An Open Letter To Burger King

I am a business consultant and herewith offer a few observations at no cost !

I used to have my morning coffee at your rival McDonald’s. I received a coupon promotion for coffee – and for 25 cents I thought I’d give your local restaurant a try. First visit – last week – I find the restaurant not open until 8:00 a.m. – so anyone out for coffee won’t head to BK. One of the great lessons a restaurant learns is that the bank charges interest 24 hours a day .

Second visit 8:05 this week – just me and the staff despite the coffee at a fraction of what others charge . The colors of the restaurant are dull – blue / grey. What you learn is that restaurant patrons do not want to be all alone in a large building.

Why aren’t you advertising to the seniors that fill McDonald’s in the early morning ?People attract people – you are not gaining any ” community ” of early morning patrons or folks grabbing something before their commute / office.

Third visit – the aft ernoon. Much busier – but not to your main rival’s level AND importantly – with only two people asking for coffee : 1) the staff relied on remembering our orders – no display terminal 2) my order – coffee with one cream wrong – and had to be redone 3) the staff calls out orders to each other because there was no display screen for orders

This is not a staff problem – the people were friendly and doing their best. You as an organization are failing your clients , staff and shareholders. Great potential – but they used to say the same about me.   Jack A. Bass http://www.jackbassteam.com

My Favorite Stocks to Watch in the Expanding Coffee Market

By George Leong, B.Comm. for Profit Confidential

I love the smell of coffee brewing in the morning—and in the afternoon and evening. As you can tell, I do enjoy my coffee—but I also like watching some of the market’s top coffee stocks.

At the top of my hit list in the coffee sector is Starbucks Corporation (NASDAQ/SBUX), just because of its strong brand recognition not only in the United States but worldwide. Whether it’s in Asia, Europe, or Latin America, you can always find that familiar green Starbucks logo. If they are long-term in their investment strategy, there’s little chance an investor could go wrong with Starbucks.

However, when I have a craving for a baked treat (though I seldom do), I do like the “Boston Kreme” donut and “Cheddar Cheese Bagel Twist” at Dunkin’ Donuts, operated by Dunkin Brands Group, Inc. (NASDAQ/DNKN), which also owns Baskin-Robbins. Dunkin is known more for its donuts than its coffee; nevertheless, it is a coffee shop that many customers will venture out to for a sweet treat.

 

Dunkin is still primary an American brand, but the company is considering returning to the United Kingdom. The company is looking at opening 50 outlets in the greater London area within five years, but that number could run as high as 150 outlets in the United Kingdom. (Source: Rocco, M., “Dunkin’ Donuts Plans Return to U.K.,” Fox Business Network web site, September 12, 2013.) The company also has plans to move into Moscow.

While the expansion plans are encouraging, I really doubt the Dunkin brand can become the global icon that Starbucks has become. In China, for instance, Starbucks is rapidly growing.

An alternative investment opportunity to Dunkin—and a company that the people at Dunkin should be keeping an eye on—is Canada-based Tim Hortons Inc. (NYSE/THI). The company’s product is similar to Dunkin’s, and it is rapidly growing in the United States. As of June 30, 2013, there were 4,304 Tim Hortons outlets in the network, including 807 in the U.S.

 

In my view, Tim Hortons is more of a threat to Dunkin than Starbucks, especially in the U.S. market, which is growing in importance to Tim Hortons.

The valuation of Tim Hortons is also more attractive, trading at 17.47X its 2014 earnings-per-share (EPS) and a price/earnings-to-growth (PEG) of 1.63; Dunkin is trading at 24.38X its 2014 EPS and a PEG of 1.75.

Dunkin is more of a play on the U.S. coffee market, with its 10,600 outlets, which makes it the second-largest coffee chain in the country after Starbucks.

At this point, from a valuation perspective, I would look more seriously at Tim Hortons than Dunkin.

One final coffee player to watch that is sizzling on the charts is Green Mountain Coffee Roasters, Inc. (NASDAQ/GMCR), which I profiled at the $39.00 level in December. The stock is now trading above $83.00. (Read “Never Mind Starbucks: Green Mountain Coffee Is Worth the Beans.”)

Build Your Portfolio On A Solid Foundation : All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic:

Building Your Apprentice

Millionaire Portfolio

 All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

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All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic:

Building Your Apprentice

Millionaire Portfolio

 

 All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

All You Need To Succeed – in 500 pages of Investing Strategy and Selections


Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today's stock market

Available at http://www.amazon.com

Stock Market Magic: Building Your Apprentice Millionaire Portfolio 2012: All you need to succeed in today’s stock market [Paperback]

Jack A. Bass (Author)

5.0 out of 5 stars  See all reviews (2 customer reviews) | Like 1678

Price: $28.95 & this item ships for FREE with Super Saver Shipping

Denny’s Serves Up Grand-Slam Returns

By George Leong, B.Comm. for Profit Confidential

We all know that McDonalds Corporation (NYSE/MCD) is the reigning king of the fast food sector and one of the top performers over the past decade, based on my stock analysis.

In fact, my stock analysis suggests that McDonalds’ rivals are trying to emulate what is working at the company rather than compete against the seller of the iconic “Big Mac.”

Burger King Worldwide, Inc. (NYSE/BKW) may be pursuing a similar strategy to McDonalds’ by diversifying its menu offering with new items and value-conscious options, based on my stock analysis.

Yet while Wall Street focuses on McDonalds and its burger-oriented rivals, my stock analysis reveals that a stock that I feel offers better valuation and potential upside is Denny’s Corporation (NASDAQ/DENN). With a market-cap of $552 million, Denny’s is dwarfed by the $102-billion market cap of McDonalds, but that doesn’t mean there isn’t a buying opportunity with Denny’s, based on my stock analysis.

In fact, Denny’s is up 50% over the past 52 weeks and has easily outperformed the S&P 500’s advance of 26.8% and McDonalds’ 11.8% gain, according to my technical analysis.

Denny’s is best known for its “Grand Slam” breakfast offerings. The company has gone through a major structural reorganization in which it sold many of its stores to franchisors, thereby reducing its own operating costs and collecting fees instead. As of March 27, 2013, 1,525 of the company’s 1,689 restaurants were franchised. The end results have been stronger operating numbers and a steady rise in the company’s share price, according to my stock analysis.

About 98 restaurants are situated in Canada, Costa Rica, Mexico, Honduras, Guam, Curacao, Puerto Rico, Dominican Republic, and New Zealand.

And in an aggressive and bold move, Denny’s has been looking at expanding into the highly competitive Chinese market, where the top players are McDonalds and YUM! Brands, Inc. (NYSE/YUM)—owner of the Kentucky Fried Chicken (KFC) and Taco Bell brands. The company’s deal with Great China International Group was recently cancelled, likely due to some poor results from the top players in China, based on my stock analysis.

On the operations end, Denny’s reported adjusted earnings of $0.08 per diluted share in its first-quarter earnings season, up 48.4% year-over-year and a penny above the Thomson Financial consensus earnings-per-share (EPS) estimates. It was the third straight quarter of outperformance.

On a comparative valuation basis, Denny’s trades at 1.16X trailing sales and has a price-to-earnings-growth (PEG) ratio of 0.92, versus 3.71X sales and a PEG ratio of 2.04 for McDonalds.

Now, don’t get me wrong; I still believe McDonalds will continue to be the top player in the restaurant and fast foods sector going forward. (Read “The Secret to Success in the Fast Food Sector.”) But for some added potential, a small-cap such as Denny’s makes sense for the aggressive investor, based on my stock analysis.

 

Jack in The Box

Jack in the Box

Jack in the Box (Photo credit: Wikipedia)

I’m All Right Jack ?

JACK : NASDAQ : US$36.82

Jack in the Box‘s second-quarter profit fell 39% as the restaurant operator posted weaker sales, and the year-earlier was boosted by a large gain on the sale of restaurants. For the quarter ended April 14, Jack in the Box reported a profit of $13.3 million, or 29 cents a share, down from $21.6 million, or 48 cents a share, a year earlier.

The latest period included a loss of three cents a share that was mainly attributable to refranchising, while the year-earlier period saw a 21 cents ashare gain from refranchising. Excluding such items and restructuring charges, operating earnings were 33 cents, up from 30 cents. Revenue declined 3% to $355.6 million. Analysts surveyed had projected a per-share profit of 31 cents and revenue of $359 million. Same-store sales rose 0.9% at Jack in the Box company restaurants and slipped 2% at Qdoba company restaurants.

The company in February anticipated same-store sales will be flat at Jack in the Box and flat to down 2% at Qdoba. Restaurant operating margin widened to 15.8% from 15.5%, as company restaurant costs decreased 5%.

For the year, Jack in  the Box lifted its operating earnings guidance for the year, now expecting $1.55-1.65 a share, compared to its earlier forecast of $1.48-1.63 a share.

McDonald’s Credit Suisse Upgrade

Bolivian McDonald's

Bolivian McDonald’s (Photo credit: lndhslf72)

MCD

NYSE : US$95.12

Credit Suisse raised their target price on McDonald’s as they believe MCD is well positioned to return to meaningful share gains in 2012, with upside to numbers if the macro environment stabilizes from a late January slowdown.

However, even if a slowing consumer environment limits absolute upside to numbers, relative outperformance on fundamentals combined with low relative valuation makes risk/reward attractive to the brokerage. The brokerage looks at drivers of 2006-11 share gains, and how they are set to reassert themselves in 2013. Credit Suisse believes that reestablishing a pricing gap, reemphasizing the dollar menu, and a much improved product pipeline (versus difficult competitor compares) can accelerate MCD share gains in 2013.

This analysis makes the brokerage comfortable with their above-consensus US comp estimates despite macro concerns. Credit Suisse already sees fewer risks to MCD’s estimates than to peers’, and a reacceleration in share gains could rapidly reverse valuation trends (relative to other burger quick service restaurants, MCD’s is near all-time lows.)

Any larger macro-driven “flight to stability” trade would only further benefit MCDs relative valuation/share performance, in the brokerage’s opinion.

McDonald’s Thankful GOP Millionaires To Battle Minimum Wage Hike

House Salad at Buffalo Wild Wings

House Salad at Buffalo Wild Wings (Photo credit: Tojosan)

MCD : NYSE :

US$94.00
You pay for what you get.

The world’s largest restaurant chain was the biggest hit to the Dow on Wednesday, after President Barack Obama announced a plan to raise the minimum wage. The blizzard that lashed the U.S. Northeast at the end of last week possibly hurting the company’s sales, and Buffalo Wild Wings’ (BWLD) report on Tuesday that same-store sales are declining this year, may also be affecting McDonald’s stock, but most analysts agreed Obama’s call to raise the federal minimum was the main driver.

Obama called for a federal minimum wage increase to $9 an hour, from $7.25; he also proposed tying the minimum wage to the cost of living. The current minimum wage has been in effect since 2009. McDonald’s and its franchisees don’t disclose what they pay their restaurant workers. Its franchisees, as well as other restaurant chains, such as Wendy’s (WEN) and Jack in the Box (JACK), spend money lobbying against minimum-wage increases.

McDonald’s, which has about 14,000 U.S. locations, has been vying with other eateries to lure cash-strapped Americans. Earlier this month, the chain reported that U.S. same-store sales gained 0.9% in January as it advertised its Dollar Menu and tested new items to help boost sales.

Wendy’s A Round of Frostys For Everyone!

Wendy's

Wendy’s (Photo credit: Wikipedia)

WEN : NASDAQ :

US$5.19

! Shares of Wendy’s got a lift after the company received a positive mention in Barron’s over the weekend.
The magazine notes that over the past several months, the restaurant has gone back to its roots, focusing on high-quality products and better marketing, as well as a remodeling of its stores. Wendy’s has launched 66 new restaurants and 48 renovations that have met with a positive response from customers. Sales in the newer-looking stores are up 25% since remodeling.

The company plans to remodel 200 stores this year, and open 120 new units. In 2015 it is targeting 1,300 new and remodeled outposts. From a valuation perspective, Barron’s pointed to its enterprise value of 8.4 times EBITDA as attractive given than competitors such as McDonald’s (MCD) and Yum! Brands (YUM) sport EV/EBITDA ratios of 10 or higher.

At 10
times 2014 estimated EBITDA, the magazine says Wendy’s would be worth $7.20, and the upside is complimented with a dividend yield north of 3%.

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