Stocks For Dad
TMF Edible's Stock For
Dad
Quality Dining, Inc. <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QDIN)") else Response.Write("(Nasdaq: QDIN)") end if %>
4220 Edison Lakes Pkwy.
Mishawaka, IN 46545
(219)
271-4600
Company
Snapshot
Hi Dad,
You've filled my life with stories of an island I have never seen and lessons
I will always cherish. To have succeeded, only to have it all stripped away
by a communist regime and start all over again, the stamina and the never-ending
workdays, I am forever in awe. Yet as the ever-elusive light at the end of
the tunnel grew further away, we grew stronger as a family.
Now as we near Father's Day, where I will surely plant the kiss on your cheek
that I dreaded to land in front of my friends in my youth, I found a stock
that, like you and mom back in 1960's Cuba, has been unjustly stripped of
the dignity and fiscal value that it deserves.
QUALITY DINING <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: QDIN)") else Response.Write("(Nasdaq: QDIN)") end if %> has lost 85% of its value since last
summer. The restaurant operator had its rise and fall when it bought Bruegger's
Bagels, the largest bagel chain in the country. The stock went from $20 to
nearly $40 a share as Wall Street saw dough in the doughmakers.
Here's what we're hoping for: The biggest critics of Quality are the
founders of Bruegger's, who now own 25% of Quality after the merger. They
have convinced their franchisees that it was Quality's fault that the bagel
chain is struggling. Funny, the three next largest chains,
EINSTEIN/NOAH <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: ENBX)") else Response.Write("(Nasdaq: ENBX)") end if %>, MANHATTAN BAGELS <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BGLS)") else Response.Write("(Nasdaq: BGLS)") end if %>
and BAB <% if gsSubBrand = "aolsnapshot" then Response.Write("(Nasdaq: BAGL)") else Response.Write("(Nasdaq: BAGL)") end if %> have all
lost more than half their stock
value in recent months. Is Quality incompetent, or is the more likely
story that a hot niche rode high last year on hype and investors are now
realizing that it's a harder to execute on a larger scale with so much
competition?
So forget Bruegger's. Take your lumps and sell it back to the founders who
think Quality is responsible for the industry malaise or any higher bidder.
Leave the company with their successful restaurant business which includes
Grady's and Spaggeddies, but mostly franchised Burger King and Chili's units.
If someone were to pay for Bruegger's the current market cap of Einstein,
and Bruegger's is bigger, that would mean $30 a share to Quality Dining.
Here's what to look out for: $30? Not likely.
Quality Dining is on the ropes. Remember, dad, how on a bad day you compare
yourself to a salmon swimming upstream only to get eaten by a bear in calmer
water? Well, Quality Dining will be lucky to get any kind of serious coin
for Bruegger's, but there will be something. The company has announced they
will take a charge of about $150 million for the divestiture and it only
accentuates Quality's poor judgment in buying into last year's hot dining
trend.
After that you will be left with the same sleepy company that investors were
paying more than $20 a share for long before the company had ever heard of
Bruegger's, with the same if not better outlook for the future.
Just like you dad. You've done awfully well for yourself on so many different
levels. But, most of all, as a father. I love you, and all your broken dreams
and exceeded expectations. Happy Father's Day.
Rick
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