Free cash flow is a lot higher than that. They have bought back 40% of their stock over the last 5 years. Recently, they have been paying off debt. They will be bought out in the next year or two.
50 Restaurants means the 50 corporate ones they own. They also have 140 franchise locations on top of that. They should be earning $2 - 3 million net on just the franchises alone. This company only earns half of what it should.
I have not read any reports, but how do they make under $5 million in net income but own ~50 restaurants. I do not live in a region they are prevalent in, but the restaurants I have seen of theirs look nice and expensive. If just their corporate owned stores made $150,000 after tax each, then that is $7.5m in net income. Where am I going wrong?
I've been reading a lot of positive comments on the restaurant sector in 2015. Economy doing well. The low price of gas provides move discretionary income. Same store sales up compared to last year's polar vortex. All good news for DAVE.
Sentiment: Strong Buy
I see my favorite store in Augusta, GA is no longer there. Their website looks better than HABT, LOCO and ZOES. They don't trade (volume) enough for me to buy. I buy a bottle of their BBQ sauce once a year at Wal-Mart in SC. In the South BBQ restaurants are plentiful and high quality MOM & POP establishments. Their cooks are in and out of prison and jail but they'll work for $8 an hour, as they have a record still warm off the press. DAVE should transform into a football type sports bar. Good luck to longs. I wouldn't be surprised if DAVE was $50 in a year or two. I'm sticking with TASR for now as it goes up and down 5% a day, and demonstrations are getting more violent.
It's pretty obvious that DAVE will be sold within the next 18 months. Four of the five board members are major holders in the company. David Mastrocola and Jonathan Lennon from Pleasant Lake own 923,000 shares. Adam Wright owns 429,000 shares. Patrick Walsh owns 381,000 shares. That's just the board members. Add in Scott Brummer who owns SAB Capital with 634,000 shares, Wexford Capital who owns 700,000 shares, and Lioneye who owns 598,000 shares and you have 3.6 million shares (greater than 50% of shares) accounted for. It only takes these 4 board members and 3 hedge funds to vote their shares in favor of a sale and it's a done deal. Ed Rensi has no intention of sticking around. Neither does Richard Pawlowski (CFO) who specializes in turning around companies and selling them. Read the writing on the wall. This management team, board of directors, and hedge funds are looking to sell DAVE. I'm guessing they will get at least 275 million for it which is around $40/share.
Sentiment: Strong Buy
They can't sell the company. They are shrinking and stores are selling less now. Nobody will pay much for a company going the wrong direction. Maybe 5 times earnings? That would be $6 per share. They need to turn the company around before they can consider selling it.
They said on the conf call they will come up with a new marketing plan next year and that they are working on it now. Not very encouraging.
I shop at Meijer and pass by the Bolingbrook location every day. If this is a test location in which you're going to base a lot of future decisions on I'm baffled as to how they chose the site they did. There are some signs but almost no visibility from Janes Avenue (you have to turn on a side street, 2 different choices, in order to actually get to Dave's) which is the main road. A location that would have been so much better is where the IHOP is about to open. It is located in the corner of the Meijer (which is always incredibly busy) parking lot and "across the street" (on an angle) from Dave's.
I think they should sell and deliver daily runs of DAVE food--say BBQ pork and riblets--to neighborhood bars. Initially gratis but as part of a program to have the food at the neighborhood bar. In Appleton WI, they could try this at a place like Hank and Karen's. Sales might be low but it will remind folks that DAVE is just across town when they want to really pig out. Rensi can email me here for the address to send the consulting bonus.
You and Rensi don't get BBQ. If you look at all the most successful BBQ joints you will see they do not get regular bar business.
Regular bar patrons come daily and drink and eat. Nobody can eat BBQ everyday. It is a heavy food and just does not lend itself to daily regular customers. To get bar business up makes sense. But to think you can get regulars to eat BBQ everyday is foolish.
I have to admit that Rensi sounded pretty old when talking about what millennials liked in bar food and craft beer. However, he is on the right track as far as the craft beer goes. He mentioned Pacific Northwest franchisee with over 30 beers on draft. I looked at the Bolingbrook beer menu and was impressed with the selection of local beers as well as others. What is really unusual is that they are all served in pints, including Dogfish Head 90 minute IPA (9% ABV) , an 8.3% Saison and Revolution Brewing Anti-Hero. Serving the 90 minute IPA only in pints is the kind of irrational thinking that will win beer fans. The bar food needs work. No salads. Needs pork belly like they have at Revolution brewing or even better yet the pork belly tacos they have at Three Floyds. Once they figure that out, they will be some regulars in there. Also need some kind of attraction or reason to make DAVE a destination. Sponsor some softball or volleyball teams to get the word out about the bar. Guys don't go to Tilted Kilt just for the beer. Throw some Daisy Dukes on the bar waitresses for some Southern fun. Show some Nascar on the big screen.
I have no idea what you're talking about. Franchisees pay an up front fee and 50k for each new location. They pay 5% of gross sales as a commission to DAVE.
Nope. They said on the call that Bolingbrook has better sales comps than the rest. Not that their sales are higher.
If there was anything positive about Bollingbrook to say, don't you think they would have said that? Not a word.
They did say they were using their cash to buy stock. That makes sense as to why the stock price iso so high. They are supporting the stock price by spending millions buying it. That works until they run out of money.