Here is the math. If they own the roaster they make .16 per sleeve. If they don't they make .06 a sleeve. The issue is if they start to loose market share to diedrich and timothy's. Which if you didn't know they are...in a big way. The MM's are crunching the numbers every 3 months.
Also the machines (2) at Tullys are leased from GMCR so they will lose that rev. stream. The Bellacino items already done buy a 3rd party.
I believe this is a good deal for GMCR. I worry about how they will handle the business(yes the k-cups and stores). Tullys doesn't really move that many k-cups. But they do a ton of Foodservice bags and retail bags. GMCR doesn't know how to handle retail stores...I can promise you that...ask anyone at Newmans. They seem to have a handle on foodservice but not Sysco style. My understanding is big FS companies are moving away from Tully's due to this. Call it rumor...but I believe I am right.
Here is the issue. Tully's was losing money hand over fist. GMCR will stablize that...but I think that the GMCR style of doing business(which is odd, trust me) doesn't match up with the Tully's way. They will need to remove all the Tully's folks if they want this to break even after the purchase.
I am long GMCR. I think it will go down below $30 due to most people not understanding what is really happening. And I would say load up the truck if it does!!!
It sounds like a good fit. No retail stores to clutter up the operation, yet the infrastructure is already there to produce Kups and distribute to wholesale customers such as supermarkets. I like that concept. That being said, it sounds like the remaining Tullys retail and int'l. wholesale operation will be buying all Kups from GMCR. How bad can that be?
Don't know but think you're right; can't be sure as looks like Tully's will run as a "stand alone" company.At the same time I feel that GMCR would not charge itself (Tully's) a "royalty" on K-CUPS unless there is some business/tax advantage.
Hopefully the details will come out after the Conf. call and later on in filings.
Here's the same press release from Tully's
Reaffirms that Tully's is KEEPING and GMCR is NOT BUYING Tully's domestic RETAIL business OR Tully's internatinal RETAIL or wholesale business.
GMCR is purchasing the parts they are the leaders in (and best at growing out and expanding)
Despite Tull'y remaining a separately run company, actually being owned by GMCR, it would no longer be a 3rd party roaster. I would think that the royalties would go away and the full price/Kup would kick in. So wouldn't you count Tully's volume the same way as GMCR volume when doing this calculation? Am I misunderstanding you on this?