moore_capital54 Posted July 4, 2011 Share Posted July 4, 2011 http://www.frischs.com/ Owner of Big Boy Burgers, trading near 52 week high. Market capitalization is just $113M which is about 11x last years after tax profit. Seems to me a guy like Biglari could do wonders with this chain, and the growth potential is there having only 151 locations. About $80M worth of land at cost on the balance sheet that is most probably worth a great deal more. Not much cash, but nevertheless interesting. Link to comment Share on other sites More sharing options...
Kraven Posted July 4, 2011 Share Posted July 4, 2011 Do they own all of Big Boy or just some of them? For some reason I thought they were just a large franchisor. The thing with Big Boy is its such a tired old chain. It pains me a bit to say that. I grew up with it and loved it as a kid. Link to comment Share on other sites More sharing options...
bookie71 Posted July 5, 2011 Share Posted July 5, 2011 they are also Golden Corral franchisees and ore mostly in the Ohio area. Link to comment Share on other sites More sharing options...
Parsad Posted July 5, 2011 Share Posted July 5, 2011 Do they own all of Big Boy or just some of them? For some reason I thought they were just a large franchisor. The thing with Big Boy is its such a tired old chain. It pains me a bit to say that. I grew up with it and loved it as a kid. They own most of the "Frisch" Big Boy restaurants...about 91 stores. Another 25 are franchised in their master limited partnership territories. Old brand, but like Steak'n Shake, they are a very well recognized brand in their market. The Frisch/Maier family controls about 29% of the stock. They are also franchisees of the Golden Corral buffet chain...about 35 restaurants. They made a mistake getting involved there. The actual "Frisch" Big Boy restaurants are cash cows, and they struggled integrating the Golden Corral chain during the last few years. It's starting to come around, but nothing like the burger restaurants. Balance sheet is good, and company-owned restaurants are undervalued on there. Debt/equity is good, but the company spends too much of their cash flows on capital expenses. All of their older restaurants are usually completely refurbished every five years, and they are now starting to open stores where the return on capital isn't particularly good relative to older stores. Great business, that needs a better capital allocator! I told Sardar about the idea some time ago, but I don't think he was interested. Wish I had more money! ;D Cheers! Link to comment Share on other sites More sharing options...
Kraven Posted July 5, 2011 Share Posted July 5, 2011 Interesting. I forgot that there are different Big Boys. On the west coast, they were "Bob's" Big Boy. Link to comment Share on other sites More sharing options...
moore_capital54 Posted July 5, 2011 Author Share Posted July 5, 2011 Agreed Parsad, this brand can easily be twice as large, and with some rejuvenation can attract a whole new demographic as well. Problem is like you say, need someone who "gets it". Link to comment Share on other sites More sharing options...
bookie71 Posted July 5, 2011 Share Posted July 5, 2011 They had a sports team a few years ago which really drained them, their stock really jumped when they got rid of it. Link to comment Share on other sites More sharing options...
Parsad Posted July 5, 2011 Share Posted July 5, 2011 They had a sports team a few years ago which really drained them, their stock really jumped when they got rid of it. They had their hands in a couple of businesses that they needed to get out of. The son, Craig Maier, was partly responsible for getting them out of those businesses and focus on the core burger business. The problem was, they began to saturate their burger territory, and they agreed to franchise the Golden Corral restaurants to diversify their business. Unfortunately it's more like di-worsify! They've gotten the Golden Corral business turned around, but the margins aren't anything like the burger business. If they just spent less on capital expenses, stifle the Golden Corral business at its current size (which seems to be the case currently), and just spend the excess cash flows on share buybacks and dividends, the stock would be much higher. On another note, have you guys noticed that the Steak'n Shake menu is now moving in the wrong direction as far as size is concerned. They are adding too many new menu items. Sardar had the strategy correct originally...focus the menu, add value, and add occasional new offerings. But now, they seem to be heading the wrong way. May cut into their margins as food costs increase and they increase the amount of food inventory they have to maintain. I do like the national one-price idea, and that should help bolster a more national focus on the business. Cheers! Link to comment Share on other sites More sharing options...
bookie71 Posted July 6, 2011 Share Posted July 6, 2011 Their same store sales (Other than thee Golden Corral) usually show an increase each quarter (except for last crash), I have followed them for years and would hate for someone like Biglari to try to buy in. I like a company that looks long term. Link to comment Share on other sites More sharing options...
OracleofCarolina Posted October 12, 2011 Share Posted October 12, 2011 Sanjeev, Looks like someone is thinking at HQ, FRS hired Brookwood Associates to explore strategic alternatives for the Golden Carroll business segment Link to comment Share on other sites More sharing options...
ragnarisapirate Posted December 12, 2011 Share Posted December 12, 2011 Yeah, does anyone have any idea what the Golden Corral assets are worth? They really aren't that great of a business, but, I can't imagine that they are worth nothing, and will just be shuttered. Surely there is a better operator of them that would be willing to buy them? Link to comment Share on other sites More sharing options...
Parsad Posted March 26, 2012 Share Posted March 26, 2012 Yeah, does anyone have any idea what the Golden Corral assets are worth? They really aren't that great of a business, but, I can't imagine that they are worth nothing, and will just be shuttered. Surely there is a better operator of them that would be willing to buy them? An update. Frisch did the right thing finally and they've reached a deal with Golden Corral. Golden Corral will exercise their right of first refusal and buy back the restaurants. No idea how much they sold for, but it's a great thing for Frisch. Now they can focus on the core burger restaurant business which is terrific and a cash cow. Not sure why companies always feel like they HAVE to do something. Generally, they end up ruining a good thing. This would be a terrific business for someone like Berkshire, Fairfax or Markel to buy...probably way too small for Berkshire, but would have been a terrific buy for Fairfax or Markel. The price has risen now, but someone should have approached them a long time ago when it was selling at $19-20. The Frisch/Maier family have no one to run this thing once Craig retires, and they do not know what to do with the excess cash flows since they have a relatively limited territory to expand. The restaurants are all in pretty good shape, and they are very well known in their markets. All that excess cash could have been put to good use in the hands of someone like Hamblin-Watsa or Tom Gaynor, and the Maier family probably would have liked the ability to take shares in either of those companies for succession planning, while still allowed to run the business. Cheers! http://finance.yahoo.com/news/frischs-announces-golden-corral-franchisings-200500816.html Link to comment Share on other sites More sharing options...
ragnarisapirate Posted March 26, 2012 Share Posted March 26, 2012 This would be a perfect business for BH to buy... roughly the same geographic areas are covered and Biglari would likely be able to cut a lot of costs. The company could likely get away with spending slightly (and I do mean, slightly) less in cap ex. Link to comment Share on other sites More sharing options...
Parsad Posted March 26, 2012 Share Posted March 26, 2012 This would be a perfect business for BH to buy... roughly the same geographic areas are covered and Biglari would likely be able to cut a lot of costs. The company could likely get away with spending slightly (and I do mean, slightly) less in cap ex. They could spend alot less on capex actually. They probably spend about 30% too much at the very least. It would fit into BH, but I would prefer if FFH or MKL had bought it. The main reason being if an owner is giving up their company, they want someone taking over who isn't going to eat up a good chunk of the future retained earnings from the shares they get in return. That is also one of the drawbacks of BH's compensation plan, especially if that $10M cap is ever removed. No owner is going to sell their business to them for stock, since Sardar is going to get more and more of the earnings over time. He's going to have to buy businesses for cash if that cap is ever removed. Cheers! Link to comment Share on other sites More sharing options...
ragnarisapirate Posted June 29, 2012 Share Posted June 29, 2012 Golden Corral was sold off and the company is now cash rich.... really cash rich. Especially for a company that is the size it is! Do they declare a big dividend like they had in the past? OR, do they go private? It seems ripe for either. As they don't seem like the managers that would wake up and say "HEY! We want to open 50 more restaurants in a month!" I no longer have a stake in this. Reluctantly sold out in the mid 27s... I really like the company and wish that it would go down to 18 again! Link to comment Share on other sites More sharing options...
Parsad Posted June 29, 2012 Share Posted June 29, 2012 Golden Corral was sold off and the company is now cash rich.... really cash rich. Especially for a company that is the size it is! Do they declare a big dividend like they had in the past? OR, do they go private? It seems ripe for either. As they don't seem like the managers that would wake up and say "HEY! We want to open 50 more restaurants in a month!" I no longer have a stake in this. Reluctantly sold out in the mid 27s... I really like the company and wish that it would go down to 18 again! They did exactly what I said they should do. I told a couple of people to buy this thing out when it was around $17-18, but no one wanted to buy it. The actual Frisch Big Boy burger restaurants are cash cows, but Golden Corral was eating up that cash flow and bleeding money. All they needed to do was sell off the Golden Corral chain and focus on the burger restaurants. They have limited market they can expand into, so they shouldn't grow much more than they have. Just run their restaurants well, make sure they are clean and up to date, and pay most of the cash flow out to shareholders. Cheers! Link to comment Share on other sites More sharing options...
Cardboard Posted June 29, 2012 Share Posted June 29, 2012 Hi Sanjeev, I would still love to hear about that Canadian business that you bought trading at net cash a few months ago. I still have not been able to find it with the caracteristics that you mentioned. Cardboard Link to comment Share on other sites More sharing options...
ragnarisapirate Posted July 30, 2012 Share Posted July 30, 2012 Just announced a big share repurchase (~9% of the common) and a huge dividend of 9.50/share... I just keep wondering if management is ever going to take this thing privatem again. Link to comment Share on other sites More sharing options...
Guest hellsten Posted July 30, 2012 Share Posted July 30, 2012 First time I hear about FRS. Looks very interesting. Maybe something to buy when the price is depressed? I checked their website and found this: The Company has reported a profit every year since going public in 1960, and paid cash dividends to shareholders every quarter over the same period. Did some further digging and found a funny quote in an article about Frisch's: The concept seems stuck in the 1950s. The menus are strictly old-school. And the pace of unit expansion is funereal. http://restaurant-hospitality.com/news/big-dividends-big-boy-1211 Franklin Microcap (of Mutual Series and John Templeton fame?) owns 6%, and The Royce Fund (tagline "committed to smaller companies, devoted to value) owns 10% of the company: http://investors.morningstar.com/ownership/shareholders-major.html?t=FRS®ion=USA&culture=en-us Parsad, may I ask how you find these great "hamburger stocks" (Steak 'n Shake & Frisch's Restaurants)? :) Link to comment Share on other sites More sharing options...
Parsad Posted July 30, 2012 Share Posted July 30, 2012 Parsad, may I ask how you find these great "hamburger stocks" (Steak 'n Shake & Frisch's Restaurants)? What can I say? I eat alot of hamburgers! But only to maintain my svelte and girlish figure! ;D Cheers! Link to comment Share on other sites More sharing options...
ragnarisapirate Posted July 31, 2012 Share Posted July 31, 2012 Parsad, may I ask how you find these great "hamburger stocks" (Steak 'n Shake & Frisch's Restaurants)? What can I say? I eat alot of hamburgers! But only to maintain my svelte and girlish figure! ;D Cheers! Funny. Have you actually eaten at an FRS (given the geographic difference and that they are all kind of in the middle of nowhere US)? I much prefer their food over SNS, though the shakes at SNS are superior (in my mind) Link to comment Share on other sites More sharing options...
bookie71 Posted July 31, 2012 Share Posted July 31, 2012 I love it!!! Remember that running a family restaurant is different than a fast food joint. A cafeteria is different and I'm glad to see them getting back to their roots. I have followed them for years and have a cost basis of about $10 and change. I guess my basis will go to less than a dollar, DANG. :D ;) :) Link to comment Share on other sites More sharing options...
bookie71 Posted August 2, 2012 Share Posted August 2, 2012 P.S. Also it is at 15% tax rate, no matter what our mixed up congress does with the Bush tax cuts. I have been trying to decide if there is an arbitrage opportunity as the stock only rose a couple of bucks on the announcement. Link to comment Share on other sites More sharing options...
Guest hellsten Posted January 24, 2013 Share Posted January 24, 2013 I no longer have a stake in this. Reluctantly sold out in the mid 27s... I really like the company and wish that it would go down to 18 again! I was scanning the list of 52 week lows and found FRS. You now have the opportunity to buy FRS for $18.24/share. 2012 annual report: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDgyNjI3fENoaWxkSUQ9NTE3MjE4fFR5cGU9MQ==&t=1 - The sale of the Company's remaining 29 Golden Corral restaurants in May 2012, from which proceeds amounted to $49.8 million - at the end of our fiscal year, we operated 93 Big Boys and licensed another 25 Big Boys to other operators. - we opened two new Big Boy restaurants during the year, both in the Greater Cincinnati market. There was also one new Big Boy under construction in the Greater Cincinnati market - Also in July, our Board approved a new program to repurchase up to 450,000 shares of our stock over the next three years. Both the special dividend and the share repurchase program underscores our board of directors’ commitment to deliver superior returns to our loyal shareholders. - we paid our 206th consecutive regular quarterly cash dividend, a 52 year record of which we are extremely proud and plan to continue. - Frisch's Big Boy Land and building owned 79, land or land & building leased 14 - the cost required to build and equip each new Frisch's Big Boy restaurant currently ranges from $2,500,000 to $3,400,000 - Part of the Company’s strategic plan entails owning the land on which it builds new restaurants Buying back 9% of shares over the next 3 years. Link to comment Share on other sites More sharing options...
Guest hellsten Posted June 6, 2013 Share Posted June 6, 2013 Asset Play: Frisch Restaurants: http://seekingalpha.com/article/1484401-asset-play-frisch-restaurants Link to comment Share on other sites More sharing options...
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