Starbucks’ Operating Profit Margin Increases
At the end of fiscal year 2014, SBUX’s operating income was $3.1 billion. Its operating profit margins increased to 19% in 2014—compared to 17% in 2013.
Hospitality & Restaurants
Everything you need to know about news affecting hotels, restarants and other businesses in the hospitality sector.
Starbucks’ Key Operating Costs
SBUX wants to grow sales. It’s also important to manage the operating costs. In this part of the series, we’ll take a look at four key operating costs.
A Closer Look At Texas Roadhouse’s Steak-Focused Menu
In the last part of this series, we briefly covered Texas Roadhouse’s (TXRH) steak-focused menu. Let’s look at it in more detail in this article.
A Must-Read Business Overview Of Texas Roadhouse
In this overview of Texas Roadhouse, we’ll look at the company’s financial performance, value drivers, competition, unit growth, and other key information.
Starbucks Is Expanding By Taking On Debt
SBUX’s total debt increased from $1.3 billion to $2 billion. It issued long-term debts in 4Q13 and 1Q14. This increased the interest expense by $36 million.
Starbucks Is Expanding Dayparts To Grow Sales
SBUX is also expanding its offerings in different dayparts. The expanded offerings cater to a wider customer base. They increase the wallet share.
Analyzing Starbucks’ Successful Mobile Ecosystem
Once the card is registered on the Starbucks (SBUX) website, the data is available on other ecosystems—for example, a mobile app. It helps a customer keep track of rewards.
Starbucks Gets Help From Its Rewards Program
One of the ways a customer can become a My Starbucks Rewards member is by using the My Starbucks Rewards card. The card is available at the checkout counter.
Starbucks Has Seven Growth Strategies
SBUX recognizes its limitation in attracting customers. As a result, SBUX is exploring other growth strategies. It’s looking at other beverage businesses.
A Business Overview Of Starbucks Corporation
Starbucks Corporation (SBUX) is a limited-service café. It operates more than 20,000 restaurants across 65 countries around the world. It employs more than 191,000 people.
Why The Americas Segment Is Important For Starbucks
The America’s segment includes revenues mainly from the US, Mexico, and Canada. This segment accounted for 73% of SBUX’s revenues in 2014.
Starbucks’ Coffee Has Three Revenue Sources
Consumer packaged goods, or CPG, include the sale of SBUX’s coffee and tea-related products—like single-serve tea and coffee products. It also includes several beverages at retail stores.
McDonald’s List Of Initiatives That Will Bring A Turnaround
McDonald’s list of initiatives includes simplifying its menu and possibly offering locally relevant menu items. This could be quite a gamble.
McDonald’s Says “Strong Competitive Activity” Impacting Sales
According to McDonald’s management, “strong competitive activity” is affecting its sales. Other fast food chains don’t seem to be feeling the competition.Company & Industry Overviews The successful franchise restaurant model
The benefits of the franchise model include the opportunity for the company to grow faster because the franchisee provides the capital for making the restaurant ready for operation, and the franchisor faces lower risk if the store underperforms.Company & Industry Overviews Unit growth equally important for restaurants as same-store sales
Restaurants seek revenue growth in a variety of ways, but after exhausting all options, restaurants pursue a unit-growth strategy to capitalize on these opportunities.Company & Industry Overviews Restaurants add dayparts to increase sales
By opening restaurants for different dayparts such as breakfast, afternoon snacks, or late-night snacks, restaurants believe they will sell more products throughout the day and improve same-store sales.Company & Industry Overviews What drives restaurant same-store sales?
Same-store sales are driven by two factors: the number of customers walking into the stores and the average amount or average check those customers pay for an order.
Product innovation is Starbucks’ primary focus
Starbucks’ (SBUX) management states that product innovation will be its primary focus as it maintains a lesser focus on its coffee business.Company & Industry Overviews Know about same-store sales to understand restaurants
The two most important drivers of revenue in a restaurant business are same-store sales and unit growth. Same-store sales growth measures the growth at existing stores or locations over a period of time.Company & Industry Overviews Pilgrim’s Pride Corporation’s three customer categories
Pilgrim’s customer base is spread across 100 countries, including the US and Mexico, which together contributed ~92% of the company’s revenues as of 2013 year-end.Company & Industry Overviews The nature of full-service restaurants
Full-service restaurants make up 44% of the market share in the United States. Full-service restaurants usually serve breakfast, lunch, and dinner.Company & Industry Overviews What is a company-operated restaurant model?
In a company-owned restaurant, the company takes ownership of the operation at the restaurant location. The company uses its own financial resources to get the location ready for business.Company & Industry Overviews What is a limited-service restaurant?
Limited-service restaurants can be classified into fast food or quick service, fast-casual restaurants, pizza restaurants, and cafés.Consumer Why Marriott’s hotels have a specific ownership structure
Marriott (MAR) operated a total of 3,916 hotel properties in fiscal year 2013. Most of these properties were either managed, franchised, or licensed.
Why it’s important to understand Marriott’s brands
Marriott has a diverse portfolio of 18 brands. It describes the brands as “individually distinct and collectively powerful.”
Why the EV/EBITDAR multiple is best for valuing hotel companies
The EV to EBITDAR multiple is used in businesses where there’s significant rental and lease expenses—hotels and airlines. We’ve used this to analyze Marriott’s valuation.Consumer Understanding Hilton’s operating cost
Hilton has operating expenses related to its owned and leased hotels and timeshare properties. This is separate from depreciation and amortization expenses.Consumer Key revenue drivers for the hotel industry
RevPAR is calculated by dividing hotel room revenue by the total available room nights. It’s used in the hotel industry to measure the company’s ability to generate greater revenue from each room.Consumer Must-know: Hilton gets revenue from its timeshare segment
Timesharing—also known as vacation ownership—is a method of getting the right to use a vacation property like a hotel or a resort. The buyer owns “timeshare interests” or intervals.Consumer A breakdown of Hilton’s revenue by segments
Timeshare revenue accounted for ~18% of total revenue from segments. The company generates revenue by marketing and selling timeshare interests and managing resort operations.Consumer Why Hilton expanded its presence in the international market
Hilton’s hotels, resorts, and timeshare properties are spread across 91 countries and territories. On December 31, 2013, Hilton’s portfolio consisted of 678,630 rooms.Consumer Hilton’s market share in the domestic and international market
Hilton’s growth plans are measured by the number of rooms under construction. Its growth plans rank first in the industry in all its markets—domestic and international.Consumer Must-know: A SWOT analysis of Las Vegas Sands
The strengths, weaknesses, opportunities, and threats (or SWOT) analysis is a useful tool for decision-making in businesses and organizations. It helps companies identify the positive and negative factors inside and outside an organization.Consumer Why Burger King’s restaurant visit program is so important
Burger King (BKW) opened a net of 131 new restaurants in the second quarter, making for a total net new restaurant count of 682 restaurants in the past 12 months.Consumer Why new entrants haven’t been a threat for the casino industry
The casino industry has heavy capital expenditures in gaming machines. This contributes significantly to the total output that’s generated by a casino operator. This is why the threat of new entrants to the industry has been low.Consumer Why the casino industry is rapidly expanding into new markets
The international gaming industry is growing quickly. It’s expanding to new jurisdictions. Many U.S. commercial casino companies, including Las Vegas Sands (LVS) and Wynn Resorts (WYNN), have helped the industry become an important part of the global economy.Consumer Why the commercial gaming market is increasing for casinos
Casino gaming is the largest part of the commercial gaming market. It continues to grow in popularity. There has been a surge in demand for casino games. As a result, new casino destinations have been created. Existing casinos have also been expanded.Consumer Must-know: Starbucks’ key value metrics—same-store sales
Same-store sales are one of the important drivers in the restaurant industry. Same-store sales directly drives the revenues. It measures the percentage change in the revenues generated by existing restaurant locations over the same period last year.Consumer Why InterContinental Hotels’ “asset-light” strategy drives growth
The company said on its website that its “business model is focused on franchising and managing hotels, rather than owning them, enabling us to grow at an accelerated pace with limited capital investment—we call this ‘asset light.’Consumer Must-know: Key metrics in McDonalds’ quarterly earnings
McDonald’s reported flat global comparable sales and negative comparable guest count for 2Q14, which is concerning from a long-term income growth perspective.Consumer Why marketing and advertising are so important for restaurants
Mainstream channels of marketing—like radio, TV, and print ads—are still common. But many restaurant chains have also used social media to increase their brand presence.Consumer Important pros and cons of the company-operated restaurant model
In the last part of this series, we looked at the franchise model. Let’s now take a look at the company-operated restaurant model.
Important pros and cons of the franchise restaurant model
The most common business models in the restaurant industry are for franchised and company-operated restaurants. Let’s look at the franchise model in closer detail.Consumer Overview: Assessing the restaurant industry business model
Restaurants are simple businesses. Because we have to eat every day, people often think the restaurant industry is a safe one to invest in.
Why food will become more important to Starbucks’ future growth
As a primary coffee retailer, food has been a relatively minor part of Starbucks Corp.’s (SBUX) focus in the past. But lately, Starbucks has been expanding its product offerings for food.Consumer An industry advantage: Dunkin’ Brands’ operating costs are dieting
Dunkin’ Brands has a very low capital requirement relative to the rest of the coffee retail industry. This is due to its business model, centered around establishing franchises across the world.Consumer Must-know: Dunkin’ Brands is innovating the supply chain
Dunkin’ Brands Group doesn’t typically supply products to its franchises. Revenues derive from royalty fees as opposed to product distribution.Consumer Must-know risks: Why Starbucks should hedge its shrubs
Starbucks indicates that it uses derivative contracts to hedge commodity price risks. These contracts typically don’t have a lifespan longer than five years.Consumer A Starbucks on every corner: A guide to the SBUX business model
This business model has allowed Starbucks to be the first coffee firm to put retail locations in each of the BRIC nations and many more.