Okonomen Posted March 30, 2020 Share Posted March 30, 2020 Suprised to see nobody's mentioned QSR during this panic. Strong franchise with no capex but quite leveraged like all otehrs in the industry. However, a lot of drive thru sales which is good during these times. What do you guys think? If QSR doesnt go chap 11 it looks like an interesting long temr case here close to 10x 2019 earnings ex corona 2020/2021 impact Link to comment Share on other sites More sharing options...
rb Posted March 30, 2020 Share Posted March 30, 2020 I've looked at it but it's still expensive. I don't know where you get your numbers but I'm getting something like 3.5x revenue and 29x 2019 earnings. That's a lot to pay for a mountain of debt. Link to comment Share on other sites More sharing options...
Uccmal Posted March 30, 2020 Share Posted March 30, 2020 Suprised to see nobody's mentioned QSR during this panic. Strong franchise with no capex but quite leveraged like all otehrs in the industry. However, a lot of drive thru sales which is good during these times. What do you guys think? If QSR doesnt go chap 11 it looks like an interesting long temr case here close to 10x 2019 earnings ex corona 2020/2021 impact I have been following. They are getting the sh*t kicked out of them. TH and BK dining rooms and takeout are closed. The TH drive throughs I frequent are much less busy - anecdotally 50%. I have puts on QSR. I also bought 100 shares as a tracker. I may buy more when it reaches 75% below the high, but not until then. Like everything else it depends on how long these closures have to last. Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 30, 2020 Share Posted March 30, 2020 Anecdotally, the line for drive-thru at Popeyes down my street is absolutely crazy... Across the corner, there's no line at the KFC. Link to comment Share on other sites More sharing options...
longlake95 Posted March 30, 2020 Share Posted March 30, 2020 the first bite of KFC is the best. Then it's vomitville. Link to comment Share on other sites More sharing options...
BG2008 Posted March 30, 2020 Share Posted March 30, 2020 You guys should pay some attention to the TAST, a franchisee chain of Burgers Kings in the US. They have been rolling up franchisees and buying them from mom and pops. The BK franchisees really don't earn an adequate return on capital. I wonder how long this last as there are no longer any suckers who wants to own a franchise anymore. The millennial do not have the capital or a the desire to flip burgers and manage people. Link to comment Share on other sites More sharing options...
fareastwarriors Posted March 30, 2020 Share Posted March 30, 2020 You guys should pay some attention to the TAST, a franchisee chain of Burgers Kings in the US. They have been rolling up franchisees and buying them from mom and pops. The BK franchisees really don't earn an adequate return on capital. I wonder how long this last as there are no longer any suckers who wants to own a franchise anymore. The millennial do not have the capital or a the desire to flip burgers and manage people. Immigrants? Link to comment Share on other sites More sharing options...
KCLarkin Posted March 30, 2020 Author Share Posted March 30, 2020 You guys should pay some attention to the TAST, a franchisee chain of Burgers Kings in the US. They have been rolling up franchisees and buying them from mom and pops. The BK franchisees really don't earn an adequate return on capital. I wonder how long this last as there are no longer any suckers who wants to own a franchise anymore. The millennial do not have the capital or a the desire to flip burgers and manage people. They are claiming 156K in restaurant-level EBITDA. That seems to be pretty good! Link to comment Share on other sites More sharing options...
rb Posted March 30, 2020 Share Posted March 30, 2020 You guys should pay some attention to the TAST, a franchisee chain of Burgers Kings in the US. They have been rolling up franchisees and buying them from mom and pops. The BK franchisees really don't earn an adequate return on capital. I wonder how long this last as there are no longer any suckers who wants to own a franchise anymore. The millennial do not have the capital or a the desire to flip burgers and manage people. They are claiming 156K in restaurant-level EBITDA. That seems to be pretty good! Don't those things cost like 1-2 million a piece? 156k in ebitda doesn't sound all that juicy. Link to comment Share on other sites More sharing options...
dbuch Posted March 31, 2020 Share Posted March 31, 2020 These look cheap to me too. $1.4B FCF is about $3/sh so they were trading around 10x. For a business that is growing managed by 3G seems cheap considering they traded at an average 23x before. Closer to 14x now but still seems reasonably cheap. Link to comment Share on other sites More sharing options...
rb Posted March 31, 2020 Share Posted March 31, 2020 These look cheap to me too. $1.4B FCF is about $3/sh so they were trading around 10x. For a business that is growing managed by 3G seems cheap considering they traded at an average 23x before. Closer to 14x now but still seems reasonably cheap. Be careful with the numbers. The have a big minority interest. A lot of that FCF doesn't belong to common. Link to comment Share on other sites More sharing options...
BG2008 Posted March 31, 2020 Share Posted March 31, 2020 You guys should pay some attention to the TAST, a franchisee chain of Burgers Kings in the US. They have been rolling up franchisees and buying them from mom and pops. The BK franchisees really don't earn an adequate return on capital. I wonder how long this last as there are no longer any suckers who wants to own a franchise anymore. The millennial do not have the capital or a the desire to flip burgers and manage people. They are claiming 156K in restaurant-level EBITDA. That seems to be pretty good! The problem is that you need to put aside about $50k of that into future renovations. These restaurant franchiseees tend to highlight EBITDA, but that DA is very real. Homie. The FCF in this business is laughable when you factor everything in. Link to comment Share on other sites More sharing options...
dbuch Posted March 31, 2020 Share Posted March 31, 2020 Ah, i see, so really $2 sh fcf. Not quite as enticing. Link to comment Share on other sites More sharing options...
peridotcapital Posted May 5, 2020 Share Posted May 5, 2020 These look cheap to me too. $1.4B FCF is about $3/sh so they were trading around 10x. For a business that is growing managed by 3G seems cheap considering they traded at an average 23x before. Closer to 14x now but still seems reasonably cheap. Be careful with the numbers. The have a big minority interest. A lot of that FCF doesn't belong to common. Doesn't the fully diluted share count (~464M) include the non-controlling interest? It looks like the $3 per share of FCF quoted includes the units as well as the common shares... Link to comment Share on other sites More sharing options...
manuelbean Posted May 5, 2020 Share Posted May 5, 2020 These look cheap to me too. $1.4B FCF is about $3/sh so they were trading around 10x. For a business that is growing managed by 3G seems cheap considering they traded at an average 23x before. Closer to 14x now but still seems reasonably cheap. Be careful with the numbers. The have a big minority interest. A lot of that FCF doesn't belong to common. How do you account for the FCF of minority interest? Thank you Link to comment Share on other sites More sharing options...
pratik.thakkar Posted August 7, 2020 Share Posted August 7, 2020 Renovating the restaurant is the responsibility of the franchisee. Other than Tim Hortons, I do not believe RBI contributes anything to renovation for restauarants at BK and Popeyes where the property is controlled by the franchisee. Even in cases where Restaurants are controlled in the form of RBI is the head lease and sub lease it to the franchisee they usually get inducements from Landlords at specific renovation intervals which reduce their contribution which can be verified from the Cashflow Statement for RBI. As far as TAST goes I think a better way to understand and value the business would be through an NPV model used in Mining industry or Oil & Gas. Hope this helps, P Link to comment Share on other sites More sharing options...
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