How can a restaurant chain like DIN with about 300 more than twice the number of units than DENN but less than 1/2 the total gross revenue report positive earnings? A head to head comparison by yahoo finance provides no clues. The cost of running 3700 restaurants has to be at least twice as running 1700. The cost of a billion and 1/2 in debt should be at least what 250 million is. How are they doing this? Are they converting common stock to preferred? Are the prefered shares counted against earnings. The very bottom line should relect that this restaurant chain make less gross revenue per unit than DENN and offer a clue how so much of this revenue turns up as "net revenue" when margins aren't anywhere near 30% and how this "net revenue" turns into unbelievable earning per share.
A accountant would be appreciated here. Do "Preferred shares" count. Do earnings per share only count "earnings" aganst "common shares"? Does DIN have 1/4 the number of shares out VS DENN with about a million or do they have 46x the shares outstanding? The only way I can make heads or tails out of this is to forget shares. If you take the gross revenue and divide that by total stores...................A typical Dennys delivers more revenue to the corporation (franchised + company stores) than does a typical DIN unit. The debt per unit in each respective company from a risk perspective is much lower (franchisee debt withstanding) per store in the DENN chain (almost 1/3 the debt) than a average DIN unit. Since both companies are making money building and franchising units......the question remains..... what restaurant chain can make money when all it's company stores are franchised? I can visualize Dennys being debt free.........Din.... no way.
The DIN francchise system is larger and much better!
DIN ended 2011
- operating 192 restaurants (avg sales of $2.2M) and
- franchising 3,377 restaurants(avg sales of $2.0M) & 6.01% royalty
DEN ended 2011
- operating 206 restaurants (avg sales of $1.9M)
- franchising 1,479 restaurants (avg sales of $1.4M) & 3.63% royalty