This is a reprint of an earlier post.
Making Dough, UFOC, Common Sense
by: di_vur_se_fi 03/06/04 09:59 pm
Msg: 85882 of 117568
On pages 30-31 of the book, MAKING DOUGH: THE 12 SECRET INGREDIENTS OF KRISPY KREME'S SWEET SUCCESS (Kirk Kazanjian and Amy Joyner, John Wiley and Sons, 2004), is some interesting data.
The authors quote some sales figures from the UFOC (Uniform Franchise Offering Circular); this information is not found in the various SEC filings. The information details revenue and profitability for four company stores in fy2001:
Location: Charlotte, NC
Date opened: September 1990
Total revenue: $1.23 million
Retail sales: about $1.1 million
Operating profit: $549,942
Location: West 38th Street, Indianapolis, IN
Date opened: May 1995
Total revenue: $3.7 million
Retail sales: $812,133
Operating profit: $1.35 million
Location: Indianapolis, IN
Date opened: sometime after May 1995
Total revenue: $2.78 million
Retail sales: $771,945
Operating profit: $1.22 million
Location: Winston-Salem, NC
Date opened: Not provided
Total revenue: $2.69 million
Retail sales: $1.96 million
Operating profit: $953,111
The first thing that is striking about these figures is the low total revenue relative to the 10-k reported average of $69.0 weekly per company store:
(weekly total revenue in thousands)
Indy #1: $71.2
Indy #2: $53.5
The second thing that is striking (even shocking), is the extremely low retail sales revenue:
(weekly retail revenue in thousands)
Indy #1: $15.6
Indy #2: $14.8
COO (former CFO) Tate has indicated on various cc's that typical retail sales are about $40,000 per week in the steady-state. Even the flagship store in WS didn't attain that, at least not in fy01.
For comparison purposes, PNRA averaged $35,600 in weekly retail revenue at its stores systemwide in its recently completed fy04.
Finally, the operating expenses as a % of sales is astonishing low, especially given that I have previously shown that kkd's mix cost alone is about 58% of revenue in fy01 at 100% company owned stores:
(operating expenses as a % of revenue)
Indy #1: 63.5%
Indy #2: 56.1%
What about the expenses for store labor, depreciation, store rent, and all other store level expenditures? If these stores have the average 58% mix expense, then what happened to the other expenditures?
As many long-time readers know, I have previously shown that 100% company owned stores are responsible for nearly all the earnings growth in the last year:
The information in the UFOC, while consistent with my own observations of slow retail sales, is inconsistent with the information in the kkd financials, imo. I don't understand how these stores can show such high profitability when
1) the consolidated joint ventures stores are barely profitable
2) the equity method joint venture stores are not profitable
3) the company stores are largely low margin wholesale operations as opposed to the largely high margin retail operations of the joint ventures
It doesn't make any sense
Hello Di-ver. Welcome back.
As an intellectual exercise, well done. But too much analysing over why the thing won't move when I push on this end of the string, could be a useless endeavor.
Refer to old Darvis here perhaps(How I Made 2 Million....).
After spending weeks finding and analysing the best company in the best industry, he thought he'd just discovered gold. So bought a bunch of company stock....and the stock never moved.
Flash forward to this POS. It should be going down, but wait a minute...what the heck is this.
My son, my son. Why hast thou foresaken me? Can you not see the evil that has entered your mind and body? Do you not realize how that poison alcohol has turned you to side with Satan? Your words are to pitied, and you will forever be cursed with your nemesis namesake, bornagain. For it will always remind you that you are only capable of weak, poorly contrived banter. We all will pray for you, as well as your brethren who I have admonished here on several occasions in the past. For he, too, cannot stay on a straight path.
<<< Well, for one thing you're wrong on applying a certain gender to either of those spellings. >>>
See for yourself...
"The adjective is a relatively recent borrowing into English from French (the traditional English terms for blond being "fair-haired", "flaxen", or "tow-haired"), and careful writers still distinguish between the masculine blond and the feminine blonde. "
<<< What's that supposed to mean chimp?
"Blonde" or "blond" are both acceptable forms of the word. In either case, I'm the expert in spelling on this backwood's board. >>>
Blond is the male form of the word. Blonde is the female.
Better understand the difference, unless you are a fan of these type of "women"
Thanks for the reprint.
From what you say, the profitability reported in the Krispy UFOC was an exageration of that reported in KK's audited statements. Krispy has since admitted that its audited statements were incorrect.
Presumaably the UFOC financials were an inducement to sign up franchisees, and as such are a slam-dunk basis for suits.
What, if any, franchises were established after the UFOC release?
My 5'8" blonde model is waiting.
Are you talking about a doll, or a real person??
If it is the latter, and if true, what about your wife? Regardless, this says a lot about you and your character.
Anyhow, this is starting to sound like the "confessions board", and not like the KKD investment board.