Tim Hortons Inc
How Buffett Defended Berkshire’s Partnership with 3G Capital
Berkshire Hathaway teamed up with 3G Capital, a Brazil-based investment firm, to buy H.J. Heinz in 2013 and Kraft Foods in 2015. This action formed a new merged entity, Kraft Heinz Company.
Where Does Shake Shack Get Its Revenue Sources?
Domestic means all of the restaurants in Shake Shack’s domestic market—the US. Revenue from this segment was $78.5 million in 2013.
Starbucks’ 5-Year Stock Performance
Now, we’ll discuss SBUX’s stock performance over the past few years. SBUX returned $9,037 on $1,000 invested on January 1, 2009. The fourth quarter earnings announcement is approaching.
Starbucks’ Net Profit Margins Improve Over 5 Years
SBUX’s net income and net profit margins have been on an uptrend since 2010. At the end of fiscal year 2014, SBUX’s adjusted net income was $2.05 billion.
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.
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.
Starbucks’ Personalized Marketing Initiatives To Grow Sales
SBUX actively uses personalized marketing to make the customer feel more engaged with the company. SBUX expects revenue to grow five times due to the personalized marketing techniques.
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.
Food Inflation On Meat Eases In November
Food inflation Food cost is one of the important operating costs for a restaurant. In the McDonald’s (MCD) overview series, we learned that food and paper costs can be as much as 34% of sales. Food inflation can cause a restaurant’s operating margins to squeeze, but a restaurant like Chipotle Mexican Grill (CMG) can adjust its […]
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.
Farallon Capital sells stake in Weyerhaeuser Co.
Farallon Capital Management sold its position in Weyerhaeuser Co. (WY) during the third quarter. The stock accounted for 1.16% of the fund’s total 2Q14 portfolio.
Farallon Capital sells stake in Yahoo!
Farallon Capital Management sold its position in Yahoo! Inc. (YHOO) during the third quarter. The stock accounted for 3.39% of the fund’s total 2Q14 portfolio.
Farallon Capital raises stake in Allergan
Farallon Capital Management increased its position in Allergan Inc. (AGN) during the third quarter of 2014. The stock accounted for 3.13% of the fund’s total 3Q14 portfolio.
Farallon Capital ups stake in Covidien
Farallon Capital Management increased its position in Covidien plc (COV) during the third quarter. The stock accounted for 5.06% of the fund’s total 3Q14 portfolio.
Farallon Capital starts new position in Cognizant Tech Solutions
During the third quarter, Farallon Capital Management initiated a position in Cognizant Technology Solutions (CTSH). The position accounted for 2.06% of the fund’s 3Q14 portfolio.
Farallon Capital starts new position in International Game Technology
Farallon Capital Management initiated a position in International Game Technology (IGT) during the third quarter. The position accounted for 2.21% of the fund’s 3Q14 portfolio.
Farallon Capital initiates position in Tim Hortons
Farallon Capital Management started a new position in Tim Hortons Inc. (THI) during the third quarter of 2014. The position accounted for 2.62% of the fund’s 3Q14 portfolio.
Farallon Capital starts new position in Time Warner Inc.
Farallon Capital Management initiated a position in Time Warner Inc. (TWX) during the third quarter of 2014. The position accounted for 2.85% of the fund’s 3Q14 portfolio.
Starbucks’ year-to-date returns
As of November 2014, Starbucks’ (SBUX) year-to-date return was 3.3%, compared to returns of 10.9% on the Standard & Poors (or S&P) 500 Index and 9.5% on the restaurant segment.
Profit margins keep rising for Starbucks
In the fourth quarter of 2014, Starbucks (SBUX) reported a net income of $587 million compared to a net loss of $1.232 billion in the fourth quarter a year ago.
Starbucks increases leverage in 2014
Total debt-to-asset ratio for Starbucks was 0.19, which means that the company has five times more assets than debt to cover its obligation.
Starbucks’ strategy: Aggressive unit growth
Unit growth is a key driver that Starbucks is aggressively pursuing to grow the company’s sales. In the last 12 months, Starbucks has added 1,599 net new restaurants, or 8% growth in units.
An overview of Starbucks’ 4Q14 earnings
Starbucks Corporation (SBUX) reported adjusted earnings per share (or EPS) in 4Q14 of $0.74, an increase of 23%, compared to an adjusted EPS of $0.60 in the same quarter last year.
Tim Hortons’ year-to-date returns as of November 2014
As of November 2014, Tim Hortons’ (THI) year-to-date (or YTD) returns were 54.3%. The S&P 500 had returns of 10.9%. The restaurant industry had returns of 9.1%.
Why THI’s shares didn’t change after the earnings release in 3Q14
Tim Hortons (THI) reported its earnings before the market opened on November 5. Shares started trading at $80.59. This was flat from the previous day’s closing of $80.57.
Tim Hortons faced a higher effective tax rate in 3Q14
THI had an effective tax rate of 34% in the third quarter. Its tax rate increased from 28.3% in the same quarter last year. The increase was due to the company’s favorable tax impact last year.
Must-know: Tim Hortons’ segment-wise revenue in 3Q14
Canada is THI’s main segment. It accounts for 82% of THI’s revenues. It reported $688 million in revenues in 3Q14—this is 5.6% growth year-over-year (or YoY).
Tim Hortons’ unit growth and channel development
Besides product development and menu innovation, a restaurant can also boost its sales by growing units and penetrating deeper into the markets. THI added 44 new restaurant units during the 3Q.
What do Tim Hortons’ Double Double Card and TimmyMe app mean?
THI launched a new mobile application. Restaurants across North America have bar code scanners. Customers can use the TimmyMe app to pay for their orders.
Why Tim Hortons’ same-store sales grew in 3Q14
THI’s same-store sales increased 6.8% in the US. Its same-store sales in Canada grew 3.5%. The same-store sales growth in Canada was a result of the company ‘s new product launches.
Tim Hortons’ same-store sales impress in 3Q14
THI’s same-store sales in the US were driven by higher average unit volume from the breakfast daypart. The breakfast daypart increased customer traffic during non-peak hours.
Analyzing Tim Hortons’ 3Q14 earnings
THI’s second quarter earnings were released on November 5. It reported a diluted earnings per share (or EPS) of $0.68—compared to an EPS of $0.72 in the same quarter last year.
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.
How technology helps drive restaurant sales
Increasingly, restaurants are using technology to increase customer traffic and drive same-store sales.
Restaurants innovate menus to stay relevant
Restaurants often innovate their menus to remain relevant to their customers. This also helps restaurants keep up with shifting trends in the industry.
Domino’s offers highest year-to-date returns
ROE represents the percentage of income generated from shareholders’ equity, and it’s calculated as net income divided by shareholders’ equity.
Domino’s management guidance on food costs, capex, and more
Management anticipates the effective tax rate to be in the range of 37% to 38% for the “foreseeable future.” Corporate tax rates in the U.S. are high, and force some companies to move their headquarters to countries offering lower tax rates.
Why we could see a refreshed KFC soon
KFC’s sales in the U.S. are slowing down. KFC is testing a new concept called the KFC Eleven to tackle this issue. It’s also testing another concept for its international market called Super Chix.
Why Brinker International’s unit growth matters to its investors
Opening a new location is another revenue growth source for a restaurant chain. At the end of 4Q14, Brinker International had a total of 1,615 restaurants system-wide. It added 46 new system restaurants over the year.
Must-know: Why Chili’s same-store sales increased
For the restaurant industry, one of the key drivers is same-store sales earnings. Brinker International (EAT) reported a same-store sales growth of 2.5% for Chili’s—compared to -0.6% in the same quarter last year.
Darden’s food costs, labor costs, and selling and general expenses
Darden Restaurants’ (DRI) food and beverage costs were 1.8% higher as a percentage of sales compared to the corresponding quarter a year ago. Higher beef, seafood, and dairy costs primarily drove up the food costs. Food costs also increased due to core menu enhancements made last year by the company.
Must-know: Why Darden introduced new menu items at Olive Garden
Same-store sales are driven by two components—the number of customers walking into a restaurant (guest count or traffic) and the average amount paid by a customer for the food (ticket or average check).
Must-know: Why Darden cares about Olive Garden’s same-store sales
Olive Garden is the largest brand under Darden Restaurants in terms of revenues. Almost 99% of Olive Garden restaurants are in the U.S. It serves Italian cuisine with menu items such as pastas, soups, salads, pizzas, flatbread, and desserts.
Why leveraged loan deals are seeing a strong calendar
Leveraged loans are commercial loans. They’re provided by a group of lenders. The loan is usually secured. It’s structured, arranged, and administered by investment and commercial banks—the arrangers. An example of an arranger is JPMorgan (JPM). Then, the loan is syndicated to other banks or institutional investors.
Why Dunkin’s year-to-date return is negative
As of September 11, 2014, Dunkin’ Brands Group’s (DNKN) year-to-date (or YTD) return was -8.2%—compared to returns of 9.9% on the S&P 500 Index and 1.37% for the restaurant industry. First quarter results were disappointing. Dunkin’ Donuts U.S. same-store sales grew by only 0.5%. They were affected by severe weather conditions in U.S.
Must-know: Dunkin’s management’s guidance into the future
Management expected a full year same-store sales for Dunkin’s U.S. segment between 3%–4%. However, there was a weak performance in second quarter. As a result, management lowered the guidance to same-store sales between 2%–3% on a full year basis. Management maintained the same-store sales guidance of 1%–3% for Baskin-Robbins U.S.
Must-know: Dunkin’s major costs of operations
Dunkin’ Brands Group (DNKN) has three major costs of operations. The costs of operations include general and administrative expenses, cost of products sold, and occupancy expense. Dunkin’s general and administrative expenses accounted for $56 million in the second quarter. This was 30% as a percentage of sales—compared to $62 million, or 34%, as a percentage of sales.
Must-know: What strategies are driving Dunkin’ Brands?
Same-store sales are driven by two components—transaction and traffic. Transaction is driven by pricing and products offered to the customer—or mix. For Dunkin’ Brands (DNKN), transaction contributed to more than half of same-store sales growth. To increase the traffic, the company introduced new items and offers.
Tim Hortons’ effective tax rates and the Burger King merger
Burger King (BKW) recently announced that it will acquire Tim Hortons (THI). In our acquisition series, we explained that this deal was structured as a tax inversion deal. Let’s take a look at what Tim Hortons’ effective tax rate has been over years.
Must-know: Why management initiatives affected Tim Hortons’ sales
Tim Hortons (THI) has introduced new items in its menu, opened new locations, implemented a digital strategy, and pursued other initiatives to grow revenue. Let’s now see how effective these initiatives have turned out for sales.
Why Tim Hortons introduced a mobile app and loyalty cards
Along with introducing new products like those we discussed in the previous part of this series, Tim Hortons (THI) is also testing different revenue channels and payment methods.
Must-know: Tim Hortons’ unit growth and other key initiatives
Besides product development and menu innovation, which we discussed in the last part of this series, a restaurant may also boost its sales by growing units and penetrating deeper into the markets.
Why Tim Hortons’ same-store sales grew through menu innovation
Restaurants often introduce new products in their menu and use promotional campaigns to drive customers into the restaurants.
Why Tim Hortons’ same-store sales are an important value driver
Tim Hortons (THI) had a total of 4,546 restaurants as of the second quarter’s end. About 79%, or 3,630, of Tim Hortons restaurants are in Canada. About 19%, or 866, restaurants are in the U.S.
Burger King’s effective tax rates and the Tim Hortons acquisition
Burger King’s (BKW) acquisition of Tim Hortons (THI) will make it the third-largest restaurant chain in terms of market capitalization, after McDonald’s (MCD) and Yum! Brands (YUM).
Burger King’s 2nd quarter 2014 tax rates and profit margins
Net income is used to calculate earnings per share (net income over weighted average shares outstanding). It improves based on an improved cost metric. Let’s see how Burger King’s (BKW) net income has done over the year.
How Burger King is financing its Tim Hortons acquisition
The Tim Hortons (THI) acquisition’s value of about $12.5 billion is more than Burger King’s (BKW) market capitalization of $10.9 billion as of August 26.