EAT AT MY RESTAURANT—INVESTOR VIEW
With this case, we review the profitability of several restaurant companies. The restaurant companies reviewed and the year end dates are as follows:
1. Yum Brands, Inc.
(December 30, 2008; December 30, 2007)
‘‘Through the five concepts of KFC, Pizza Hut, Taco Bell, LJS and A & W (the ‘‘Concepts’’) the company develops, operates, franchises and licenses a world system of restaurants which prepare, package and sell a menu of competitively priced food items.’’ 10 K
2. Panera Bread
(December 30, 2008; December 25, 2007)
‘‘As of December 30, 2008, Panera operated and through franchise agreements with 39 franchisee groups, 1,252 cafes.’’ 10 K
3. Starbucks
(September 28, 2008; September 30, 2007)
‘‘Starbucks Corporation was formed in 1985 and today is the world’s leading roaster and retailer of specialty coffee.’’ 10 K
|
Data Reviewed |
Yum Brands, Inc. |
Panera Bread |
Starbucks* |
|||
|
2008 |
2007 |
2008 |
2007 |
2008 |
2007 |
|
|
All inclusive degree of financial leverage |
1.18 |
1.14 |
101.46 |
100.55 |
115.44 |
104.01 |
|
Diluted earnings per share before nonrecurring items |
$1.96 |
$1.68 |
$2.22 |
$1.79 |
$0.43 |
$0.87 |
|
Percentage of earnings retained |
66.60% |
69.97% |
100.00% |
100.00% |
100.00% |
100.00% |
|
Dividend yield |
2.33% |
1.17% |
0 |
0 |
0 |
0 |
|
Price/earnings ratio |
15.77 |
22.94 |
22.62 |
20.32 |
34.79 |
30.11 |
|
Market price per share |
30.91 |
38.54 |
50.22 |
36.37 |
14.96 |
26.2 |
Required
a. Comment on all the data reviewed for each individual company for 2008 and 2007.
b. Based on the above, which firm would you select?