Borders

Some interesting items from Borders (BGP) 10-Q Inventory:
During the first quarter of 2008 the Company implemented an initiative to actively reduce inventory in its stores. As a result, the Company significantly reduced inventories in the music category, as well as space allocated to that category. In addition, the Company reduced inventories in book and DVD categories as well, in order to make its inventories more productive. These two factors significantly contributed to the reduction in inventories and generated $88.9 million in cash in the quarter. As a result of the decline in inventories, account payable decreased $56.5 million during the first quarter of 2008. The Company will continue to actively manage inventory levels throughout 2008 to drive inventory productivity and to maximize cash flows.CapEx:

The Company expects capital expenditures to be between $80.0 and $85.0 million in 2008, compared to the $142.7 million of capital expenditures in 2007. The Company has critically reviewed all capital expenditures to focus on necessary maintenance spending and projects with very high return on capital. Capital expenditures in 2008 will result primarily from investment in management information systems, the Company’s new e-commerce Web site, as well as a reduced number of new superstore openings. In addition, capital expenditures will result from maintenance spending for existing stores, distribution centers and management information systems. The Company currently plans to open approximately 14 domestic Borders superstores in 2008. Average cash requirements for the opening of a prototype Borders Books and Music superstore are $2.8 million, representing capital expenditures of $1.6 million, inventory requirements (net of related accounts payable) of $1.0 million, and $0.2 million of pre-opening costs. Average cash requirements to open a new airport or outlet mall store range from $0.3 million to $0.8 million, depending on the size and format of the store. Average cash requirements for a major remodel of a Borders superstore are between $0.1 million and $0.5 million. The Company plans to lease new store locations predominantly under operating leases.The real good news is the level of disclosure prior to the filing. There aren't any "what?" items in the filing. A good measure of this is probably because the book business is not overly complicated and more still is because Ackman is the largest shareholder. CEO George Jones does deserve some credit though, he has been totally upfront up until this point with shareholders. Good.

Gymboree

Gymboree Investment Highlights
Children's apparel has a necessary replacement cycle.
By nature, children's apparel needs to be replenished several times a year, usually by a mature female demographic with a propensity to spend on their children. Yes, the Gymboree brand carries higher price points than its publicly-traded specialty competition - Carter's (CRI) and Children's Place (PLCE) - and the mass channel private labels.
However, the average Gymboree customer represents a high-end audience with limited exposure to rising gas prices and other negative macroeconomic factors. We also expect a modest sales boost in coming years from baby boomer retirees who will likely have more time and resources to devote on their grandchildren.
With the combination of established brands that resonate with mothers everywhere (Gymboree and Janie and Jack) and still-emerging brands (Crazy 8) , we anticipate robust sales growth (at least mid-teens) through the balance of the decade and likely beyond.
Strong financial footing.
When evaluating a consumer stock investment, the most important factors to evaluate are:
Top-line growth (including mature and new store growth),
The likelihood of sustained profitability and return on invested capital,
Cash generation and flexibility,
Debt requirements, and
Inventory turnover.
Gymboree generally passes the test on each of these considerations, with solid top-line growth, sector-leading operating margins and returns on invested capital (nearing 20%), ample cash on hand, a debt-free balance sheet, and inventory turnover over 4.0x (excellent for a mall-based apparel retailer).
Investment Risks
Valuation. Admittedly, we are a bit concerned about Gymboree's valuation, given the stock's impressive run this year (the stock has climbed back from a low of $27 in January to a recent close of just under $44). However, at about 14x forward earnings (the consensus fiscal 2009 estimate is $3.16, according to Yahoo Finance), we still find this stock relatively cheap to its peer group (about 15x, aided by Children's Place inflated valuation) and anticipated earnings growth (mid-to-high teens). As such, we would comfortable with owning Gymboree's stock into the high-$50 range.

Blockbuster

There haven’t been a lot of developments in the last few weeks on Blockbuster’s (BBI) $6-a-share bid for Circuit City (CC). The stock certainly isn’t trading like a company in play; the Street doesn’t seem to think anything is going to happen.
Arvind Bhatia, an analyst with Sterne Agee, asserts in a research note this morning that Blockbuster is likely to provide an update on its proposed transaction in the next two weeks. He sees three possible outcomes:
Blockbuster proceeds with its bid.
Blockbuster lowers its bid.
Blockbuster pulls its bid.
Given the still troubled financial picture at Circuit City, Bhatia thinks the odds that the company pursues a deal at $6 a share is just 5%.
He sees a 60% chance that Blockbuster lowers its bid. At $4.50 a share, he writes, CC would have an enterprise value of $750 million. Bhatia says financial synergies from a deal could be $500 million to $700 million, which means BBI could argue that they would be buying CC at 1x synergies. (Haven’t ever seen that ratio before.) Nonetheless, he thinks that BBI holders “will need to be convinced there is more to the combination” than cost cutting: they will want to hear a plan for turning CC around.
He also sees about a 35% chance that BBI simply walks from the deal.
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Sonic

The more I hear from Sonic (SONC), the drive-in restaurant chain, the more I believe that this is a broken company. SONC reported disappointing results on Tuesday as the company earned 28 cents for its third quarter ended May. Analysts expected SONC to earn 31 cents which was flat with the third quarter of 2007.
The company claimed that the shortfall was due to colder and wetter weather. Same store sales declined 0.4% in the quarter but there was a wide disparity between a 0.5% increase at franchised units versus a 3.9% decline at “partner” drive-ins, which are primarily company owned. To the company’s credit, sales did pick up as the quarter progressed.
SONC has several problems. Weather is certainly one of those problems but it goes much further than just some rain in March. SONC has hoped to expand coast to coast and from border to border. However, so many of those geographies don’t have the year round weather to compliment the drive-in business model.
The commodity cost pressures is certainly hurting SONC. The company gets the double whammy of higher food costs which impacts its costs and the higher cost of gasoline which puts fewer drivers on the road to dine at the company’s drive-ins.
SONC has made one big mistake in the past year, which is to take on a huge amount of debt to restructure its capital structure and buy back stock. Since 2q06 (February 28, 2006) SONC share count has declined from about 89 million shares (reflecting a 3 for 2 split in May 2006) to nearly 62 million shares and is down about 5 million shares in the last year. The stock has lost about 1/3 of its value in the last two years and now SONC has gone from being nearly debt free to carrying about $700 million in debt.
When you put this all together, I don’t have much confidence in SONC's business model or management proficiency.

Tim Horton's

Odlum Brown analyst Stephen Boland became the latest bull on Tim Hortons Inc. (THI) this week, initiating coverage on the coffee and doughnut retailer with a "buy" rating and C$42 price target.
In a note to clients the analyst wrote:
Tim Hortons is a high quality Canadian business. It boasts a stellar return on equity, has a solid balance sheet, and a long track record of growth. We believe there is opportunity for the company to generate double-digit earnings per share growth for several years, driven by unit expansion and same-store sales growth.
Importantly for investors, Mr. Boland said the stock is ripe for the picking after pulling back from a December high of C$40.41 in December.
The analyst said:
Weighing on the stock recently has been a generally shaky stock market and valuation compression for most quick service restaurants as investors fret about a slowdown in consumer spending.
He also added that the shares were hit by poor first quarter results.
However, Mr. Boland said none of these factors impact the long-term thesis for Tim Hortons, and he told clients the share price presents a good opportunity to establish positions.
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Investing in a Franchise Business

It is a known fact that franchise owners usually have a better chance of success as a business operator than an independent start up owner. The likelihood of success can be attributed to a proven and tested business model, existing market brand, support and training from the franchisor. The question is, are there advantages to investing in the public stocks of franchises?
Comparing the actual ownership and operation of a franchise to owning the stocks is like comparing apples to oranges. In terms of just an investment hypothetical, there are some clear advantages. We will take McDonald’s Corporation (NYSE:MCD) as an example.

The start up capital requirement for owning a McDonald’s franchise ranges from $500K-$1.6M. It would take a number of years to break even and turn a profit on the money invested. Since it is a franchise business, there are royalty payments to be paid and the time expenditure of running a business can be hefty.
On the other hand, you do not need much to really own a piece of McDonald’s; in fact you can be an “owner” for $54.10 (current share price). If you are independently wealthy and just happen to have an extra $500K at your disposal and bought MCD five years ago at $13 per share, today you are sitting on at least a cool $2M in profits assuming proper trailing stop loss management and you got out at the $63.69 high.
Not a bad ROI for about 20 minute’s worth of work placing trades and without all the hassles of running a brick and mortar business. Ok, ok I hear what you are saying. This was an ideal situation, hindsight is 20/20 and no one in their right mind would plop down half a million on just one stock.

The point of this exercise is to demonstrate the potential of publicly traded franchises as a unique class of stocks to invest in. Entrepreneur magazine just recently released their “2008 500 Franchise Rankings” of both private and public franchises. McDonald’s and Yum! Brands (NYSE:YUM) were among several of the many publicly traded franchises which made the top 20 on this list. Owning a carefully chosen basket of these stocks would have performed well.
The University of New Hampshire’s Rosenberg Center compiles an index that tracks the market performance of the top 50 U.S. public franchisors every quarter. Over 98 percent of the market capitalization of corporations involved in the business of franchising is represented by the RCF 50 Index. This composite index of franchisors has beaten the S&P 500 in the past 5 years as shown in the published 2007 3rd quarter report.
Professor Udo Schlentrich, director of the University of New Hampshire’s William Rosenberg International Franchise Center has this to say about the performance of the RCF 50 Index during and interview with Blue MauMau:
“Although the Fran 50 companies have out-performed the S&P 500 companies for the past 5 years, there is no guarantee that they will continue to do so in the future. We believe some of the reasons we have seen this growth is that franchising, as a business model, has become better understood and valued by the investment community. For example, franchised companies are, by their very nature, less capital intensive. In addition, the financial risk is largely borne by the individual franchisee. Also, franchisee-owned stores are seen to operate more effectively in a retail environment than corporate-owned stores — however, there is still some controversy on this subject. Finally, many franchise systems have been able to effectively penetrate international markets, thus achieving additional growth and spreading economic and political risk.” –Udo Schlentrich
Fourth quarter 2007 and this year may see an overall drop in the index because of recent franchisor consolidations, market volatility and uncertainty, but if past performances are of any indication, the trend in the RCF 50 Index may continue to outperform the S&P 500 –even in this downturn.

YUM! Brands

The Colonel Plays A Politcal Game Of "Chicken"
Posted By:Jane Wells
Topics:Marketing
Sectors:Food and Beverage Media
Companies:Cadbury Schweppes, PLC Yum! Brands Inc

Oh those marketing geniuses at Yum! Brands
YUM BRANDS INC
YUM
34.84 -0.29 -0.83%
NYSE
Quote Chart News Profile[YUM 34.84 -0.29 (-0.83%) ]
and Dr. Pepper Snapple (formerly Cadbury Schweppes
Cadbury PLC
CSG
49.12 -0.02 -0.04%
NYSE
Quote Chart News Profile[CSG 49.12 -0.02 (-0.04%) ]

Slogans like "Finger Lickin' Good," and people dancing around singing "I'm a Pepper" just don't cut it anymore in the age of dogs riding skateboards on YouTube and products which promote "going commando." Sigh. I miss wanting to teach the world to sing, in perfect harmony.
But we live in different times. Politically intense times. The era of eBay.
So KFC, owned by Yum! Brands, is playing a political game of chicken this election year by selling "Right Wing" and "Left Wing" T-shirts. (See images.) For undecided voters, there's a shirt saying "Tastes the Same to Me." The slogans are printed on American Apparel T-shirts (man, read Margaret Brennan's past blogs on THAT company), and all proceeds go to charity. While being sold at www.kfc.com, the company is also flooding Young Republican and Young Democrat events with the tees, and hoping to convince some celeb to wear one. But what about Bob Barr fans? "Wingless"? Ralph Nader? Maybe just an egg.
Dr. Pepper couldn't give a hoot about the election. He's a lover not a fighter. And he recognizes crass commercialization when he sees it! A Virginia bride named Kelly Gray auctioned off a spot at her wedding on eBay to help pay for the $7,000 event. The winner, out of 23 bids, was Dr. Pepper! Paying $5,700! Actually the winner was "Nick" from Dr. Pepper, as in PR guru Nick Ragone (www.nickragone.com) who came up with the idea. Ragone says the company will actually pitch in $10k for the wedding and supply all the drinks. Gee, what drinks they'll provide?
Ragone says, "We're finding that traditional media just isn't reaching our target audiences anymore, and so we're taking on more 'disruptive' tactics - things that get inside a story in a way that connects with people." ABC's "Good Morning America" is doing a story on the stunt, but, of course, being on my blog is the true sign of successful. After all, I "broke" the story when Dr. Pepper offered everyone in America a free soda if Axl Rose finished his 17-year-in-the-making epic "Chinese Democracy." "We've caught lightning in a bottle again," says Ragone, who makes more money than I do, thinking up stuff like this.

The Colonel Plays A Politcal Game Of Chicken
But you don't think Nick is actually going to the wedding, do you? Dr. Pepper plans to launch a website to help Gray find a guest to actually show up in Ragone's place.
Still...forget being a wedding guest! Fake Jane wishes she could just marry the good doctor...he's rich and famous, and he wouldn't require much from her. Plus, she can always "can" him in the recycling bin if things don't work out.

Coca-Cola Completes Franchise Buy

Coca-Cola FEMSA completes Brazil franchise buy
Coca-Cola FEMSA completes $364.1 million acquisition of Coca-Cola Brazil franchise Remil
June 27, 2008: 06:54 AM EST

NEW YORK (Associated Press) - Coca-Cola FEMSA SAB de CV, the largest Coca-Cola bottler in Latin America, said late Thursday it completed the purchase of Coca-Cola Co.'s Refrigerantes Minas Gerais Ltda. franchise territory for $364.1 million.
Coca-Cola FEMSA said the deal will expand its footprint in Brazil by more than a third.
Founded in 1948 in Belo Horizonte, Remil sold 114 million unit cases of sparkling beverages, water, still beverages and beer in 2007. The franchise serves the cities of Belo Horizonte, Contagem, Curvelo, Divinopolis, Governador Valadares, Ipatinga, Juiz de Fora, Lavras, Leopoldina, Mariana, Montes Claros, Janauba and Petropolis.
Coca-Cola FEMSA's operations in Brazil, including both of its franchise territories, will now represent about 30 percent of the Coca-Cola bottling system in Brazil.
Mexico's Coca-Cola FEMSA produces and distributes Coke, Sprite, Fanta and other Coca-Cola drinks in Mexico, Guatemala, Nicaragua, Costa Rica, Panama, Colombia, Venezuela, Brazil and Argentina. The company has 30 bottling facilities in Latin America and serves over 1.5 million retailers.
Coca-Cola Co. owns a 31.6 percent stake in the company.

www.cocacola.com
www.francorpconnect.com
www.francorp1.com

Franchise Statistics

q Franchised businesses account for nearly 50% of all retail sales in the United States.



q The International Franchise Association has reported that franchising is responsible for 760,000 businesses, 18 million jobs, 14 percent of the private sector employment, and over $500 billion in payroll!



q From January 2000 to December 2004 the index that tracks the performance of the top 50 franchisors increased 34.5% compared to a drop of 20.1% in the S&P 500 over the same period.



q A 1999 study by The United States Chamber of Commerce found that 86% of franchises opened within the last five years were still under the same ownership and 97% of the were still open for business.



q A U.S. Department of Commerce study conducted from 1971 to 1997 showed that during that time less than 5% of franchise businesses were closed each year.



q A U.S. Small Business Administration study conducted from 1978 to 1998 found that 62% of non-franchised businesses closed within the first 6 years of their existence due to failure, bankruptcy, etc.



q Total sales by franchised businesses are projected to reach over $2 trillion, this year.



q 1 out of every 12 businesses is a franchised business.



q A new franchised business is opened every 8 minutes of every business day.



q In 2000, the median gross annual income, before taxes, of franchisees was in the $75,000 to $124,000 range, with over 30% of franchisees earning over $150,000 per year.

Re/Max Franchise

Overview of the Re/Max franchise program.

RE/MAX Int'l. Inc.
Founded by Dave and Gail Liniger in Denver in 1973, RE/MAX is now a global network of more than 116,000 real estate agents. In the RE/MAX system, agents are in charge of their own business and operate under a maximum commission concept.

No. of Franchises: 6,973
Franchising Since: 1975
Franchise Fee: $12,500 - $25,000

Training & Support
TRAINING

Available at headquarters: 5 daysSemi-annual convention and conference
ONGOING SUPPORT

NewsletterMeetingsToll-free phone lineGrand openingInternetField operations/evaluationsPurchasing cooperatives
MARKETING SUPPORT

Ad slicksNational mediaRegional advertisingOther marketing support: Brochures, magazines, videos, online extranet, business satellite network

7-Eleven acquired White Hen Pantry

7-Eleven to acquire White Hen Pantry.
Convenience Store Decisions, September, 2006
E-mail Print Link Content provided
in partnership with

In its largest acquisition in 20 years, Dallas-based 7-Eleven Inc. announced the purchase of White Hen Pantry Inc., the Lombard, Ill.-based convenience store chain that operates and franchises 206 stores in the Chicago area and Northwest Indiana, and licenses another 55 units in Boston. With the addition of the White Hen stores, the number of stores 7-Eleven operates, franchises and licenses in North America will increase to more than 7,100.

Holiday Inn

Holiday Inn chain upgrades with style

Enlarge By Jennifer S. Altman for USA TODAY

Daniel Gedna does security duty at a Holiday Inn in New York City. The hotel opens this week.

Enlarge By Jennifer S. Altman for USA TODAY

Wilma Fiore looks over some of the preparations.




Yahoo! Buzz Digg Newsvine Reddit FacebookWhat's this?By Barbara De Lollis, USA TODAY
NEW YORK — When the Holiday Inn in Chelsea opens Thursday, you won't find the chain's typical old wall-to-wall carpeting, floral bedspreads, a front desk cluttered with hotel brochures or rows of impatiens planted outside.
Instead, you'll see hardwood flooring, columns made from hand-laid river rocks, and slender Japanese planters outside.

This newly built Holiday Inn hotel is one of the first in the USA to bear the modern version of the green-and-white Holiday Inn logo — a sign meant to convey radical changes underway. As many as a thousand of the chain's existing 3,200 hotels worldwide are expected to earn the new sign this year, with the entire chain completely revamped by early 2010.

The new look is just one part of a sweeping, $1 billion overhaul that InterContinental (IHG) launched last year to revive the iconic brand.

The new design "brings us 20 years forward and projects us 10 years beyond," says Steven Porter, president of The Americas, InterContinental Hotel Group, during a tour of the hotel earlier this month.

FIND MORE STORIES IN: California | Virginia | Pennsylvania | Manhattan | Austin | Chelsea | Americas | Wichita | Santa Ana | John Mayer | Jack Johnson | State College | Kylie Minogue | Holiday Inn Express | Realtor | Kline | Holiday Inns | Created | Baby Boomer | Aloft | InterContinental Hotels | Element | Hyatt Place | Dumfries | Marriott-brand
Holiday Inn isn't just slapping new signs on old facilities. Instead, it stepped up quality inspections at all its hotels, and it's providing hotel owners with guidance on how to meet new standards.

The standards cover everything, including the entrance lighting, shower rods, lobby soundtrack and customer service training.

Before the makeover process began, Holiday Inn also stopped renewing contracts of hundreds of hotels that didn't meet standards or had exterior corridors that travelers perceive as unsafe. It also devised a stylish new look for newly built Holiday Inns such as the one in Manhattan to reignite development deals.

Some elements of the plan — such as illuminating the hotel at night in the brand's signature color — will also be carried over to Holiday Inn Express to unify the brands, but the newer Express chain doesn't need as dramatic a makeover.

Not aging gracefully

Created in 1954, the roadside hotel chain flourished by franchising as the USA's interstate highway system grew.

But it's been losing share in recent years as younger chains won over customers, and aging hotels appeared too dowdy.

Drastic action was needed to rescue the brand because older hotels were starting to outlive their lifespan, says Steve Rushmore, president of HVS, the hospitality consulting firm.

"Unless you do a significant renovation to existing properties, or a have them leave the chain, your chain starts to deteriorate and becomes old and obsolete," he says.

Once an existing hotel has been renovated, passed inspections and hung the new Holiday Inn sign, Porter says owners will see revenue per available room — a typical industry measure that considers rate and occupancy — increase by between 3% and 7% above normal inflation.

The contemporary design is meant to appeal to its Baby Boomer customer base, as well as younger travelers who might pick one of the stylish, midprice hotel brands recently launched, such as Aloft, Element or Hyatt Place.

Ellen Kline, a Realtor in State College, Pa., says she quit staying at Holiday Inns about a year ago because she didn't like not knowing whether she'd pull up to a good hotel or a poor one. Now, she stays mostly at Marriott-brand hotels.

"I like to stay in a place that's clean and up to date," she says.

Still, Kline, 50, says she'll consider staying in Holiday Inns once they're overhauled when traveling for conferences or on road trips with her teenage daughter. The chain fits her budget. Holiday Inn's average rate this year is around $97 a night.

But Holiday Inn has advantages beyond price, Rushmore says.

"Holiday Inn still has a very powerful name and reservation system, and being part of InterContinental Hotels has the advantage that they can cross sell," he says. "They're not starting out from ground zero like a new brand."

By the end of this month, about 40 Holiday Inns in the USA will have earned the right to install new signs. The list includes hotels in Dumfries, Va., and Wichita; and near the airports in Santa Ana, Calif., and Austin. Porter expects all 3,000 hotels will be completed by 2010.

Project green light

The revamped hotels preserve little from the past. The primary reminder is the splash of green in the Holiday Inn sign and entry lighting, recalling the old green-and-white-striped Holiday Inn towels.

Walking up to the Sixth Avenue Holiday Inn in Chelsea, guests see black Japanese-style planters and a modern steel-and-glass portico. At night, it is illuminated with that vibrant green lighting.

Guests will hear hip, chart-topping music by singers such as Jack Johnson, John Mayer and Kylie Minogue from built-in speakers both outside and inside the lobby. Rhythms will change by time of day.

In the lobby, they'll see a minimalist front desk. The "check-in" sign hangs from the ceiling, instead of resting on the counter, to reinforce the uncluttered look. Check-in counters will be kept free of promotional brochures, reflecting more sophisticated travelers who know what they want.

The beds feature white cotton duvet covers, white sheets and higher-quality mattresses. The shower has a curved shower rod and curtain that lets in more light.

Hotels have leeway in the design

Since the cookie-cutter look is no longer in vogue, Holiday Inn created design guidelines and color palettes that can be interpreted differently by hotels.

The plan doesn't address the restaurants, which serve at least breakfast, dinner and room service.

It also doesn't target the Holidome pool and activity area, although the chain adopted new standards in the last two years so that only hotels with the appropriate features hold that designation.

Guests, meanwhile, may see improvements before the new Holiday Inn sign appears, as the process can be lengthy.

At the 23-year-old Holiday Inn in El Paso, for instance, the hotel already has the new front desk, bedding and linens. A few more changes must be made before the new sign comes in October, but customers already show more enthusiasm, says owner Bill DeForrest, who's also CEO of Lane Hospitality. Guests have paid an average of $104.72 so far this year, or 13% more than the same period last year — a bigger jump than he would've received without the renovation, he says.

Occupancy and guest satisfaction levels also rose higher than normal, despite new competition in the past 18 months from limited-service hotels such as Hilton Garden Inn and Holiday Inn Express, he says.

"They're paying more and they're happier with the way the hotel's treating them," says DeForrest, who chairs the Holiday Inn owners' committee.

Readers, what amenities would you like to see at the revamped Holiday Inns?

YUM Brands

The Best Opportunity This Decade
By Jim Mueller June 23, 2008 Comments (0)
1
Recommendation

Over the past 60 years, the United States has seen, and survived, 10 recessions (not counting the one we might be in at present). From the shortest one -- six months in 1980 -- to the two that spanned 1973-1975 and 1981-1982, we've muddled through and come out the other side. In between each, we've experienced, on average, almost five years of expansion.

So while we might be in another recession right now, I'm excited!

Pardon me while I wipe my chin
First, we have a whole bunch of people running around in panic mode crying, "The sky is falling!" They don't want to hold stocks during a recession, so they're willing to sell them -- cheap.

Second, the news media fan the flames of panic with constant stories about weakening consumer spending and the specter of recession.

Third, we've got a handful of really hated companies. Specifically, I'm talking about the banks, thrifts, and builders that caused and are feeling the fallout from the mess we're in.

What does that add up to? Bargains.

Like a kid in a candy store ... and the candy's on sale
One option is one of the banks -- specifically Wells Fargo (NYSE: WFC). It's been feeling the effects of the credit crisis unwinding and shares are down some 33% from the highs reached last fall.

There's also the investment bankers and brokerages. While E*Trade (Nasdaq: ETFC) is struggling, others, like JPMorgan Chase (NYSE: JPM), might be worth investing in. Heck, if it gets cheap enough, I'll even take a closer look. (Even possibly bad companies can be good investments if you get them at the right price.)

Then there are (still) the retailers, trying to survive declining same-store sales and decreased consumer spending. This is where a strong balance sheet is helpful. American Eagle Outfitters (NYSE: AEO), for instance, has $370 million in cash and short-term investments and no debt. As long as cash flow keeps coming, and it has so far, the company should survive to become great again.

Even some big name companies have been dragged down: Pfizer (NYSE: PFE), maker of a lot of the drugs we take, for instance. The stock has been falling for most of the past year.

Finally, there are restaurants. Chipotle Mexican Grill (NYSE: CMG), the burrito spinoff from McDonalds, and Yum! Brands (NYSE: YUM), the owner of both KFC and Taco Bell, are both off significantly. Possibly all that talk about lower consumer spending in 2008 has driven their prices down. But really, who cares about 2008? For my money, I'm more interested in companies I can buy today to own in 2013 -- so thanks for the bargains!

"When Miller and Nygren speak, people listen."
Investing in the above industries might seem counterintuitive now, but Bill Miller of Legg Mason says au contraire:

[Several] years ago, everyone wanted tech and Internet and telecom stocks ... The time to buy them was in 1994 or 1995, when they were cheap. But in 1994 or 1995, people wanted banks and small and mid caps, which should have been bought in 1990, and well, you get the picture.

Bill Nygren, another great value investor, agrees. Looking at the current economic situation, he wrote, "What usually happens is that suffering industries begin to recover, the next crisis comes from somewhere least expected, and the cycle of creating new investment opportunities starts anew. We have no reason to believe it will be different this time."

What these gentlemen know is that investing today in areas that aren't well liked will position your portfolio for when we come out of this bear market. There will be another bull market. What we have now is the chance to grab some good companies while they're cheap.

So what are you going to do? Stop investing in stocks altogether, worried that things will be different this time? Or listen to master investors (not me -- Miller and Nygren!) and look at some opportunities?

I know what I'm going to do, and I can hardly wait.

Finding value
If you'd like some help in figuring out if a beaten-down company is worth investing in, take a look at our Motley Fool Inside Value service. Philip Durell and his team look in downtrodden areas of the market, just as Miller and Nygren advise.

Since the newsletter's inception, its picks are beating the market; plus, you can see the stocks they're recommending today for free with a 30-day trial.

This article was first published Feb. 12, 2008. It has been updated.

Jim Mueller owns shares of American Eagle and Yum! Brands, but no other company mentioned. The Motley Fool owns shares of American Eagle and Legg Mason. The former company is a Stock Advisor recommendation, while the latter is an Inside Value pick, as is Pfizer. Chipotle is a Rule Breakers choice and a Motley Fool Hidden Gems selection. JPMorgan and Pfizer are Income Investor recommendations. The Fool has a disclosure policy.

Franchise Stocks

5 Dynamic Dividend Stocks
By Matt Koppenheffer June 20, 2008 Comments (0)
2
Recommendations

The New York Yankees of the '50s and the Chicago Bulls and Dallas Cowboys of the '90s had one crucial element in common: consistent excellence in their organizations and performance. That's a rare accomplishment, but if you think it could never occur in your portfolio, think again. Carefully chosen dividend-paying stocks could be your key to superstar returns.

Build the next investing dynasty
These long-haul outperformers can help you build your fortune, as studies from investing gurus such as Jeremy Siegel have shown time and time again. Finding them is our Motley Fool Income Investor service's mission.

National Fuel Gas (NYSE: NFG), for example, has returned more than 100% since August 2005, and it's currently rewarding investors with around a 2.1% yield. Or consider Snap-on (NYSE: SNA), which has returned more than 100% since October 2004, atop a current 2.2% yield. While these stocks happen to be Income Investor recommendations, you don't need to be a subscriber to get these great gains.

Identify new talent
With the help of Motley Fool CAPS, we'll search for the best dividend-paying stocks around. Here are several dividend picks that have also earned high ratings from the 110,000-plus members of our CAPS community:

Company
Yield
CAPS Rating (out of 5)

PetroChina (NYSE: PTR)
4%
****

CPFL Energia
8.6%
*****

Intel (Nasdaq: INTC)
2.5%
****

Cellcom Israel (NYSE: CEL)
8.9%
*****

Yum! Brands (NYSE: YUM)
2.1%
****

Source: Capital IQ, Yahoo! Finance, and CAPS as of June 19.
Any one of these quality companies would add some dividend excellence to your portfolio, but I thought I'd kick off further research with a closer look at Inside Value favorite Intel.

Dependable dividends
As we know, not all dividend payers and dividend payouts are created equal. For that reason, it's important to make sure that the dividend you're expecting isn't about to take an extended vacation with the dodo bird. To figure this out, I like to look at the prospects for the company's business, the company's history of paying dividends, and the sustainability of the current dividend.

Fortunately, most people reading this are likely very familiar with Intel's business. As a world leader in semiconductors and microprocessors, it has a tremendous business and an enviable brand. Though it does face competition, its primary competitor, AMD (NYSE: AMD) ... well, let's just say it's been through some shaky times. And though tech companies aren't typically known for their dividend payouts, as the table above shows, you can now collect a 2.5% dividend for holding Intel stock. And hey, that yield is nearly as much as a one-year treasury.

Looking at the dividend, it's notable that though Intel has been paying some dividend since 1992, the payout didn't even break the $0.10 level until 2004. Since then, the dividend has been a dependable part of shareholder returns, and it's been raised every year. However, this is hardly the dividend history of many of the hardcore dividend payers.

Digging into the financials, though, there seems to be little reason to be concerned about the future of the dividend. Intel produces a healthy amount of cash and has to spend a relatively small portion of it on new capital equipment. This leaves plenty of dough to continue paying -- and growing! -- the dividend, not to mention buying back billions of dollars of stock.

On CAPS, the stock may not have a five-star rating, but it can still claim 5,000 bullish investors versus just 496 bears. One recent bull, CAPS All-Star DarkToast, isn't expecting to get rich from the stock, but thinks it's a solid bet to outperform the market:

This stodgy old stock still has some life in it. While the days of $60 a share are likely only in the past, I expect Intel to beat the S&P over the next 5 years. With the best in the world server and desktop chips, growing networking market share, and very interesting new embedded processors Intel should see some healthy growth.

In addition I think it is likely that Tech stocks will lead the way when the economy eventually turns around. Not that I am holding my breath...

You can check out who else has been bullish on Intel, as well as chime in with your own thoughts, by heading over to CAPS. You may also want to check out a few of the other top-rated dividend payers above while you're there.

Dividend stocks could help you transform your portfolio from the flash-in-the-pan Florida Marlins into the dependable New York Yankees. And if you hate the Yankees, it's probably because they're so darn good, so darn often.

More CAPS Foolishness:

7 Highly Rated Stocks on Sale
7 Must-Read Stock Blogs
7 Stocks Defying the Doubters
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Snap-on and National Fuel Gas are Motley Fool Income Investor picks. Intel is a Motley Fool Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

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Tim Horton's

The Story of Tim Hortons
The Tim Hortons chain was founded in 1964 in Hamilton, Ontario. The chain's focus on top quality, always fresh product, value, great service and community leadership has allowed it to grow into the largest quick service restaurant chain in Canada specializing in always fresh coffee, baked goods and homestyle lunches.

The first Tim Hortons stores offered only two products - coffee and donuts. The selection of donuts to enjoy was highlighted by two original Tim Hortons creations, the Apple Fritter and the Dutchie. They became the most popular donut choices in the 60's, and remain two of the most popular today.

But as consumer tastes grew, so did the choices at Tim Hortons. The biggest change in the chain's product focus took place in 1976 with the introduction of the phenomenally successful Timbit (bite-sized donut hole), today available in over 35 different varieties. The chain's growth into the 1980's brought about a whole series of new product introductions: muffins (1981), cakes (1981), pies (1982), croissants (1983), cookies (1984), and soups & chili (1985). Sandwiches, which were originally introduced in 1993, were re-introduced as a new and improved line-up of 6 varieties, called "Tim's Own", in 1998. Also, in the 1990's, bagels (1996), flavored cappuccino (1997), Café Mocha (1999) and Iced Cappuccino (1999) were introduced. In 2003, the Turkey Bacon Club sandwich and Maple Pecan Danish were successful menu additions. In 2005 Tim Hortons introduced, Yogurt & Berries, Cinnamon Roll and Hot Smoothee to the menu. Many new great products were added to the menu in 2006 such as the Chicken Salad Wrap and the hot Breakfast Sandwich (eggs, sausage or bacon, processed cheese on a toasted homestyle biscuit).

The chain's biggest drawing card remains its legendary Tim Hortons coffee. The special blend is also available in cans, as are Tim Hortons hot chocolate and English Toffee and French Vanilla cappuccinos, so customers can also enjoy these great tasting products at home.

In addition to our regular stand alone stores, Tim Hortons locations can also be found in shopping malls, highway outlets, universities and hospitals, providing prominent visibility for the chain. Most standard Tim Hortons locations offer 24-hour drive-thru service, catering to consumers on the go. Combo unit locations, which house both a Tim Hortons and Wendy's, offer customers the convenience of both restaurants under one roof.

In 1995, Tim Hortons merged with Wendy's International, Inc., giving new focus and impetus to the expansion of the Tim Hortons concept in the United States. Tim Hortons locations can presently be found in Michigan, Maine, Connecticut, Ohio, West Virginia, Kentucky, Pennsylvania, Rhode Island, Massachusetts and New York, with responsible expansion continuing in these core markets. The Canadian operation is 95% franchise owned and operated, and plans in the U.S. call for the same key strategy to be implemented as expansion progresses. Currently, there are more than 2,750 stores across Canada, and over 350 locations in the United States.

In March 2006, Tim Hortons completed an initial public offering of the company and was fully spun off as a separate company as of September 29, 2006. Tim Hortons trades on the NYSE and TSX (THI).

Monumental Moments
1964 - First Store opens in Hamilton, Ontario
1964 - First Store opens in Hamilton, Ontario
The very first Tim Hortons store opened on Ottawa Street in Hamilton, Ontario in 1964.

1967 - Tim Horton and Ron Joyce become full partners
1967 - Tim Horton and Ron Joyce become full partners
Few could have imagined that a 1,500 square foot coffee and donut shop opened in Hamilton, Ontario in 1964 would become the launching pad for a giant Canadian chain. Ron Joyce (left in photo), franchisee of Store # 1, managed to get three successful stores running by 1967 and became full partners with Tim Horton, a legend in the National Hockey League.

1974 - Tim Horton is killed in a tragic accident
1974 - Tim Horton is killed in a tragic accident
In February 1974, Tim Horton died in a tragic car accident. Ron Joyce established the Tim Horton Children's Foundation that year in honour of Tim's love for children and desire to help those less fortunate. In 1975, Ron Joyce became sole owner of the chain which then consisted of 40 stores. He built a formula for success by focusing on "always fresh" product and outstanding service.

1976 - Introduction of Timbits®
1976 - Introduction of Timbits®
As consumer tastes grew, so did the menu choices in the Tim Hortons stores. In 1976, the popular Timbit, a bite-sized treat was introduced. Over the next several years, items like muffins, cakes, pies, croissants, soups and chili were added to the menu.

1987 - Store 300 opens in Calgary, Alberta
1987 - Store 300 opens in Calgary, Alberta
The 300th store in the Tim Hortons chain opened in Calgary, Alberta in February 1987.

1991 - Store 500 opens in Aylmer, Quebec
1991 - Store 500 opens in Aylmer, Quebec
The Tim Hortons chain celebrated this significant milestone - their 500th store opening - in January 1991 in Aylmer, Quebec.

1995 - Tim Hortons merges with Wendy's International Inc.
1995 - Tim Hortons merges with Wendy's International Inc.
In 1995, Tim Hortons merged with Wendy's International, Inc. Tim Hortons continued to operate as a separate entity. The merger provided a new focus for the expansion of the Tim Hortons concept in the United States. Tim Hortons locations can presently be found in Michigan, New York, Ohio, Kentucky, Maine, West Virginia, Massachusetts, Connecticut and Rhode Island. The Canadian operation is 95% franchise owned and operated, and plans in the U.S. call for the same key strategy to be implemented as expansion progresses.

In March 2006, Tim Hortons completed an initial public offering, and was fully spun off as a separate company as of September 29, 2006. Tim Hortons trades on the NYSE and TSX (THI).






Store 1000 opens in Ancaster, Ontario

1996 - Introduction of Bagels
1996 - Introduction of Bagels
The 1980's and 90's brought the introduction of deli-style sandwiches and the extremely successful launch of the bagel program. The chain's biggest drawing card, however, remains its legendary Tim Hortons coffee. The special blend is also available in cans and pouches so customers can enjoy this great tasting coffee at home.

1997 - Store 1500 opens in Pickerington, Ohio
1997 - Store 1500 opens in Pickerington, Ohio
This Tim Hortons in Pickerington, Ohio, is the chain's 1500th store.

1998 - Introduction of "Tim's Own"T sandwiches
1998 - Introduction of "Tim's Own"T sandwiches
The six varieties of "Tim's Own" sandwiches are made fresh-to-order with the best quality ingredients. The Tim Hortons lunch menu also includes a wide variety of soups, including "Tim's Own" chicken noodle, as well as chili and bagels.

1999 - First store honoured!
1999 - First store honoured!
In October, the very first Tim Hortons store re-opens after renovations, unveiling a special plaque and signage commemorating the historic site. Ottawa Street in Hamilton, Ontario is honourarily renamed "Tim Hortons Way".

2000 - Store 2000 opens in Toronto, Ontario
2000 - Store 2000 opens in Toronto, Ontario
Tim Hortons celebrates the landmark opening of its 2000th store in December, 2000, at Richmond and Sherbourne streets in downtown Toronto.

2001 - New Career Wear launched
2001 - New Career Wear launched
A new line of Career Wear, by international fashion designer Stephan Caras, is introduced to the chain. Over 55,000 store employees, management and owners are proud to be wearing the new look, with its warm beige, brown and black tones. Designed to be professional yet comfortable, it is also durable and functional.

2004 - In May, the Tim Hortons chain celebrates its 40th Anniversary
2004 - In May, the Tim Hortons chain celebrates its 40th Anniversary
Tim Hortons expands its U.S. business into Rhode Island, Connecticut and Massachusetts by acquiring 42 Bess Eaton coffee and donut restaurants.

2006 - Tim Hortons goes public

Buying a Franchise

College Grads: Want a Franchise With Those Fries?
Posted by Raymund Flandez
Is buying a franchise a good route to take for recent college grads?

Look closely: Can you spot a 20-something franchisee?Photo credit: hrindspnks via flickr
We recently came across this list from alternative-investments site NuWire Investor of what it called five types of franchises for young people:

pet care
painting services
children’s services
nonmedical home care
an existing franchise business (rather than buying new unit)
We’ve noticed articles in the past year that spotlight 30-and-unders who have gone into franchising. Last summer, the New York Times featured young people wanting to be their own boss and running a business, with no experience or cash. Some franchises, like Wing Zone, recruited on a college tour.

One catch: Many young would-be business owners use their parents’ money to support their new venture or to secure bank loans.

With some franchise start-up costs running to $150,000 to $300,000-plus, is being a franchise owner really a smart move for new college grads? Can enthusiasm and energy pull a 20-something through the long hours, sweat and, not to mention, potential debt?

International Franchising - Food Concepts

FRANCHISING


U.S. Restaurants Push Abroad
By RICHARD GIBSON

Perhaps nowhere is the Americanization of the planet more evident than in the restaurant world.

There's an Applebee's in Athens; a Papa John's pizzeria in Karachi, Pakistan; two Ruby Tuesdays in Bucharest; a Denny's in Christchurch, New Zealand; a Chili's Grill & Bar on a riverboat on the Egyptian Nile. And always there are the seemingly ubiquitous outposts of McDonald's, Domino's and KFCs that keep popping up, like tourists on holiday, wherever one goes.

As the restaurant industry in the U.S. turns increasingly dour, major brands are turning their attention abroad, where business remains relatively robust and growing middle classes are creating large pools of consumers eager to taste affordable American-style fare.

Not only do the companies encounter less competition there than in the U.S., but newly arrived brands also typically enjoy a novelty aura that attracts the curious. Finally, many franchisers sell operating rights to local businesspeople, who assume responsibility for the restaurants day to day and send royalty payments back to the chains' home offices, often giving the corporate owners a superior return on their investment.

"Trends continue to be in our favor," says McDonald's Corp. President Ralph Alvarez. "We're growing [abroad] because demand exceeds our supply."

Many investors in McDonald's and multi-fast-food giant Yum Brands Inc. are holding those stocks precisely because of the perceived opportunities overseas.

This year, Burger King, McDonald's and Papa John's International Inc. are among chains intending to open more restaurants abroad than at home. And in laying out plans for combining Wendy's International Inc. with its Arby's sandwich business, Triarc Cos. said it sees substantial possibilities abroad, where both brands have relatively few outlets.

YUM, which owns Pizza Hut, Taco Bell and Long John Silver's, along with KFC, estimates that within 10 years 70% of its profits will come from outside the U.S. Today, about 55% does.

The company is a stellar example of how to cook up overseas potential. China, a market it entered 21 years ago, today delivers about 25% of the company's annual profits. Its KFC brand has more than 2,000 locations in 500 cities across the Chinese mainland, with restaurants that not only serve chicken but also congee soup and fried dough at breakfast. (McDonald's, which followed KFC to China, has fewer than half that number.) Yum is even venturing into the coals-to-Newcastle business of selling its version of Chinese food to the Chinese.

With 15,000 of its 35,000 restaurants outside the U.S., Yum continues to seek out new markets. KFC soon will enter Nigeria, its 106th country. Next year Yum plans to test the popularity of its best-selling domestic brand, Taco Bell, in India.

Casual-dining operators also are trekking abroad in search of profits. Chili's parent, Brinker International Inc., which says its long-term vision is to become the "dominant, global casual-dining restaurant portfolio company," last year signed development agreements to expand in Australia, Canada, Ecuador, Honduras, Peru, Portugal, South Korea and Turkey.

As in the U.S., McDonald's says, finding the right location is the company's biggest challenge abroad. Prime real-estate targets are increasingly in suburbs ringing the cities of Europe, Asia and Latin America. The world's largest hamburger chain, McDonald's has more than 17,500, or about 56% of its restaurants, outside the U.S.

While McDonald's Mr. Alvarez says that "we're not looking for new countries" to enter, archrival Burger King has been doing just that. In fiscal 2007, the No. 2 company in hamburger restaurants behind McDonald's went into Japan, Poland, Egypt and Indonesia. In the past two years it has opened 34 restaurants in 14 cities in Brazil alone.

Another dominant U.S. player abroad is Domino's Pizza Inc., with some 3,500 stores, or about 40% of its total, outside the U.S. That 25-year overseas presence recently helped offset disappointing domestic results; in the last quarter, international comparable sales -- free from the intense competition that has roiled the U.S. pizza market -- rose 8.8% from a year ago while Domino's domestic business experienced a 5.2% drop.

Some restaurateurs modify their menus to cater to local tastes. In some parts of Asia, for instance, McDonald's serves rice burgers: shredded beef between rice patties. Customers in the Netherlands can order a deep-fried patty of beef ragout. In India, its Big Mac -- called the Maharaja Mac -- is made with chicken rather than beef. But, says Mr. Alvarez, "our core menu is still what you know in the U.S. People come to McDonald's because they want an American product."

Overseas success isn't a sure bet. Papa John's stumbled on its first foreign sojourn, when it entered Mexico in 1998. "We didn't have our act together," says David Flanery, president of the pizza company's international operations. "We had the wrong franchise partner."

As a result, the company eventually closed most of its 40-or-so stores there, found new local operators, revised its support structure and started over. Today, the Louisville-based firm has pizzerias in 28 countries.

Despite the allure, some big U.S. restaurateurs haven't ventured outside North America. They include Cheesecake Factory Inc., Jack In The Box Inc., Panera Bread Co., CBRL Group's Cracker Barrel Old Country Store chain and Darden Restaurants Inc.. Each has indicated it sees significant growth at home.

"We periodically look at international expansion to understand where opportunities exist," says Darden spokesman Rich Jeffers. "However, given the momentum that we have at our existing businesses and given the potential that we have with LongHorn [steakhouse], Bahama Breeze, Capital Grille and Seasons 52, we believe that our focus on domestic opportunity will consume most of our time over the next few years." Darden does operate a smattering of Olive Garden and Red Lobster restaurants in Canada.

Write to Richard Gibson at dick.gibson@dowjones.com

McDonald's and the McCafe

Conventional wisdom says McDonald’s should continue to have great success as the economy slows and consumers trade down restaurants just as they’ve been trading down to Wal-Mart for their shopping needs. Sounds great, except that the company's insiders beg to differ: Over the last six months, nearly 760,000 shares worth some $43 million have been sold.

A significant amount by any measure, this works out to roughly a 20% liquidation of the insiders according to Thomson Financial. CEO James Skinner sold 35% of his stake. Gloria Santona, the general counsel, parted with more than half of her shares. Jose Armario, responsible for Canada and Latin America, traded away 80% of his holdings.

My guess is that they’re less than confident about the big McCafé push. Better drip coffee is one thing, and McDonald’s definitely has good drip coffee. But going head-to-head with Starbucks is another. Don’t kid yourself: McDonald’s will never be Starbucks -- and by the look of things it probably doesn’t want to be Starbucks anyway. There just isn’t any synergy between burgers, fries, and cappuccinos.

Consider demographics and brand personality. Starbucks is urban, born in Seattle, and populated by graduate students looking for single-origin coffees from Africa. McDonald’s is Mainstreet U.S.A., packed full of blue-collar men, moms and kids, and broke teens ordering off the dollar menu. If you can’t picture a truck driver from Wyoming ordering a double-pump vanilla non-fat latté, then McCafé is doomed -- especially with all the competition entering the field.

That isn’t to say all hope is lost. Going upscale with better chicken items, salads and fruits, and remodeled restaurants has been successful. Better quality hamburgers featuring Angus beef are being tested in select markets. Efforts should continue to focus on improving and expanding the food offerings, taking into account the lessons of the Arch Deluxe failure.

McDonald’s head chef Dan Coudreaut, labeled the “Most Powerful Chef in America,” has already demonstrated success with the Asian Salad and McSkillet Burritos. Given the continued emphasis on fitness and health in society, there is a big opportunity for McDonald’s to clean up its image. Offering fresh vegetables in Happy Meals would be a good start. Bringing back the deli sandwiches would be another.

Until then, rising food prices will pinch margins hard, sales will drag, and free cashflow will be tied up in the coffee fiasco. Maybe shares won’t tumble, but it’s hard to see them going much higher from here.

Landry's CEO to Buy Company

Landry's CEO to buy company for $1.3 bln
Source: Reuters
Posted: 06/16/08 5:04PM
Filed Under: Main
(Recasts; adds details, background, analysts' comments)
By Anne Pallivathuckal
BANGALORE, June 16 (Reuters) - Landry's Restaurants agreed to be bought by Chief Executive Tilman Fertitta for about $1.3 billion, including debt, almost six months after he made his initial offer for the restaurant-chain operator, but left the door open for opposing bids from third parties.
Fertitta will pay $21.00 a share in cash, about 25 percent more than the stock's Friday closing price of $16.79. The deal value of $1.3 billion includes about $885.0 million of debt.
Landry's shares, which have lost almost half their value over the past year, surged 20 percent to touch a high of $20.15 Monday.
The deal represents a triumph for Fertitta over skeptics who had doubted his ability to secure funding for the deal as the credit crunch squeezed debt markets.
The 50-year-old Fertitta, whose cousins Frank and Lorenzo Fertitta took Las Vegas casino operator Station Casinos private in a management-led buyout last year, had in January offered to buy Landry's for $23.50 a share.
But in April Fertitta, who has been with the company for more than two decades and owns about 39 percent of Landry's, cut his offer price to $21 a share as credit market conditions worsened, making it far more costly to obtain the debt financing needed for the deal.
But Landry's on Monday said Fertitta, whose offer values the stock at about 16 times forward earnings, has received debt financing commitments from Jefferies Funding LLC, Jefferies & Co Inc, Jefferies Finance LLC and Wells Fargo Foothill LLC to fund the acquisition.
The company, which competes with Texas Roadhouse , CBRL Group Inc , and larger rivals DineEquity Inc and Darden Restaurants , said the deal is expected to be completed in about four months, during which time it will stop payment of its regular quarterly dividend of 5 cents per share.
Landry's, which operates the iconic Golden Nugget Hotel & Casino in Las Vegas and several casual-dining outlets, said a special committee will solicit other acquisition proposals from third parties for about 45 days following the signing of the merger agreement.
SMH Capital analyst William Hamilton said he expects the deal with Fertitta to go through since the board has approved the deal with the funding. An employee of SMH Capital is a director of Landry's Restaurants.
There have been no other bidders for the restaurant-chain operator since Fertitta's initial offer in January and Hamilton said he didn't anticipate another bidder emerging as the current economic environment and credit markets make it difficult to raise capital.
Hamilton also drew attention to the fact that Fertitta owns 39 percent of Landry's, giving him an edge over other potential suitors.
The analyst said Fertitta's offer appears to be the best for the company, whose shares have seen a slide from a high of $32.30 last July as consumers reign in spending amid rising fuel prices, uncertainty in the credit markets and a weakening economy.
The company was also hurt by creditors demanding early repayment of a $400 million bond issue, before it finally agreed in August last year to reinstate the 7.5 percent senior notes, increasing the interest rate to 9.5 percent.
Under the agreement, at 18 months, the company would have an option to redeem the bonds or for the noteholders an option to call the bonds.
If the buyout is successful, the bonds will be refinanced as part of the deal, Standard & Poor's credit analyst Charles Pinson-Rose said. Standard & Poor's Ratings Services has a 'B' corporate credit rating on Landry's and on CreditWatch with negative implications.
Shares of the Houston, Texas-based company were trading up $2.91 at $19.70 Monday afternoon on the New York Stock Exchange. (Editing by Pratish Narayanan)

Friendly's Ice Cream

Press Releases - Ice Cream and Smoothie FranchisesEstablished Restaurateur Will Open 12 Restaurants in Raleigh-Durham,Wilmington and Lumberton.WILBRAHAM, Mass.

(December 4, 2006) - - Friendly’s Restaurants Franchise, Inc., one of America’s most successful restaurant franchises, today announced that it will significantly expand its presence in North Carolina through a development agreement with established restaurateur Cliford E. Bullard, Jr. Under the development agreement, Bullard will open three Friendly’s restaurants in the Raleigh-Durham, Wilmington and Lumberton markets with the option for nine additional restaurants.

The first restaurant is scheduled to open in Lumberton by the end of June 2007, and all 12 locations will be open by June 2013. Friendly’s current North Carolina location is in Huntersville. Cliford “Clif” Bullard, Jr., has more than 25 years of multi-concept restaurant experience. He owns and operates 19 Burger King and eight Smithfield’s Chicken ‘n Barbecue franchises, primarily in North and South Carolina.“We have long regarded North Carolina as an extremely important strategic market for Friendly’s, and in Clif Bullard we believe we have found the perfect partner to expand our presence here,” said Jim Sullivan, vice president, franchising and real estate development. “Clif’s record as a restaurateur speaks for itself. With his operations expertise and his understanding of local store marketing, he was an ideal choice for Friendly’s and we are confident that he and his team will help make the Friendly’s brand a tremendous success in North Carolina.”

Friendly’s, named among the nation’s 25 top performing franchises by the Wall Street Journal, opened its first location in Springfield, Mass., in 1935 and now has more than 500 locations in 16 states.“With delicious food and signature ice cream offered in a concept with five day-parts, the opportunity for volume and growth is outstanding. Friendly’s top-notch marketing and operations teams offer the complete package of products and support services needed in today’s marketplace.”Each Friendly’s will bring additional jobs and tax revenues to the local area. “I’m looking forward to making Friendly’s an active and valued part of the Raleigh-Durham, Wilmington, and Lumberton communities,” Bullard added. The announcement is part of an ongoing franchise expansion strategy by Friendly’s, which has announced plans for 23 restaurants in the last 10 months.

Friendly Ice Cream Corporation (Amex: FRN) www.friendlys.com is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in more than 515 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations. With a 71-year operating history, Friendly's enjoys strong brand recognition and is currently revitalizing its restaurants and introducing new products to grow its customer base.

Red Robin

Red Robin board reaffirms plan to buy back stock
Red Robin Gourmet Burgers board reaffirms plan to repurchase up to $50 million in common stock
May 29, 2008: 09:03 AM EST

NEW YORK (Associated Press) - Red Robin Gourmet Burgers Inc., a restaurant chain operator, on Thursday reaffirmed its plans to repurchase up to $50 million in common stock.
Based on Wednesday's closing price of $33.26, Red Robin would be able to purchase about 1.5 million common shares.
Red Robin currently has about 16.8 million shares of common stock outstanding.
Red Robin's board initially approved the plan to repurchase stock in August 2007.

Cheesecake Factory

Cheesecake Factory "hold," target price reduced - update
06/02/08 - Wedbush Morgan Securities

NEW YORK, June 2 (newratings.com) - Analyst Brian Moore of Wedbush Morgan maintains his "hold" rating on The Cheesecake Factory Inc (CAKE). The 12-month target price has been reduced from $21 to $20.In a research note published this morning, the analyst mentions that the company’s bi-annual menu, which is likely to roll out on June 13, is unlikely to include higher-priced entrees. Although a price increase of 2.5% by Cheesecake Factory in 2H08 is expected to signify effective brand management, it is unlikely to boost its margins, Wedbush Morgan adds. The downward revision in the target price reflects the recent multiples compression in the peer group, the analyst says.

O'Charley's reports results for 2008

O'Charley's reports results
May 20, 2008

O'Charley's Inc. (Nasdaq: CHUX), a casual-dining restaurant company with two Clarksville locations, has reported revenues and earnings per share for the 16-week period ended April 20.
OAS_AD('ArticleFlex_1');

Revenue for the first quarter of fiscal 2008 decreased 4.9 percent to $297.5 million from $312.9 million in the first quarter of fiscal 2007.
Income from operations in the quarter was $8.6 million, or 2.9 percent of revenues, and earnings before income taxes were $4.7 million.
In comparison, income from operations in the prior year quarter was $14.6 million, or 4.7 percent of revenues, and earnings before income taxes were $10.7 million.
— Jimmy Settle

Darden Restaurants

Darden Restaurants' new headquarters, stock price are on the rise
Construction crews are making progress on Darden Restaurants' new $100 million headquarters in south Orange County. As of Tuesday, the steel frame has been completed, and the concrete flooring is nearly finished. (STEPHEN M. DOWELL, ORLANDO SENTINEL / June 3, 2008)
Mark Chediak Sentinel Staff Writer
June 4, 2008
Article tools

Darden Restaurants' new corporate headquarters has started to rise on 57 acres south of Orlando -- and so has the casual-dining company's stock since hitting a low late last year.NEW HOME GOING UPWHAT: A $100 million building started in October. Steel frame completed. Concrete flooring nearly finished. Parking deck and facade under way.WHY: Execs at Darden Restaurants, Orlando's only Fortune 500 company, are eager to move from its sprawling 11-building campus off Lake Ellenor Drive since striking a deal in early 2006 to relocate in Orange County. (The company was promised about $12.9 million in state and county money to stay in the Orlando area.)

Complete coverage of Darden Restaurants
WHERE: Corner of John Young Parkway and the BeachLine Expressway.LOOKING AHEAD: Headquarters should be ready by fall 2009 and will feature state-of-the art test kitchens, on-site dining facility and fitness center, built-in wireless Internet access and large, open work spaces. It will house all Darden's executive and support staff -- more than 1,100 people -- in one space for the first time.STOCK GOING UPWHAT: Price has resurged since a plunge in December, after the company announced disappointing earnings. Shares of the company closed at $33.56 on Tuesday, up about 26 percent from the start of the year.WHY: Analysts credit Darden with doing a good job of managing costs despite rising food prices and increasing labor expenses. Restaurant sales have been holding up better than competitors. Olive Garden keeps filling its tables, as cash-strapped customers love endless, salad, breadsticks and soup. Last year's purchase of LongHorn Steakhouse and Capital Grille also seen as a plus.LOOKING AHEAD: Darden will release results of its fiscal fourth quarter and fiscal year 2008 at the end of the month. Many analysts expect the company to meet sales and earnings goals. One analyst at JPMorgan says sales at Olive Garden should be up (about 2 percent), with sales flat at Red Lobster and sales dipping (down 3 percent) at LongHorn. Economic downturn will make it a challenging summer for all restaurant companies.

Steak n Shake and Radio Shack

SMALL STOCKS

Steak n Shake, RadioShack Lead Consumer Decline
By GEOFFREY ROGOW June 3, 2008; Page C6

With investors worried about May retail sales and a government payroll report both due out later in the week, consumer names drove small-capitalization stocks lower Monday.
Also damping consumer stocks, oil futures rose 0.3% to $127.76 a barrel.
"People need to see stability in the job market. If the labor market really starts to unravel, people will just pull their horns in," said Bill Strazzullo, chief market strategist for Bell Curve Trading.

Within the consumer space, declines Monday were led by Steak n Shake, which fell 39 cents, or 5.8%, to $6.38 on the New York Stock Exchange. RadioShack (NYSE), which sits at the intersection of consumers and technology, also closed lower, losing 55 cents, or 3.8%, to 14.10.
For the session, the Russell 2000 index of small-capitalization stocks fell 7.26 points, or 0.97%, to 741.02. Meanwhile, the Standard & Poor's SmallCap 600 declined 3.92 points, or 0.99%, to 391.39 after closing in positive territory for the first time this year Friday. The slide for both indexes Monday marked their first declines in five sessions.
Small-cap financials also sold off, weighed down by the afternoon ratings cut of three Wall Street giants by Standard & Poor's, as well as leadership changes for large-caps Wachovia and Washington Mutual.

"People were lulled into a sense that the issues for financials were over, and this reminds us it's still got a ways to play out," said Richard Parker, managing director for institutional equity trading at Stanford Group.
Included in the small-cap banking decliners Monday, UCBH Holdings slid 59 cents, or 12%, to 4.29, while Boston Private Financial lost 67 cents, or 8%, to 7.76.
With oil ticking up and the weak economic reports, airline carriers were lower across the board. Leading the group down was United Airlines parent UAL, which lost 66 cents, or 7.7%, to 7.88; US Airways Group, down 20 cents, or 5.1%, to 3.76, and Delta Air Lines, off 30 cents, or 4.9%, to 5.85.

As a result of news from the annual meeting of the American Society for Clinical Oncology in Chicago this weekend, several drug companies moved higher Monday.
Avant Immunotherapeutics tacked on 3.97, or 28%, to 17.98, after the Needham, Mass., vaccine developer reported robust midstage results of its brain-cancer vaccine, CDX-110, on which it has teamed up with Pfizer.

Meanwhile, an early-stage trial of an Infinity Pharmaceuticals treatment showed a response in treating patients with a rare but deadly cancer of the stomach and intestines who were previously treated with therapies including Pfizer's Sutent and Novartis's Gleevec. Infinity, of Cambridge, Mass., closed trading up 78 cents, or 11%, to 8.13.

In addition, Acorda Therapeutics rose 6.74, or 31%, to 28.30 after the Hawthorne, N.Y., biotechnology company said a second late-stage trial showed that its multiple-sclerosis drug improved mobility in some patients with the debilitating disease. Acorda plans to file for licensing to market the drug, being developed with Elan, in the first quarter.

Abiomed jumped 2.32, or 16%, to 17.10 after the Danvers, Mass., medical-devices maker said the Food and Drug Administration approved its Impella 2.5 Cardiac Assist Device.
Lions Gate Entertainment (NYSE) slid 80 cents, or 7.5%, to 9.85 after the Santa Monica, Calif., independent film producer and distributor posted a fiscal fourth-quarter profit shy of analysts' expectations.

Chinese maker of solar wafers ReneSola declined 1.49, or 5.9%, to 23.59 on the NYSE. The company said it plans to sell nine million American depositary shares to pay for expansion projects. The company was also downgraded to underweight from equalweight by Morgan Stanley.

Unisys (NYSE) declined 24 cents, or 4.7%, to 4.82 after the Blue Bell, Pa., information technology services firm was cut to underperform from neutral at Merrill Lynch, according to theflyonthewall.com.

Denny's Corporation

Denny's Corporation (Nasdaq: DENN) - tasty stock for investors?
Contributed by: Gediminas J.Date: 15 May, 2008

Denny's Corporation (Nasdaq: DENN) engages in the operation of family-style restaurants. Currently, the company has 373 company-owned and operated units and 1,177 franchised and licensed units. Denny's has operations in the United States, Canada, Costa Rica, Guam, Mexico, New Zealand and Puerto Rico. The company announced their 1st quarter results on April 29, 2008. Income from operations decreased for the second quarter in a row. According to the latest SEC filing the company had revenues of nearly $196 million which was 17% less than the same period a year ago. Despite that, the company still managed to pull a net income of $4.1 million which was 4 times more than a year ago.
The seemingly alerting revenue decrease was due to the sale of a few franchised restaurants. Denny's had sold one company restaurant and 21 of their franchised outlets to franchisees. The company has also added 9 new franchised restaurants and one company restaurant in the first quarter of 2008.

The president and CEO of Denny's Corporation, Nelson Marchioli, is optimistic about the company's future: "We are pleased with the progress we are making to optimize our business model and strengthen our balance sheet, despite the difficult operating and economic environment impacting our industry. We are confronting the challenges of reduced consumer spending and rising commodity costs with promotional items that have strong customer appeal and offer a compelling value but are also designed to benefit our food cost margins. In addition, our current marketing campaign ‘Real Breakfast 24/7' powerfully emphasizes the quality and value of Denny's real breakfast experience."

Denny's stock soared up shortly after the earnings release. From a fully technical point of view the stock appears to be forming a rather stable uptrend. Also the forming of a "rounding-bottom reversal-pattern" can be identified in the stock's behavior, meaning the price will most probably gradually get higher. Further, the company had a PEG ratio equal to 0.43 the last time I checked, which supports the assumption of current stock undervaluation.

Bob Evans Shares Rise

Bob Evans shares rise after company reports 4th-quarter profit hike, offers 2009 guidance
June 4, 2008 - 12:26 a.m.

NEW YORK (AP) - Shares of Bob Evans Farms Inc. jumped Wednesday after the casual dining company offered fiscal 2009 guidance and said its fourth-quarter profit climbed 5 percent.
Shares climbed $5.34, or 18.5 percent, to $34.43 in heavy midday trading.
After the market closed Tuesday, Bob Evans reported its fourth-quarter earnings, beating Wall Street analyst estimates by 11 cents per share, if a pretax gain from the sale of real-estate assets is included in the company's profit.