Monday, December 18, 2006 12:17:59 AM
A restaurant in itself is a liability. You have to pay rent/other overhead, etc. There's no underlying asset in most cases (unless it's real estate which would be on the balance sheet). The value of a restaurant stems from its ability to generate great returns, which is a function of the concept.
Look at it like this:
Pizza Inn (Nasdaq: PZZI) has a market cap of 17 million dollars, and an enterprise value of around 25 million. It has a total of 391 restaurants, 387 of which are franchised. Why is it worth so little? The restaurants don't make money, so the whole operation is basically one gigantic liability. "Owning" (leasing) a bunch of spaces and having restaurants there doesn't mean anything and, in and of itself, is not a harbinger of value.
uWink, I believe (along with many others), has the potential to generate tremendous returns on investment, and so it has a higher value than a company that can't do that, no matter how few restaurants uWink has in operation at this moment.
This is all my opinion of course.
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