Current Strategy
Hi, DBS. To answer your question, I don't think the strategy will work because I've never seen it work. I've seen Diedrich Coffee and others do the same thing and fall flat on their face. Juggling brands is a difficult act.
In this case, they are not profitable. Even MCD got unfocused with its purchase of Donatos, Boston Market, Chipotle, etc. And they were much smaller brands that didn't even contribute to the bottom line. However, they were a drain on resources. MCD jetisoned all brands to get its focus back in one of the greatest turnaround case studies of all time. Ford, same thing. They purchased Jaguar, majority ownership in Mazda, etc. Lately, the've been shedding all those brands, getting back to basics.
In SPKL's case, it would be a drain on resources and focus, and they are too small. It's hard to integrate company cultures. It looks good on paper, but I never see it work out in reality. But it might make for a good story and perhaps a good first quarter or so. The synergies never seem to materialize long run, however. At least not paralle acqusitions of this type, and certainly not with small companies.
I think the best strategy is to sell the Canadian division for hard cash and focus on their core markets and what they have. They should grow in tight concentric circles, reaching market penetration in one area before branching out to another. They should not have a large infrastructure first, at the mercy of needing franchisees. They shoudl have franchisees seek them out, and they can be more selective. When you have to meet growth goals like this, you often pay too much for real estate and take anyone with a heartbeat. Never a good long term situation.
But to do things right would not make for a good story. I really think this was all about lining insider pockets from the start. I've seen this same song and dance with Twistee Treats, a penny stock that bilked millions from investors in the early 80's. Went bankrupt and popped up again as a penny stock in a reverse merger in the 90's to repeat the bankruptcy story and fleecing of yet more shareholders.
I'm definitely not here to hold. I'm here to sell. Although, it could go to zero, and that's why I took a nibble. Perhaps another nibble at three. Best luck to all.
News 
Market Data 
Discover 
