vinod1 Posted March 25, 2015 Share Posted March 25, 2015 Since the normal franchise units currently opening cost around $1.5 million to $2 million NBL, Could you please let me know where you got this number from? Is it your estimate? Could you give a little more color on this? Thanks Vinod Sure - the number is not really an estimate, but more like my best inference from many different sources, of what a franchisee must spent to construct and open a new Steak n Shake franchise unit. That number is drawn from the franchise disclosure documents and other places. That may seem like a lot, but it is actually less than many comparable type restaurants (though there are some chains that have a lower cost than that too). This is also significantly less than what a Steak n Shake unit used to cost, pre-Biglari, apparently, when it was over $2.5 million to open a new unit. Vinod, NBL In the 2010 Chairmen's letter, the following is mentioned re franchise unit costs: The new layout provides the theater in which we can showcase the production of made-to-order steakburgers and hand- dipped milkshakes to entertain guests. Now, a franchisee can open an efficient, beautiful unit for about $1.5 million. My projection is that revenues emanating from each unit will doubtless surpass the $1.5 million mark, which combined with our current operating margin would yield an attractive return on investment for the franchisee. We shrank the former box size from about 4,200 square feet to nearly 3,200 square feet but kept the same number of seats in the dining area. The former model was simply inefficiently designed. The new prototype is a display of our uncompromising dedication to the pursuit of excellence. Inflation will have increased that number since 2010 but $1.5m seems to be in the right ball park. Good find! Thank you. Vinod Link to comment Share on other sites More sharing options...
Tim Eriksen Posted March 25, 2015 Share Posted March 25, 2015 Here is what I have. Timlion_fund_2003_annual_report.pdflion_fund_2001_annual_report.pdflion_fund_2002_annual_report.pdf Link to comment Share on other sites More sharing options...
giofranchi Posted March 25, 2015 Share Posted March 25, 2015 Here is what I have. Great! Thank you very much, Tim! :) Gio Link to comment Share on other sites More sharing options...
gfp Posted March 25, 2015 Share Posted March 25, 2015 Go to the source - they give the costs and requirement for the various concepts - http://www.steaknshakefranchise.com/costs-and-qualifications-requirement-information.php Since the normal franchise units currently opening cost around $1.5 million to $2 million NBL, Could you please let me know where you got this number from? Is it your estimate? Could you give a little more color on this? Thanks Vinod Sure - the number is not really an estimate, but more like my best inference from many different sources, of what a franchisee must spent to construct and open a new Steak n Shake franchise unit. That number is drawn from the franchise disclosure documents and other places. That may seem like a lot, but it is actually less than many comparable type restaurants (though there are some chains that have a lower cost than that too). This is also significantly less than what a Steak n Shake unit used to cost, pre-Biglari, apparently, when it was over $2.5 million to open a new unit. Vinod, NBL In the 2010 Chairmen's letter, the following is mentioned re franchise unit costs: The new layout provides the theater in which we can showcase the production of made-to-order steakburgers and hand- dipped milkshakes to entertain guests. Now, a franchisee can open an efficient, beautiful unit for about $1.5 million. My projection is that revenues emanating from each unit will doubtless surpass the $1.5 million mark, which combined with our current operating margin would yield an attractive return on investment for the franchisee. We shrank the former box size from about 4,200 square feet to nearly 3,200 square feet but kept the same number of seats in the dining area. The former model was simply inefficiently designed. The new prototype is a display of our uncompromising dedication to the pursuit of excellence. Inflation will have increased that number since 2010 but $1.5m seems to be in the right ball park. Good find! Thank you. Vinod Link to comment Share on other sites More sharing options...
gfp Posted March 25, 2015 Share Posted March 25, 2015 I'm as tired as anyone of BH posts filling up this whole board - but I want to post one last thing on the subject. This series of articles may have already been posted, but it represents the most thorough and complete history of this guy and this company I have seen anywhere. And, amazingly, it is a joy to read and the author is a very good writer. It contains links to original source documents and starts in Part I with Sardar's birth in Tehran. http://seekingalpha.com/author/dana-kuhn/articles Link to comment Share on other sites More sharing options...
giofranchi Posted March 25, 2015 Share Posted March 25, 2015 I'm as tired as anyone of BH posts filling up this whole board - but I want to post one last thing on the subject. This series of articles may have already been posted, but it represents the most thorough and complete history of this guy and this company I have seen anywhere. And, amazingly, it is a joy to read and the author is a very good writer. It contains links to original source documents and starts in Part I with Sardar's birth in Tehran. http://seekingalpha.com/author/dana-kuhn/articles I agree, but I think they are a bit dated… at least as far as the author’s judgement about Biglari is concerned… If I remember well, the author posted his recent thoughts about Biglari on this thread, saying he no longer think Biglari could be trusted as a good steward of shareholders’ capital. Cheers, Gio Link to comment Share on other sites More sharing options...
vinod1 Posted March 25, 2015 Share Posted March 25, 2015 Go to the source - they give the costs and requirement for the various concepts - http://www.steaknshakefranchise.com/costs-and-qualifications-requirement-information.php Thank you! Link to comment Share on other sites More sharing options...
AZ_Value Posted March 25, 2015 Share Posted March 25, 2015 Go to the source - they give the costs and requirement for the various concepts - http://www.steaknshakefranchise.com/costs-and-qualifications-requirement-information.php Thank you! Yeah, I also have circled a cost of about a million to two million bucks in my BH files depending on the concept one wants. From SNS themselves per the link above and you can confirm from various other sources: http://www.entrepreneur.com/franchises/steaknshakeenterprisesinc/317804-0.html I'm reading through the thread, interesting discussions going on that I missed. I don't come on COBF that often anymore. I'll share thoughts when I'm done reading through it all. Link to comment Share on other sites More sharing options...
Jurgis Posted March 26, 2015 Share Posted March 26, 2015 A piece of advice: anyone who has a strong and very well-reasoned criticism towards Biglari is very welcomed, but should stop calling him “Big Liar”… Due to the very reasonable request, Biglari henceforth will be called "Maxim Liar". 8) Link to comment Share on other sites More sharing options...
Jurgis Posted March 26, 2015 Share Posted March 26, 2015 yes, generally I think it is legal theft. I don't believe any manager, no matter how talented, should be paid many tens of millions, let alone billions, to invest money that is not theirs. Scalable jobs (artists, football (European) stars, investment managers, top CEO's with outsized bonusses, ....) take the idea of capitalism too far and are generally very unfair for society as a whole. That is my personal opinion and I know many will disagree. Of course I realize that this is how the system works and that change is very unlikely as you will always find people willing to pay up. I agree with tombgrt. I vote against CEO compensation in most proxy votes. There are few exceptions: BRK, Fairfax, maybe couple more. But most CEOs are ridiculously overpaid. Same has to be said about most investment managers. Link to comment Share on other sites More sharing options...
OracleofCarolina Posted March 26, 2015 Share Posted March 26, 2015 I am not sure ISS is saying vote for BH's board, they are just saying don't vote for Groveland. I am trying to find the actual presentation but no luck, any one know where to find? Link to comment Share on other sites More sharing options...
bookie71 Posted March 26, 2015 Share Posted March 26, 2015 A piece of advice: anyone who has a strong and very well-reasoned criticism towards Biglari is very welcomed, but should stop calling him “Big Liar”… Due to the very reasonable request, Biglari henceforth will be called "Maxim Liar". 8) Love it! Link to comment Share on other sites More sharing options...
merkhet Posted March 27, 2015 Share Posted March 27, 2015 Random jetlagged thought in my head. Any chance that Gabelli opportunistically takes advantage of ISS' vote of no confidence? Link to comment Share on other sites More sharing options...
merkhet Posted March 27, 2015 Share Posted March 27, 2015 Random jetlagged thought in my head. Any chance that Gabelli opportunistically takes advantage of ISS' vote of no confidence? There is not really a way to for them to take advantage of it. They could run a proxy contest of their own next year or buy a ton of shares and lean on them further next year and take a more active role. But for this year's proxy contest, what can they do other than vote against the incumbents and announce they are doing so? They already have essentially announced that they are voting against the incumbents - but that is the main modality at their disposal in the proxy contest - so what else could they do. They couldn't even file a presentation without registering it as proxy materials and going through that whole process. I haven't read the bylaws. Is there no way to call a special meeting? (Sometimes, the bylaws have interesting ways to force issues like this.) Link to comment Share on other sites More sharing options...
giofranchi Posted March 27, 2015 Share Posted March 27, 2015 I agree with tombgrt. I vote against CEO compensation in most proxy votes. There are few exceptions: BRK, Fairfax, maybe couple more. But most CEOs are ridiculously overpaid. Same has to be said about most investment managers. In theory I agree… In practice I don’t… In practice I am satisfied valuing what I get for what I give away, and make sure it is worthwhile. Another thing I do is to check there are no cheaper alternatives: of course FFH is cheaper than BH, and that’s why my investment in FFH is much larger than the one I have in BH. Cheers, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 27, 2015 Share Posted March 27, 2015 They already have essentially announced that they are voting against the incumbents ??? Ok… I had missed that until now… Is Gabelli truly going to vote in favor of Groveland?!… If so, when has he announced his decision? Thank you, Gio Link to comment Share on other sites More sharing options...
giofranchi Posted March 27, 2015 Share Posted March 27, 2015 ISS backs Biglari Holdings in board battle - 6:54 AM Clark Schultz, SA News Editor •Proxy firm ISS recommends shareholders vote against the attempt of Groveland Capital to gain board seats at Biglari Holdings (NYSE:BH). •The 6-person slate put up by Groveland is called "inadequate" by ISS. •Biglari Holdings has an annual meeting scheduled for April 9. Gio Link to comment Share on other sites More sharing options...
Cevian Posted March 27, 2015 Share Posted March 27, 2015 I don't think this is correct. I have read the report in its entirety and ISS is recommending that shareholder's withholding votes as opposed to backing either one. Link to comment Share on other sites More sharing options...
giofranchi Posted March 27, 2015 Share Posted March 27, 2015 I have read the report in its entirety and ISS is recommending that shareholder's withholding votes as opposed to backing either one. To suggest withholding votes is never very intelligent. What if everyone follows their advice?! ::) Cheers, Gio Link to comment Share on other sites More sharing options...
InelegantInvestor Posted March 27, 2015 Share Posted March 27, 2015 The plot thickens... http://finance.yahoo.com/news/groveland-group-comments-iss-recommendation-133601225.html http://finance.yahoo.com/news/leading-proxy-advisory-firm-glass-134644681.html Link to comment Share on other sites More sharing options...
gg Posted March 27, 2015 Share Posted March 27, 2015 I don't think this is correct. I have read the report in its entirety and ISS is recommending that shareholder's withholding votes as opposed to backing either one. Could you (or anyone else who has it) post that ISS report or a link to it? Link to comment Share on other sites More sharing options...
OracleofCarolina Posted March 27, 2015 Share Posted March 27, 2015 http://finance.yahoo.com/news/steak-n-shake-announces-international-172600342.html?.tsrc=applewf More international expansion in the works Link to comment Share on other sites More sharing options...
pantheman Posted March 27, 2015 Share Posted March 27, 2015 Forbes weighing in: http://www.forbes.com/sites/antoinegara/2015/03/20/the-implosion-of-a-warren-buffett-wannabe/ Link to comment Share on other sites More sharing options...
innerscorecard Posted March 28, 2015 Share Posted March 28, 2015 Forbes weighing in: http://www.forbes.com/sites/antoinegara/2015/03/20/the-implosion-of-a-warren-buffett-wannabe/ This article was already posted and discussed earlier in this thread. Link to comment Share on other sites More sharing options...
philly value Posted March 28, 2015 Share Posted March 28, 2015 I had been thinking myself about buyout possibilities here. A traditional buyout does seems impossible/unlikely, certainly if forced to maintain the existing structure. Interesting to entertain the idea, however. As someone new here, is there any real economic or legal reason why Biglari Holding's investments in CBRL/etc need to be held in the Lion Funds? Or is this purely a Biglari move to get additional compensation given the cap on incentives at BH? Simplifying this structure in a go-private transaction would be a first step I'd think. The arguments that Biglari needs this structure in order to maintain control given his control of the GP would no longer make sense in a private scenario. A buyout fueled with debt does not seem possible given the structure. BH's most significant asset by far is its holding of CBRL stock, currently $715M gross and roughly $550M net of a 35% tax liability. There are few other unencumbered assets with significant value. SnS has I believe $213M of debt attached to it, which is a significant amount of leverage relative to operating earnings of $26.5M. Western is too small to provide any real base for adding debt. First Guard is a nice business but again quite small. A buyout could only become a slight possibility if the CBRL stake was sold prior to or as a part of such a transaction. To me this seems like a logical step towards creating value here, because it's not clear where CBRL fits into the BH model given Sardar has no control / ability to turnaround an underperforming business here. On the cash figure that NBL0303 had speculated to be ~$200M, I'm wondering how those add up to what is in the filings. The company has first the $130M of cash reported on the B/S. Then there are $10.8M of investments. Then there is the $698M fair value of the LP interests as of 12/31/14, which is net of the shares of BH held in the partnership that BH itself has a claim on. At ~4.73M shares and $140.76/share for CBRL as of 12/31/14, this totals $667M. This leaves the net non-BH, non-CBRL LP interests as $31M. Any cash transferred to the partnerships would be recorded here, wouldn't it be? Seems to fall far short of the additional $70M you had mentioned. Am I looking at this incorrectly? Finally, do we know Sardar Biglari's full economic holdings of BH? I can find via filings that he holds 31,000 shares of stock directly. Biglari Capital's filings indicate they control 320,000 shares of BH. In the BH filings, they indicate that via LP interests, BH has a claim on 197,533 shares of itself. This brings the total share count controlled by Biglari Capital not owed to Biglari Holdings itself to 320,421 - 197,533 = 122,888. Do we know how many of those 122,888 shares are held by Biglari, other insiders, or other LPs of Lion Funds? Thanks for any help here. Link to comment Share on other sites More sharing options...
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