Based on the following analysis, with 3 restaurants, they will almost be profitable.
Did this in a spreadsheet in about 10 minutes.
Woodland Hills is 5400 Sq. Ft. Using the revenue number, gives $101/sq ft. for the qtr. CGS is 30% of Revenue.
Now apply that to H&H (7200 sq ft) and Mountain View (7000 sq. ft.) Use the sq ft. number above to give revenues and the 30% to give CGS for each restaurant. Total combined Gross profit from all 3 restaurants is now $1385k. They are still down 300k/qtr (Operating Loss).
Now get creative. Assume that the new locations are in prime real estate (not a mall) and will attract huge crowds. Increase the revenue/sq ft to 135$. Now they are profitable by 20k/qtr. Make it realistic by increasing the CGS (higher rent?). Increase to 35%. Now they are only losing 70k/qtr.
In all of this I am assuming that the O/H (SG&A) remains constant. I think that is a fair assumption. They have sized themselves for 3 restaurants.
Bottom line is, they will be able to get by quite nicely with 3 restaurants indefinitely, even if they eventually have to tighten up on expenses. From the point of view of stock price, it will be based on the expectation that franchising will work out. Expect a nice pop. But be realistic, it might or might not happen. If he is an entrepreneur, he will not be satisfied with a situation that does not work out in a spectacular fashion. This has been years in the making. He will try another approach if he is not successful in a year. I also suspect that he has to show a qtr or two if stable operation (breaking even). Right now he is losing money. Be prepared for the price to stabilize after these puppies are open and if you want to be cautious, sell some just in case.
But, looking at Burn Rate to date is not realistic. You have to factor in another 1M this qtr invested into the other place in MV. After that, he will be up and running... franchising becomes the issue, then he will either explode or...
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