Author Topic: FRS - Frisch's Restaurants  (Read 9694 times)

moore_capital54

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FRS - Frisch's Restaurants
« on: July 04, 2011, 04:06:01 PM »
http://www.frischs.com/

Owner of Big Boy Burgers, trading near 52 week high.

Market capitalization is just $113M which is about 11x last years after tax profit.

Seems to me a guy like Biglari could do wonders with this chain, and the growth potential is there having only 151 locations.

About $80M worth of land at cost on the balance sheet that is most probably worth a great deal more.

Not much cash, but nevertheless interesting.
« Last Edit: July 04, 2011, 06:34:46 PM by Parsad »


Kraven

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Re: FRS US - Frisch's Restaurants
« Reply #1 on: July 04, 2011, 04:32:08 PM »
Do they own all of Big Boy or just some of them?  For some reason I thought they were just a large franchisor.

The thing with Big Boy is its such a tired old chain.  It pains me a bit to say that.  I grew up with it and loved it as a kid. 
Buy cheap and something good might happen.

bookie71

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Re: FRS US - Frisch's Restaurants
« Reply #2 on: July 04, 2011, 06:07:14 PM »
they are also Golden Corral franchisees and ore mostly in the Ohio area.
Always remember, Pigs get fat and hogs get slaughtered.

Parsad

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Re: FRS - Frisch's Restaurants
« Reply #3 on: July 04, 2011, 06:34:30 PM »
Do they own all of Big Boy or just some of them?  For some reason I thought they were just a large franchisor.

The thing with Big Boy is its such a tired old chain.  It pains me a bit to say that.  I grew up with it and loved it as a kid.


They own most of the "Frisch" Big Boy restaurants...about 91 stores.  Another 25 are franchised in their master limited partnership territories.   Old brand, but like Steak'n Shake, they are a very well recognized brand in their market.  The Frisch/Maier family controls about 29% of the stock.

They are also franchisees of the Golden Corral buffet chain...about 35 restaurants.  They made a mistake getting involved there.  The actual "Frisch" Big Boy restaurants are cash cows, and they struggled integrating the Golden Corral chain during the last few years.  It's starting to come around, but nothing like the burger restaurants.

Balance sheet is good, and company-owned restaurants are undervalued on there.  Debt/equity is good, but the company spends too much of their cash flows on capital expenses.  All of their older restaurants are usually completely refurbished every five years, and they are now starting to open stores where the return on capital isn't particularly good relative to older stores. 

Great business, that needs a better capital allocator!  I told Sardar about the idea some time ago, but I don't think he was interested.  Wish I had more money!   ;D  Cheers!    
« Last Edit: July 05, 2011, 12:17:39 AM by Parsad »
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Kraven

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Re: FRS - Frisch's Restaurants
« Reply #4 on: July 05, 2011, 04:14:17 AM »
Interesting.  I forgot that there are different Big Boys.  On the west coast, they were "Bob's" Big Boy.
Buy cheap and something good might happen.

moore_capital54

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Re: FRS - Frisch's Restaurants
« Reply #5 on: July 05, 2011, 08:10:29 AM »
Agreed Parsad, this brand can easily be twice as large, and with some rejuvenation can attract a whole new demographic as well. Problem is like you say, need someone who "gets it".


bookie71

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Re: FRS - Frisch's Restaurants
« Reply #6 on: July 05, 2011, 08:50:45 AM »
They had a sports team a few years ago which really drained them, their stock really jumped when they got rid of it.
Always remember, Pigs get fat and hogs get slaughtered.

Parsad

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Re: FRS - Frisch's Restaurants
« Reply #7 on: July 05, 2011, 12:25:53 PM »
They had a sports team a few years ago which really drained them, their stock really jumped when they got rid of it.

They had their hands in a couple of businesses that they needed to get out of.  The son, Craig Maier, was partly responsible for getting them out of those businesses and focus on the core burger business.  The problem was, they began to saturate their burger territory, and they agreed to franchise the Golden Corral restaurants to diversify their business.  Unfortunately it's more like di-worsify!

They've gotten the Golden Corral business turned around, but the margins aren't anything like the burger business.  If they just spent less on capital expenses, stifle the Golden Corral business at its current size (which seems to be the case currently), and just spend the excess cash flows on share buybacks and dividends, the stock would be much higher.  

On another note, have you guys noticed that the Steak'n Shake menu is now moving in the wrong direction as far as size is concerned.  They are adding too many new menu items.  Sardar had the strategy correct originally...focus the menu, add value, and add occasional new offerings.  But now, they seem to be heading the wrong way.  May cut into their margins as food costs increase and they increase the amount of food inventory they have to maintain.  

I do like the national one-price idea, and that should help bolster a more national focus on the business.  Cheers!    
No man is a failure who has friends!

bookie71

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Re: FRS - Frisch's Restaurants
« Reply #8 on: July 05, 2011, 06:18:29 PM »
Their same store sales (Other than thee Golden Corral) usually show an increase each quarter (except for last crash), I have followed them for years and would hate for someone like Biglari to try to buy in.  I like a company that looks long term.
Always remember, Pigs get fat and hogs get slaughtered.

OracleofCarolina

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Re: FRS - Frisch's Restaurants
« Reply #9 on: October 12, 2011, 02:16:01 PM »
Sanjeev,

Looks like someone is thinking at HQ, FRS hired Brookwood Associates to explore strategic alternatives for the Golden Carroll business segment