I would have to disagree. Debt is at approximately $50Million. Figure (at least) a 5% interest rate, that means $2.5M in interest payments alone. Their first mission MUST be to get to sustained profitability (meaning more than just a single quarter in a row of positive EPS). Once they get on better footing, they could look at share buybacks -- though I am not a fan of that approach either. There have been plenty of studies that shows buybacks dont have the impact one might expect. Dividends is more effective.
I agree on the coffee at 50 cents, or even a $1.. I mean c'mon... $1 isn't too much for coffee. I think that at best their coffee is middle of the pack,,, nothing special, they should really consider going with a private label blend from a small specialty coffee roaster. People rave about Dunkin's coffee, but our Donuts are better... let's beat them in both arenas.
As far as the stock buy-back, I am not proposing anything overly aggressive, and I think that we are cash-flow positive, most of the losses are write-downs (correct me if I am missing something)... remember the float on this stock is really small, If KKD would announce a buyback of 10% of the stock over the period of the next 12 months that would only be about $20M at these levels...
I think that our debt level is very appropriate, and unless their is a covenant against it - a share buyback would be great for shareholders.