cinemas no Blockbuster
Sky City Entertainment share price drop
New Broom set to sweep
Sky City Management: Blind, deaf and numb
Sky City sale could be off
Opposition to takeover
Premium for control
Sky City receives takeover bid
Sky City Casino Full Year Profit to June 30 2007
Setting the record straight
Sky City CEO resigns
Sky City Casino: Under performing
Sky City Casino 2007 HY Profit(analysis)
Sky City Casino 2007 HY Profit


Discuss SKC @ Share Investor Forum
Download SKC Company Reports

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c Share Investor 2007