With a joint venture store, I'm curious how the royalties work? Do they pay 4% on all sales, including First Kitchen stuff like pasta? And does First Kitchen then have to contribute to the Wendy's advertising fund? Regardless, any push internationally should be positive.
The 3 test markets for the black bean burger were very strange. Columbia, SC? I don't think there's a single vegetarian in that city. Would love to see it rolled out nationally though.
Need the earnings to grow before that happens. They already distribute a high % of current earnings.
Earnings would be $2.00 a share if the cost of goods sold was 50% like every other beer company. Why they continue to operate so inefficiently is beyond me.
The weak profit margin shines a spotlight on the inefficiencies, which can be adjusted. Cost of goods sold (COGS) is 70% at BREW, while it's only 40-47% at BUD and SAM respectively. Granted, big beer has much, much largest scale of operations, but it's tough to run a business with 70% COGS. In practical terms, that means a $2 Kona has $1.40 worth of ingredients, whereas a $2 Sam Adams has $0.94 worth of ingredients, and a $1 Budweiser has just 40 cents in ingredients.
As a thought exercise, imagine they took that 70% COGS down to 50%. That would free up about $40 million each year, or a couple bucks a share...