BH - Biglari Holdings

[NBL0303]

Yup, there was nothing wrong with the business.  The biggest problems they had were with franchisees not making enough money because he was pushing volume.  If your franchisees aren't making money, they are going to underperform and eventually shut down.  He took away regional products and pushed the volume discount meals.  He went from thinning the menu to enlarging it...that increases food costs, waste and reduces profitability.  When you are paying $20M a year in interest costs, from a business that made $35M a year and then drawing all remaining profitability to the top, your business will deteriorate.  And then you forgo advice from the people who got you there and increase expenditures in non-core, experimental areas, you open yourself up to risk, mistakes and failure. 

I'm the last one that should talk, because we stuck it out too long with Sequant Re, but we did get it right in other areas and there was nothing wrong at all with the Steak'n Shake business...if it had received the focus that it should have, it would be a billion dollar business today.  Sardar was on target for that!  He knows it and we all know it!  Cheers!

I don't think you are factoring in the coming of the amazing new milkshake machines. 

Everyone's been saying that he is licensing the milkshake making technology to the company - that he personally will own the patent or something - to further enrich himself. Was anyone on this board at the meeting - did that come up - did he say that he personally would own the milkshake making patent?

[Parsad]

Yup, there was nothing wrong with the business.  The biggest problems they had were with franchisees not making enough money because he was pushing volume.  If your franchisees aren't making money, they are going to underperform and eventually shut down.  He took away regional products and pushed the volume discount meals.  He went from thinning the menu to enlarging it...that increases food costs, waste and reduces profitability.  When you are paying $20M a year in interest costs, from a business that made $35M a year and then drawing all remaining profitability to the top, your business will deteriorate.  And then you forgo advice from the people who got you there and increase expenditures in non-core, experimental areas, you open yourself up to risk, mistakes and failure. 

I'm the last one that should talk, because we stuck it out too long with Sequant Re, but we did get it right in other areas and there was nothing wrong at all with the Steak'n Shake business...if it had received the focus that it should have, it would be a billion dollar business today.  Sardar was on target for that!  He knows it and we all know it!  Cheers!

I don't think you are factoring in the coming of the amazing new milkshake machines. 

Well Elon Musk was already redesigning the propulsion engine, solar panels and autonomous vehicles...what was left?  Milkshake machines!    Cheers!

[NBL0303]

Wow - Steak n Shake and Sardar are going viral today...

https://www.vice.com/en_us/article/kzm7k9/steak-n-shake-ceo-says-ditching-cherries-in-milkshakes-would-save-dollar1-million-a-year

https://www.businessinsider.com/steak-n-shake-losses-spark-concerns-for-future-report-2019-5

https://www.cbsnews.com/news/steak-n-shake-milkshakes-ceo-says-no-cherries-atop-milkshakes-could-save-troubled-chain-1-million/

https://www.foxbusiness.com/features/steak-n-shake-ceo-change-milkshakes-could-save-1m

https://thetakeout.com/steak-shake-ceo-cherries-milkshakes-million-1834783217

https://www.delish.com/food-news/a27481442/steak-n-shake-lawsuits/

https://www.kmov.com/news/steak-n-shake-ceo-says-no-cherries-atop-milkshakes-could/article_6db87488-7739-11e9-bb87-2bd148705c07.html

https://www.yahoo.com/lifestyle/steak-n-shake-could-going-192600531.html

https://www.clickorlando.com/food/no-cherry-on-top-struggling-steak-n-shake-hopes-to-save-1-million

[Txvestor]

Wow - Steak n Shake and Sardar are going viral today...

https://www.vice.com/en_us/article/kzm7k9/steak-n-shake-ceo-says-ditching-cherries-in-milkshakes-would-save-dollar1-million-a-year

https://www.businessinsider.com/steak-n-shake-losses-spark-concerns-for-future-report-2019-5

https://www.cbsnews.com/news/steak-n-shake-milkshakes-ceo-says-no-cherries-atop-milkshakes-could-save-troubled-chain-1-million/

https://www.foxbusiness.com/features/steak-n-shake-ceo-change-milkshakes-could-save-1m

https://thetakeout.com/steak-shake-ceo-cherries-milkshakes-million-1834783217

https://www.delish.com/food-news/a27481442/steak-n-shake-lawsuits/

https://www.kmov.com/news/steak-n-shake-ceo-says-no-cherries-atop-milkshakes-could/article_6db87488-7739-11e9-bb87-2bd148705c07.html

https://www.yahoo.com/lifestyle/steak-n-shake-could-going-192600531.html

https://www.clickorlando.com/food/no-cherry-on-top-struggling-steak-n-shake-hopes-to-save-1-million

Lol. Couldn’t have happened to a nicer guy. 😜

[NBL0303]

Lol. Couldn’t have happened to a nicer guy. 😜

I actually don't really know if he is a nice guy or not, it is just about his public actions as a CEO to me.

One thing about this and how toxic Sardar's reputation has been for a long time - Sardar really just thinks it doesn't matter. I don't believe that is the case - because they want to be an acquirer and Sardar's reputation will greatly hinder their ability to do acquisitions - I mean who would want to sell their business to him unless he was paying a pretty penny? But in some sense Sardar is right - in the current time there is so much news and information thrown at people, no one will really remember except for us. Now it is a funny store for a few days, but this level of corporate malfeasance should really become infamous like Enron - yet, it is hard for almost anything to be remembered now. An ardent Trump supporter told me this early in his political life a few years ago - she said that the media and the left were coming after him so hard everyday with all manner of complaints, accusations, allegations, etc. that it kind of actually helps him with his core supporters in the sense that no specific allegation/issue against will ever stick because there are so many thrown out daily that it all just kind of blends. With the Sardar situation, yes his reputation is shot, but it barely matters now in a sense because everyone moves on from story to story so fast.

[given2invest]

Nobody...and I mean nobody...is taking BH stock as currency in an acquisition.  And why would Biglari want to issue stock at a 50% discount to NAV or whatever it is? 

There will be no capital raising and no stock deals.  This thing is a shell that will exist forever to enrich BH.  If he's lucky with a couple stock investments, it might go up!  Heh.

[NBL0303]

There will be no capital raising and no stock deals.  This thing is a shell that will exist forever to enrich BH.  If he's lucky with a couple stock investments, it might go up! 

His stock investments may not be based on luck. And that may be part of the problem, he could make bad investments that go down, like, say, Valeant. But bad or good, investments usually depend on more than luck.

[given2invest]

There will be no capital raising and no stock deals.  This thing is a shell that will exist forever to enrich BH.  If he's lucky with a couple stock investments, it might go up! 

His stock investments may not be based on luck. And that may be part of the problem, he could make bad investments that go down, like, say, Valeant. But bad or good, investments usually depend on more than luck.

Yah, that has nothing to do with what I'm talking about.   Simply saying the only way he's going to make money at BH is with stock picking.  There will be no M&A and no secondaries.   

The stock is uninvestable.

[NBL0303]

Yah, that has nothing to do with what I'm talking about.   Simply saying the only way he's going to make money at BH is with stock picking. 

I thought you were saying that stock picking is all luck. Many people believe it is - but on the Corner of Berkshire and Fairfax I would think most people here think otherwise. It may be better if it were based on luck, that may be better than having a delusional stock picker - which can provide worse odds than pure luck does.

[Txvestor]

Nobody...and I mean nobody...is taking BH stock as currency in an acquisition.  And why would Biglari want to issue stock at a 50% discount to NAV or whatever it is? 

There will be no capital raising and no stock deals.  This thing is a shell that will exist forever to enrich BH.  If he's lucky with a couple stock investments, it might go up!  Heh.

Why would he like to issue stock at “50% discount”? Well to enlarge the pie he can eat from!
Thats why it is caveat emptor.