Thanks for your comment. I think the weakness in BOBE is organic earnings growth. Bob Evans rest is just starting to grow sales, but at a cash cost of remodels. Overall though, I can't see much more than a 1% to 4% organic same store sales growth for that concept in long-term. The branded food biz has decent growth potential, but high commodity costs are hurting margins today (but maybe not tomorrow?). Mimi's needs to go.
To me, the limited organic growth opportunity doesn't make it an unappealing investment. It just means BOBE has to use its precious cash & resources wisely to grow. I'm thinking one obvious avenue is to sell Mimi's. The other is to attempt effective marketing/branding campaigns for the branded food biz. I view the Bob Evans rest's as stable, slow-to-no growth cash generators - they're the classic, hometown friendly place that will be around for a long time and generate cash. Other avenues to grow the biz value is wise use of cash - debt pay-down, branded food marketing, opportunistic stock buybacks, and effective cost controls (which was done this most recent Q). I'm not an expert on the bob evans real-estate value, but I know they own their land and selling it in a cash-for-LT lease commitment is another way to growth the value. It isn't unreasonable to see BOBE in mid-$40's in late '12/early '13. So, we'll see...!
My family has been investors in Bob Evans since 1976 and done very well, all and all. But there are some simple things they should do RIGHT NOW that would not cost much of anything and I believe would have a dramatic impact on the stock. Anyone who has read my posts before will find some similar rants. 1. Simplify the Bob Evans Menu! It confuses customers (especially elderly), adds costs, slows down the kitchen, and ultimately decreases the experience for the customer. 2. Sell Mimi's and NEVER EVER BUY ANOTHER CHAIN. Mimi's is a failed concept. Most people know it is owned by Bob Evans, but it neither delivers a superior breakfast experience and sucks at dinner. 3. Do not sell owned locations. Owning their own locations has been a HallMark of Bob Evans fromn the get-go. Selling them and leasing them makes a great MBA case study, but takes a lot of management resources to run after the sale. 4. Up the dividend. Stock buybacks are a loser.