If you want to make some money in your PA...
Invest in COSI. I will provide rationale upon request by telephone. Otherwise you can trust me and make money like my shareholders do daily.
posted by Not Sure if Al Gore or Global Warming is a Bigger Joke at
3:50 PM
10 Comments:
Who are your shareholders? Can I buy a share in you?
They are obviously going EBITDA positive this QTR?
Are you covering this? What do you think of CBOU? 7x EBITDA. cash flowing.
Ben,
I bought COSI on your reccomendation. Forget EBITDA, who needs that. I'm in for the long run. Same store sales, forgutaboutit. If your shareholders are making money, then I do not want to be on the sidelines.
My shareholders aren't necessarily my shareholders directly, like neither are yours for your fund. I guess I wrote that the wrong way, but I meant to say that this is a good idea.
The reason that EBITDA is negative is due to the huge SGA line, which will be drastically leveraged as the concept moves from around 100 company operated stores currently to 1000 stores w/ a 75% franchise and 25% owner operated mix. The franchise business is 5% of sales and drops right down to the bottom line. My very conservative assumption is that the franchised stores will do 15% better in sales vs. the company operated stores, which is well below the national average for other restaurant franchise / co. operated mix models. So, if they do 25% better, which is more realistic, that will be significant profit upside.
The stock is at an inflection point and has finally figured out what their model is going to be, and as they aggressively grow stores the SGA line will be dramatically leveraged. I think this is definitely a nice time to be this concept before it increases its stores by 10x and drastically drives up its operating margin.
$8 - $10 stock for sure.
They did just put a cosi in Oakbrook and it is always full.
I like the idea, but I think this is a concept call for sure... it is either a 5-bagger or a bagel.
Operating margins don't look particularly enticing (especially relative to PNRA), but I figure that a good portion of that is probably related to real estate costs and that this model definitely has a large degree of operating margin in it (at least at the same store level). The alternative is that they have a cost control problem, but that seems less likely to me at this juncture. In order to produce better gross margins, my guess is that they're going to have to make some inroads on same store comps.
The SG&A line also offers a reasonable amount of operating leverage, but that would primarily be attained by growing the number of stores. This can be done, but it has to be financed somehow as they have 30 mm or so in cash and CFO is pretty low at this juncture. I doubt they have the ability to take on debt (and doubt that they'd be able to do it at a reasonable price)... which means they'll be bringing equity to market any time that they need cash.
So before this is a 5-bagger, they've got to 1.) work on same store sales and 2.) increase the number of stores in existence.
On a personal level, I have eaten there before and I liked the store. That said, I'm not sure how its really that different from a Corner Bakery.
It also makes me wonder how many of these concepts can survive. What's the real difference between a Panera, a Cosi, a Corner Bakery, a Potbellies, an Einstein's, and a La Madeleine's?
Make $ like my shareholders do daily... only at www.gorillatrades.com.
they are growing stores to 1000 via 75% franchise stores and 25% owner operated...which means only 150 more co. stores and 750 franchised stores that don't need financing.
SGA leverage is the key. Comp. sales aren't as important part as sq. ft. growth
i like the bagel comment btw. There is downside risk though obviously.
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