Finger Lick'n Good Management

Russel Creedy, CEO of Restaurant Brands Ltd [RBD.NZ] wouldn't give me an interview even though I probably know more about his company than anyone else but him but he did speak to the NZ Herald over the last week.

"There were some long-service people of 20 years plus who left, but the business needed that to change, and there's still some long servers left but they're the ones who were able to adjust and adapt."

A layer of managers between the chief executive and store managers was cut, Restaurant Brands quit making its own television adverts and supply agreements were renegotiated.
Most importantly, the emphasis on the company's star brand, KFC, was intensified.

"Change is necessary, you don't always know the true path or know 100 per cent where you're going to end up, but you've got to back yourself. It's not wild wild west stuff, you just talk to people, be open to change and ideas and bloody act.

"Procrastination will kill any business, no matter how good it is."

And there's more to come, with the company looking for a trade buyer for its 41 Starbucks stores - worth an estimated $10 million to $20 million - and the progressive sale of some of its 91 Pizza Huts to owner-operators. NZ Herald
I have been super critical of RBD and its management over the years (see links below and this Google search)) and skeptical of Russel's tenure over his last 3 years as CEO but I have to give him his dues.

Russel has done everything that I have been talking about for the last 13 years since the company listed to turn RBD around and it has worked.

Focusing on service and cleanliness, cutting costs and middle management and selling parts of the business that were losing money - Starbucks and Pizza Hut.

Creedy focused on the star performer, KFC, and has managed to grow sales to record numbers (if inflation is discounted since its record listed sales in the 1990s).

Profit is also near record levels if you ignore inflation again - I don't.

Previous management were focused on growing the company at all costs but Creedy has put the service and focus back in fast food and reaped the rewards.

This has had the effect of boosting the share price to above the 1997 listing price of $2.20 for the third time in 13 years.

Russsel has been the man at the right time for RBD and he has put in place all that the company needs for a sustainable and balanced business in terms of profit, something that RBD has never seen before. That must be tempered by the fact that he has just about wrung the maximum drop of extra profit out of KFC and the recession is helping his cause.

What he has done though is allowed the company to be able to trade well through the good and bad times and as the fast food sector is a fickle cyclical beast he has obviously put this at the top of his agenda and RBD, in the future just KFC, is in good health no matter what you think of the food they sell.

I only wish Mr Creedy would talk to me.


Restaurant Brands @ Share Investor

Chart of the Week: Restaurant Brands Ltd
Long Term View: Restaurant Brands Ltd
Stock of Week: Restaurant Brands Ltd
Restaurant Brands: Buy or Sell ?
Pizza Hut sell-off provide opportunities all-round
Danny Diab & Restaurant Brands
2008-2009 KFC sales figures mislead investors
KFC Finally Flying
Starbuck's New Zealand Cup doesn't runneth over
RBD gives KFC a push
McDonald's 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

Discuss RBD @ Share Investor Forum



c Share Investor 2010

Greek tragedy will have sequels

"The arrogance of officialdom should be tempered and controlled, and assistance to foreign hands should be curtailed, lest Rome fall."
Marcus Tullius Cicero

So one of the "PIIIGS" (the extra I's added by me is for Ireland and Iceland which has already disappeared up its own backside)has collapsed in a heap of its own debt and the local Greek population has gone feral because they don't want to face the reality that they haven't worked hard enough, borrowed too much money and really have little hope of paying back their creditors. Cutting back on wastage now is almost too late. Their debt restructure or austerity plan will have them owing more debt in years to come.

Could we see this coming though?

I and others have been banging on (see links below)about countries with high debt levels either servicing loans and having to eventually pay back what they have borrowed after the hedonism of the last 10 years or so (true the PIIIGS with the recent exception of Ireland have always lead their economic lives close to the trough edge) but people seem to have swallowed the line of that great economist, business leader and socialist, Barack Obama when he proclaimed he could see the "green shoots of recovery" in the US economy.

Well those green shoots were provided courtesy of more debt (on top of the debt accrued over the last 10 years or so and for the PIIGs even longer) ladled out with some very large buckets and the countries that provided those borrowed buckets of cash are now having to face the prospect of servicing that debt and clearly some of them cannot.

Those green shoots were courtesy of a false debt laden spring and the PIIGS are now drowning in the mud left behind.

What is clear is that the PIIGS are just the tip of the iceberg and what lurks beneath that berg is a sequel of events that will make Titanic look like a bath toy.

Look to the US for a blockbuster.

The DOW plummeted almost 1000 points this morning on fears over a European economic meltdown but at time of writing this was down 385 points.

*Footnote: It appears that the majority of the DOW plunge was due to a futures trading error that led to a wholesale sell-off.


"Cannot people realize how large an income is thrift?"
Marcus Tullius Cicero


Related Share Investor Reading

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The Definition of Insanity
The $700 Billion Question: How much will the taxpayer bailout affect my investments?
Free Market to Pollies: We dont want you!
Global credit squeeze: There is no free lunch
The global economy looks bad now? But wait there's more
Current credit crunch a blessing is disguise
Leaders must come clean over losses to restore faith
Market Meltdown: I can smell the fear from here
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Strap yourself in baby
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Recommended Amazon Reading


The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition) by Benjamin Graham
Buy new: $14.95 / Used from: $7.50
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Buy The Intelligent Investor & more @ Fishpond.co.nz




c Share Investor 2010

Hallenstein Glasson Holdings Ltd: Download full Company Analysis

Hallenstein Glasson Holdings Ltd [HLG.NZ] financial's including a full collection of data out May 6 2010 courtesy of Aspect Huntley/ASB Securities.

This is a series I will do for the Share Investor Portfolio and other NZX listed companies.

You will find balance sheets, ratios, charts, shareholder returns, 10 year analysis, broker recommendations, substantial shareholders, commentary and company details, forecasts and all the HLG info you could need to make a decision whether to invest or not. Download the full package at Share Investor Forum - you must join to download. It is free and takes less than a minute.


Disc I own HLG shares in the Share Investor Portfolio


Share Investor Portfolio Company Analysis Series

Auckland Airport Ltd
Michael Hill International Ltd
Xero Ltd

Hallenstein Glasson @ Share Investor

Hallenstein Guidance not indicative of wider retail recovery
Stock of the Week: Hallenstein Glasson
Hallenstein Glasson Australian expansion needs expert execution
Why did you buy that stock? [Hallenstein Glasson]

Discuss HLG @ Share Investor Forum




c Share Investor 2010

Rod Drury ready for the long-haul with Xero

I take a number of things away from an interview I did with Xero Ltd [XRO.NZ] Rod Drury but the two things that stick in my mind are his deep passion for the business and the fact that he is in it for the long haul.

Previous to this disclosure most of us thought he was trying to build a brand to eventually flog it off but Rod has some long term goals to achieve:

Share Investor - "Was the intention of yourself and the Xero board to build the company up as a brand with the express purpose of selling, along the lines of say 42 Below?"

Rod Drury - "No. Having sold businesses before, this time we want to grow a long term business. The market is really just starting and with accelerators like iPads, Google's up coming Chrome operating system we think that things are only just getting exciting."

While there is some merit in building a brand for someone else to buy in the short-term, more money will be made from a business for its shareholders - if it is based on good premise and run well - when the the long-term game is played. Xero has an advantage there playing the long term game.

Rod's overriding passion for his business is a motivation for those around him and the business as a whole because it provides an impetus for employees to manage themselves in a similar way and radiates out to Xero consumers - hey passion is contagious!!

I still wouldn't touch Xero with a barge pole though, not because I don't think the company is a good one, but as an investment it is one of the riskier ones for those individuals who understand the sector in which Xero operates. I still don't fully understand Xero and what they do and I like to invest in companies in which I know what they do and how they do it. I think you have to be a tech head or a user of Xero products to be able to know it well. Then if you are in that position and do know the company well and therefore see where they are going I dont blame you for investing .

Having said that I will reserve my final judgment for the promised profit for Xero in 2011 indicated by Xero management at their annual meeting last year.

I would like to publicly thank Rod for participating in the Q & A, for whatever you think of his company we don't get enough leaders of our public companies willing to put themselves under this much scrutiny.

I enjoyed the experience immensely.


Share Investor Q & A Series

Auckland Airport's Simon Moutter
Warehouse Group CEO Ian Morrice
Briscoe Group CEO Rod Duke
Ryman Healthcare's CFO Gordon Macleod
Ecoya's Geoff Ross
Xero's Rod Drury
Mainfreight MD Don Braid
Burger Fuel Director Josef Roberts
Sky City CEO, Nigel Morrison
Sky City Entertainment: CEO Nigel Morrison discusses 2010 HY
Convention Centre proposal interview with Sky City CEO Nigel Morrison


Xero @ Share Investor

Share Investor Interview: Xero's Rod Drury
Xero Ltd: Download full Company Analysis
Rod Drury on Xero and Growing Business
Xero set for surprise to the Market?
Love Xero?
Share Investor's 2010 Stock Picks
Stock of the Week: Xero Ltd

Discuss Xero @ Share Investor Forum

Download Xero Company Reports






c Share Investor 2010