Why Labour Costs are not Black Swan Events for #QSR $MCD $BKW $WEN $YUM

A lot of noise coming from unions about organizing low wage employees at Quick Service Restaurants. Quick math shows the industry cannot pay $15 plus rich benefits. Will creeping unionism hurt Quick Service?

Answer: No

Quick Service Restaurants are factories and subject to much process engineering. If wages become a problem watch for more or revamped machinery and processes and less labour. This will cause existing workers more job loss.

Part of the organizing dynamic is many QSR employees have become trapped because competitive better paying jobs are not as available. As the economy improves ever so slowly this rationale should dissipate. Previous efforts to organize were hampered by huge turn over rates. Corporations can drive those rates and turn employees in many ways. Cutting back hours and closing a few locations is one. Selective termination of union activists while dirty pool is another.

Wal-Mart has been known to close stores that unionized and everyone is out of work. QSR can easily close locations and laugh it off.

In the mean time a few headlines here and there but this will not be a factor in a buy hold or sell decision.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter @financialskepti

Twitter has Bigger Problem with Burger King $BKW $TWIT $FB

Burger King (NYSE:BKW) twitter account was hacked. Why. Because they could. Today Burger King is embarrassed and scrambling. No one blames them as a corporation.

The question becomes who is ultimately responsible for security. Was Burger King incompetent or where they following the rules as laid out by Twitter.

I use twitter a lot and am constantly annoyed by accounts which have been hacked and suddenly dysfunctional twits are streaming all over the world. Happens daily.

Twitter needs to get its security in line. Twitter is still a compelling social media platform. but questions are starting to appear. Twitter needs to fix this immediately if not sooner.

In the meantime Burger King lawyers must be reviewing a lawsuit. You cannot rely on an unstable partner and keep being hit by this nonsense.

Twitter maybe  about to experience a Black Swan consequence.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Burger King Fast Return Flip. Something Spooked 3 G Capital $BKW $WEN $YUM $MCD

Current "blue crescent" logo (July 1...

Current “blue crescent” logo (July 1, 1999–present) (Photo credit: Wikipedia)

Give me a break. Burger King (NYSE:BKW) returns to the investment stage claiming that it has revamped its stores and menu. Also the last quarter sales were very encouraging so they thought they would rush back into the markets. Give me a break, a very big break.

Just recently the Brazilian group (3 G Capital)  takes them private because the hard restructuring is best done in private. Also the Brazilian group controlled a lot of cattle farming. So creating an integrated supply chain from birthing calves to flipping big whoppers to depositing money in the bank made sense.

Quite frankly do not see too many refurbished stores out there so the capex budget still needs to be big. Menu change well what is new. I am not lovin it because I cannot spot it.

This is a disguised short move. Private equity usually needs more time to fix the problems which were substantial. They seem to have panicked and are now off loading.

So what made them panic.

George Gutowski writes from a caveat emptor perspective.

Burger King Latin Preferences?

Burger King in Guaruja, Brazil

Image via Wikipedia

Burger King (BKC) has been setting this one up for a while. Quickly reviewed 2010 financial disclosure and there is a recurring theme that may have attracted 3G Capital. Management never spoke about corporate prospects strategically. They focused on mundane store open/close ratios and menu offerings, all the while maintaining they have solid financials. The cone of silence on strategic prospects provided an anaesthetic and put investors to sleep.

 Burger King is Miami based so the Latin American connection is not a surprise. Watch for the Brazilians to sell huge amounts of beef and coffee into the Burger King worldwide system. Big win for the Brazilians, therefore the strategic investment rationale is compelling. Lots of law firms are starting law suits and investigations as to why the company was not shopped properly.

Keeping the dividend yield at around 1% makes shareholders look favourably at buyouts.

Disclosure: No position in any stocks mentioned in this post.

Burger King Pulls Its Punches

Burger King, Donegall Place, Belfast, Northern...

Image via Wikipedia

Burger King (BKC) missed the point in its latest earnings release. They have over 12,000 restaurants with a near 90% franchise rate. Yet in the press release they report 249 net new restaurants, 79 re-franchised restaurants, 54 re-imaged restaurants. These are pathetically small numbers. At the same time they report strong cash and balance sheets. The question becomes are they pulling their punches or do they really not have the capital and cash flow to do the job properly.

Disclosure: No position in any stocks mentioned in this post.