>>The first "Pie Five Pizza Company" prototype restaurant generated $230,000 in sales and $50,000 in operating income before taxes<<
That's $920,000/year with almost 22% operating margins!
Im aware of a pizza hut new store many years ago that opened to gangbusters volume of about $15,000 a week.
A few years later, it was regularly doing $8000 a week.
Its FAR, FAR too soon to read much into the opening quarters sales numbers.
And despite the 50 years of experience, nobody working at PZZI has any recent experience with what stores volume do a year or 18 months after opening. Sure, they get sales reports from their Pizza Inns, but thats it.
Im pleased the store did more than they hoped but a strong opening does not automatically mean gangbuster growth with 40 more locations in 18 months.
Absurd is the best way to describe that.
Pizza Hut based on crappy old formula. Pie 5 concept ala subway - made to order in front of you - fast casual - cha ching! This is a great idea and will grow huge fast. This has immensely huge growth ahead (think 5 years+ once they go into new territories). A smart aggressive management will grow fast and move into the right markets first. I like the company owned/franchisee model like Bwld. Also, what's up with China? That is like icing on the cake. 5 million combos - 1 billion customers (well maybe a few hundred million at least).
Cheers. And good luck.
That is why it was suggested to consider an assumption of 18% less per year on revenues of $750,00 than the current run rate of $920,000 as well as an operating margin which is 16% versus the current 22%.
With those reduced and more realistic assumptions one COULD guesstimate top line and earnings growth for PZZI that they have not had in a LONG...LONG time.
Believe many now have the benefit of seeing what Chipotle did and try and replicate the model as much as possible.
PZZI has the supply chain and experience that are needed to expand fast.
But as was stated earlier...who knows.
>>Its FAR, FAR too soon to read much into the opening quarters sales numbers... Absurd is the best way to describe that.<<
Do you even have any stock left here? I mean, you've been denigrating this since the $2s (yes, we all know you bought it in the $1s), and I'd have to assume that anyone who thought something was overpriced in the $2s would have sold it all by the $5s. If not, well, absurd would be the best way to describe that!
Assume the conservative estimate for Pie 5 of $750,000 per store revenues and 16% operating margins per year.
That is $120,000 in operating income per year.
They will have a total of 5 open within the next 7 weeks (2 currently open - one opened last week).
That would be a conservative incremental earnings of $600,000 for calendar 2012 from just those 5 restaurants.
Assume they open 5 per quarter in calendar 2012.
That would be approximately another $900,000 to $1.2 Million in incremental earnings in calendar 2012.
Total operating eanings of $1.5 Million to $1.8 Million in calendar 2012.
Calendar 2012 Revenues = $53 Million +/-
Operating Income = $3.8 Million +/-
$.46 per share?
Is that accurate?
NONE of that assumes even one franchise unit opening in 2012.
Frankly...think they should stick with company owned ala Chipotle.
Just to add a thought to that:
If it costs $300,000 to build out a unit, that's around a 45% net cash-on-cash after-tax return, and if they can finance 80% of the build-out cost at 7% interest, that's better than a 200% return on equity!
Let's be conservative and assume they will average $750,000 to $800,000 in annual revenue and have 16 percent margins. Average! They will have a total of 5 open by year end 2011. Have to assume they will open 20 +\~ in calendar 2012. This should easily put them at $52 to $55 million in calendar 2012 revenues. Based upon the margins of the assumed $10 to $12 million in calendar 2012 pie 5 revenues, while assuming the base business stays flat and they dont add ANY franchise pie 5's...would not doubt earnings in the $.35 or more for calendar 2012. May very well Provide a $7 to $10 price range in the coming months. Any major franchise development news and or an investment, partnership, deal of some sort may push the price to that range very quickly. We shall see.