Things are never as good nor as bad as they seem. Many of this company's problems stem from a combination of undercapitalization and huge spikes in commodity costs.
As an outsider, the departure of Art and Tim are obvious signs of stress and turmoil within the company, and more than likely also major differences in opinion on the direction necessary to turn things around.
We know the concept will work. We've seen the margins in well ran stores. However, it's much easier to make money in good times than in bad. All along, the plan was to plod ahead, be cash flow positive, and feed expansion to get to a point of being self sufficient and being able to raise equity to grow the chain rather than debt. There was no way in hell that they'd ever be profitable using the Dunham development agreement. However, it would allow them to get the stores rolling when no one else would finance them and allow them to later move on to more attractive financing sources.
Regardless, with commodity prices being such as they are, they're forced to play the hand they were dealt. Based on the e-mail and mug club survey I received, there seems to be an effort happening to put more focus on the bar. This is a good thing. They're adding Sunday Ticket and ESPN game plan. What does this really mean? I don't know. The tv's behind the bar are so far in the air that they strain your neck if you're sitting at the bar, although they're not too bad from the booths. Small tv's in the booths might bode well. I'm also curious to find out if they will actually turn up the volume on the tv's. For Wall Street, they've tried to keep the focus on food as their food is really better than their beer. But because of the margins on the beer, they really need to focus on that for a while.
I'm holding on to my stock because at this point zero doesn't represent that much downside. What I'll be focusing on is continued margin improvement as announced in their turn around plan last year, and the cash burn rate as well as the DHW line of credit balance. That line is primarily for building new stores but there are provisions to use a portion of it for operations.
They should be marketing the crap out of the mug club members but really havent been doing so. I don't know if this is because they have no one to do it or if it's more an issue of not feeling that it's necessary. Weekly specials should be emailed.
At this point, all options should be on the table. Maybe the wort house needs to be the brew house as well. Then future stores would not need brewing equipment and could add dining space or bar space, or simply reduce construction costs. The beer would be more consistent, the odds of running out would be less, and could be delivered by van rather than tanker truck. Yes the ambiance of the fermentation vessels is attractive, but at what cost? Or maybe they do it like BJ's where one location brews for three or four others.
Darius comes from good pedigree. At this point it's pretty much in his hands. I hope he's capable.
A Sports bar? Ha Ha Ha! I've only been to the GC by my house, but I can tell you the managers there don't even know how to change a channel. My buddy and I went there on NFL's opening Thursday night. The Twins were playing as well and GC had drag racing and ESPN News playing on the 2 TV's behind the bar. When we asked to get the games on, the manager gave us a look like it was a huge chore. I hold stock in this pile unfortunately and I am also a Mug Club member with over 1200 beer points. But that was the last straw. We drank our one beer and went over to Buffalo Wild Wings and it was packed with at least 200 people. GC had maybe 30. GC has no identity, their beer prices are too low, and the management sucks.
I agree with much of that - especially the ticket and what does that mean? They didn't want to be a sports bar - now they want to be a sports bar. They really need to decide who they are and go for it. They need to stop shooting ideas out - trying them half hearted and moving on to something else. As for the beer good idea in theory but I think there are some laws that prohibit the transportation of alcohol across state lines.
I'm not so sure that they want to be a sports bar, but what they're doing will bring in some people on saturday and sunday afternoons when they're not that busy. The layout of the bar area is such that they would never be able to put in the size and number of tv's necessary to make it a real sports bar. However, to be able to drink some "real" beer at a reasonable price and watch some football sounds appealing.