Recent Posts
- Boston Market's two-buck chick
- Are you celebrating Christmas or the holidays?
- Change must come, but what kind of change?
- What's wrong with this picture?
- Do you want living wages with that?
- Re-allocation hurts this analyst
- Prepared meals: How dangerous are they?
- Discuss: Burgers and menu labeling
- Chipotle on "hold"
- Common spices, processed foods ... really?
Recent Comments
- cole mcnugget on Max & Erma's, Part 2
- Soul Delicious Restaurant on Will the bailout help your restaurants?
- Joseph Lee on His bank account kicked up a notch
- Bundling Works on Boston Market's two-buck chick
- Anon on Julia Stewart: Improve Employees' Lives
Most Commented On
- McDonald's "gay support" issue (30)
- Micatrotto: 'LIke a very large restaurant.' (27)
- Making Servers Pay: Cold-Hearted or cost-effective? (20)
- Same old, same old integrity (10)
- Julia Stewart: Improve Employees' Lives (9)
Archives
- December 2008
- November 2008
- October 2008
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
- February 2007
- January 2007
- December 2006
- November 2006
- October 2006
- September 2006
- August 2006
- July 2006
- June 2006
- May 2006
- April 2006
- January 2006
Blog
Wendy's is sold, finally
April 24, 2008
At long last Wendy's International Inc. of Columbus, Ohio, has a new owner -- Nelson Peltz, or rather his company, Triarc. Peltz, as many know, has been an "activist" shareholder for three years, griping about how much capital the burger chain dished out given the returns. Wendy's investors got about $25 a share, some six percent higher than yesterday's closing price (who's complaining now?).Today, UBS analyst David Palmer, in a note today on the deal, took the opportunity to apply Peltz's logic to Starbucks:
|
In 2005, Nelson Peltz acquired a stake in WEN, citing a bloated cost structure and inferior unit economics at the Wendy’s chain. Since then, Peltz has made similar investments in other consumer companies under the same “under-earning” premise (e.g. HNZ, KFT). Today, we published a note reflecting our belief that SBUX also significantly under-earns due to a bloated cost structure and a licensing & roasting business that does not generate adequate franchisor-type margins (when compared to global franchisors/licensors like YUM, MCD), in our view. |
Starbucks' specialty roasting and licensing operations last year generated a profit of $195 million on revenues of $1.4 billion. It's not a bad margin, all things considered, but Palmer speculates the company could goose it significantly:
|
Given Starbucks’ profitable unit economics, we wonder if the company couldn’t run a more profitable specialty licensing business. |
Palmer doesn't offer Starbucks any advice on the subject. He instead suggests that if the profit scenario doesn't come to pass "in the next year, the company could catch the interest of potential acquirers."
Nelson, do you like coffee?
Posted by David Farkas on April 24, 2008 | Comments (1)
In response to: Wendy's is sold, finally
Observer commented:
'Course when we look at Arby's financials we wonder why Mr. Peltz feels justified in slaming Wendy's. It is so much easier to throw hand grenades than it is to catch them.