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Bob Evans Farms, Inc. Message Board

  • golfer18us golfer18us May 13, 2014 9:19 AM Flag

    Poor returns and poor margins

    As most of you know, activists have been clamoring for several changes. One of the changes has to do with selling the owned real estate. Now, I'm not sure that's a great idea but what seems to get lost in the conversation is that despite owning a significant number of their stores (and the underlying real estate), their operating margins stink. Most restaurant companies lease their sites and, as such, have occupancy expenses in the 8-10% of revenues range. These guys don't have that cost yet their operating margins are bad. Selling the real estate would expose that and may not be a great idea. Yes, they'd generate some 1-time cash inflows from the sales but the annual lease expense they'd now have would likely generate losses. Bottom line...this appears to be a flawed operating business. That's what the numbers suggest.

 
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