What Did You Buy Today?

[fenders53]

(03-18-2020, 11:46 PM)EricL Wrote:

(03-18-2020, 05:07 PM)fenders53 Wrote:

(03-18-2020, 04:52 PM)vbin Wrote: Folks who have been buying restaurant brands, why no one is looking at QSR? I think buffet is invested and if things get worst cost effective fast food will do well.

We really need to summon Eric for a quick look at balance sheets for any restaurant we are considering.  (even if I sass him sometimes lol).  That is going to be critical to any restaurant's survival.  MCD, WEN etc can go drive thru only and pay the rent and utililities.  I am pretty deep in CBRL and will have a decent position in TXRH.  Large scale carryout may not be so viable for them.  I bet they get more efficient at it by next week though.

Everyone beware this is my idea of a speculative move.  My port is dominated by UTEs, insurance companies, defense and bluechip industrials.  I don't own tech or much anything shaky other than FUN.  This is a time for risk management.  Don't add more risk if you already have enough.  The index may drop another 25% for all I know.  It's my strong belief that if our top 10 national restaurant chains can't survive this, we have big trouble that will go far beyond cheeseburger joints.

QSR is loaded up with debt after the Burger King acquisition, and is also junk rated at BB.

We are in the midst of an unprecedented hit to the restaurant industry and the economy. If things turn around, companies like this might work out, but for me personally, I wouldn't be interested in anything with less than a BBB+ credit rating.

MCD, SBUX, SYY at "BBB+" and potentially DRI at "BBB" are enough risk for my tastes.

This sounds reasonable, but I think you have to consider how fast that credit rating could change based on what the chain serves.  People are used to buying burgers and tacos via drive through.  I am buying TXRH because they have very little debt, but personally, I'm less inclined to drop $50 for a couple meals in a bag.  I'll likely be be waiting until they open the dining room.  Same for a lot of the other restaurants like Cracker Barrel, Olive Garden etc.  Fast food has a huge advantage here IMO.  This is why I think a 50-75% drop in share value is an over-reaction, and that is where we are are headed.  As Guru reminds us, the market always over-reacts.  We spend all our time here looking for those stocks, whether it's a macro or a company specific short-term crisis, or both.  Also, while these companies are not critical industries, I suspect any national chain is going to be able to access cheap financing to keep unemployment from Great Depression levels.  The details on the bill passed yesterday should be known soon.