Well, if you have been out recently, you would have seen how the “night scene” is not that glamorous anymore. Service in restaurants are now horrible. That is a combo of the dumbing, the social collapse but in business, it is the lack of wages. That cannot rise if the margin are struggling. So, it is time to short the restaurants.
Fiesta Restaurant Group, Inc. (FRGI), through its subsidiaries, owns, operates, and franchises fast-casual restaurants. It operates its fast-casual restaurants under the Pollo Tropical and Taco Cabana brands. The company’s Pollo Tropical restaurants offer fire-grilled and citrus marinated chicken, and other freshly prepared tropical inspired menu items; and Taco Cabana restaurants that provide Mexican inspired food made fresh by hand. As of December 30, 2018, it operated 139 Pollo Tropical restaurants in Florida; 162 company owned Taco Cabana restaurants; and franchised 30 Pollo Tropical restaurants in Puerto Rico, Panama, Guyana, Bahamas, and Florida, as well as franchised Taco Cabana restaurants 6 in New Mexico and 2 in Texas. The company was incorporated in 2011 and is headquartered in Dallas, Texas.
From my personal experience, Pollo Tropical is yet another fast food restaurant, same bad service, greasy and overpriced food. Nevertheless, as of May 26th, the stock has lost 75% of its value. So shorting it must come with extreme caution.
Wingstop Inc.(WING), together with its subsidiaries, franchises and operates restaurants under the Wingstop brand name. Its restaurants offer cooked-to-order, hand-sauced, and tossed chicken wings. As of December 29, 2018, the company operated approximately 1,252 restaurants in the United States, Mexico, Panama, Singapore, Indonesia, the United Arab Emirates, the United Kingdom, Malaysia, Saudi Arabia, and Colombia. Wingstop Inc. was founded in 1994 and is headquartered in Dallas, Texas.
The stock is hitting all time high. Yet it has p/e = 107. It has 13 million of cash and 322 million of debt. The revenue is ok and the operating income is ok. The “play” here is mostly on p/e ratio.
YUM Brands, Inc., together with its subsidiaries, develops, operates, and franchises quick service restaurants worldwide. It operates in three segments: the KFC Division, the Pizza Hut Division, and the Taco Bell Division. The company operates restaurants under the KFC, Pizza Hut, and Taco Bell brands, which specialize in chicken, pizza, and Mexican-style food categories. As of December 31, 2018, it had 22,621 KFC units; 18,431 Pizza Hut units; and 7,072 Taco Bell units in approximately 140 countries and territories. The company was formerly known as TRICON Global Restaurants, Inc. and changed its name to YUM! Brands, Inc. in May 2002. YUM! Brands, Inc. was incorporated in 1997 and is headquartered in Louisville, Kentucky.
The p/e ratio is 23. They have about 300 million in cash and 11B in debt. The market cap is 31B. The chart is about to turn down. There could be some money made here.
Texas Roadhouse (TXRH), Inc., together with its subsidiaries, operates casual dining restaurants in the United States and internationally. The company operates and franchises Texas Roadhouse and Bubba’s 33 restaurants. As of April 29, 2019, it owned and operated approximately 590 restaurants. Texas Roadhouse, Inc. was founded in 1993 and is based in Louisville, Kentucky.
This is a 4B cap, 25 p/e, debt is about 500 million but they have 250 out of that cash. Quarterly net income is improving and so is the total revenue. My “thing” here is that the net income is 50 million last quarter (160 million a year) . At that rate they need 4 years to pay the debt assuming it did not expand. This company is going to be in more and more debt most likely.