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Frisch's Restaurants, Inc. Message Board

  • algo41 algo41 Apr 18, 2005 10:58 AM Flag

    curious

    I didn't listent to the CC. Did they comment on the latest drop in Golden Corral same store sales? did they finally acknowledge some problems?

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    • Algo - they don't seem to get it. All buffer concepts are suffering right now. furthermore, with the franchise royalties they pay on each dollar of sales, they must execute far better than a RYans or Old Country Buffet to get the same bottom line margin. This is a classic example of a management team that simply feels the need to grow even if return on capital is inadequate.

      They keep up the refrain, cannibalization and learning a new concept. Cannibaliation only affects one or two stores and they have been in this business for five years. To put it another way, why get into a business you don't totally understand with a $100 million committtment (the cost of the first set of restaurants to build). Also, to be fair to management, they did kind of hit a perfect storm, but GC wasn't doing that well before the storm.

      I currently value the stock around $23.50, but truthfully in the current environment, I only see it going down. It would have to go down near $20 to interest me at this point (assuming of course there is not further deterioration).

      Any stocks you like these days?

      • 2 Replies to swampgator1
      • Although GC is down as a group there are a number of stores that are doing well. As a group GC is making money and the group as a whole is getting better. Home Town Buffet is closing stores left and right, Denny's is losing money, and Ryans is suffering but they are trying to rebound by using the Fire Mountain Brand.

      • -Don't own the stock, so I'm just interested in this stock along with a lot of small cap stocks in VL's small edition issue.
        -Notice that FRS has a pretty good record, and good fundamentals- first, earnings per share have grown from 33 cents in '96 to 2.05 cents in '04- according to VL, and increase in the last 5 years at 20.5% per year.
        Financial strength- B+, Long term debt- 41.2 Million dollars.
        Long term debts covered (after taxes) about 4 times- adequate.
        Profit margins small but growing- '96-1.4%,2004- 4%.
        -Small dividend. Yield of about 2%.
        -Return on total capital- 1996-3.5%, Return on total capital-2004-10%.
        Sales per share have been growing- from 23.32 per share, to 51.84 in '04.
        They evidently have been buying back shares, since in 96, there were 7.16 million shares, and now there are 5.03 Million.
        I can't see anything but positives at looking at the information provided by VL.
        What am I missing?

    • I listened to the conference call tonight. After the rehash of the reported earnings they reported that they were using $9,000,000 of the life insurance proceeeds to pay down loans and reduce interest expense. They mostly blamed the slowing economy and higher gas prices for the lower same store sales. I found it interesting that the customer count was only down 1.6% at the Big Boys, but was down 8.5% at the Golden Corrals.

      They said that the Sister Store effect on the Golden Corrals was getting to be less in Cincinatti where the number of stores has leveled out, but that in newer markets was still quite high. From my point of view, it seems like the Big Boys are a better investment, but they seem wedded to the Golden Corral concept. I can't get my wife enthused about eating at them, so I'm not sure why I still own the stock. :<)

      They indicated that they don't plan to open any Big Boys in the next 12 months, but plan to open 5 new GC's each year through 2011.

      Steve

 
FRS
25.390.00(0.00%)Dec 23 4:00 PMEST

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