Tag Archives: refranchising
Earnings and Valuation Distortions, Part 4

Earnings and Valuation Distortions, Part 4

With company operated restaurant margins optimally in the 20-25% range (McDonald’s (MCD) and Chipotle (CMG) are industry leaders), and franchising profit margin at around 70-80%, refranchising seems like an easy decision. But which throws off more free cash flow? It will be interesting to watch YUM and Jack in the Box (JACK) long term as […]

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Earnings and Valuation Distortions, Part 3

Earnings and Valuation Distortions, Part 3

Retail businesses and chain restaurants battle minute by minute for customer attention and to make a splash. Too old of a store base means something is wrong—the company is in cash cow mode, or it can’t find sites, or that its new stores aren’t economically viable. In the chain restaurant arena, refranchising is underway in […]

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