Anyone who has every gone to a mall food court can recognize most of the restaurants as well as the other stores in the mall. Many of the stores are chain stores or franchises and if the mall is successful, the stores should be to. People come to the mall and go to the stores and all is good in the world of retail. How those chains started and achieved sucess are interesting stories. In the book Double Double, HarperCollins, 2012, Douglas Hunter writes about the Tim Hortons’ story. The theme that was taken from the book is the Quick Service Restaurant (QSR) is a very competitive business and a chain that achieves success today, may not be successful in a few years. The problem will become the expectations of existing customers and the need to continually attract people to the chain. Some will want very little change – they like the QSR as it is, some will want more change and some will try other places. When the routine of going to the QSR changes, people will reasonably quickly adapt to something else. Management besides attracting and maintaining people to work in the restaurant business must also do the balance act of their customers. For the chains that are successful, congratulations, but things change.

Linking to dividend paying stocks, there are methods to play the QSR field for their are companies which have made and continually make money such as McDonald’s, however there are many chains that are not as profitable – Burger King. Very talented people work for the chains and try to offer good products. There will be many reasons why a store or small chain did not become national and that can be a very good thing – a profitable regional chain is very good thing to own. When investing in QSRs see the long term profitability first, not the possible growth of expansions, then how does the chain make money? selling franchise fees – then it needs high growth or is it in the sale of products and advertising? are the franchisees reasonably happy with the franchise or are there lawsuits outstanding? do you like the franchise? the food business is a very competitive one, but there is opportunity to be found.

There are more questions than answers, till the next time – to raising questions

Anyone who has every gone to a mall food court can recognize most of the restaurants as well as the other stores in the mall. Many of the stores are chain stores or franchises and if the mall is successful, the stores should be to. People come to the mall and go to the stores and all is good in the world of retail. How those chains started and achieved sucess are interesting stories. In the book Double Double, HarperCollins, 2012, Douglas Hunter writes about the Tim Hortons’ story. The story is about the change of people’s eating habits to eating out or what is termed the quick service restaurant (QSR). For a long time, most people did not eat out and there were only a few chain stores, but society changed and if you ask around, a relatively high percentage will have eaten outside their homes this week. A 2000s figure of  77% of chains fail after 5 years means not all franchises are even close to being equal, which means investing in a franchise is not a sure thing. The old adage about location, location, location  is very important element.  How a restaurant goes from a struggling idea to an iconic way of life and maintains the ability to earn profits is a very interesting story.

Linking to dividend producing stocks, there are stocks which own restaurants which provide a dividend, if you eat at them you can technically get paid to eat there. You pay for your meal as well as many others, only you receive a dividend from the shares. It can be a good way to pick one of your stocks, but remember the restaurants have to appeal to many people not just you. The high failure rate for food franchises means most restaurants are not going to be chain stores but are independent and carve out their niche of the business. We need both types to ensure the chain stores continually change or be open to change of their businesses. If you look closely at your favorite chain food store – you should see changes over the years.

There are more questions than answers, till the next time – to raising questions.

It is amazing to think how the world has changed in the past 20 years and how new industries came forth when no existed before. An interesting history of such changes was written by Caroline Van Hasselt book High Wire Act – Ted Rogers and the Empire that Debt Built by John Wiley & Sons, Toronto, 2007. In the book, the author talks about cable which is the reason for the existence of the Rogers company but in the end they made the switch to where their greatest revenues come from – wireless or cell phones. The process of making the transition and the growth of the cell phone industry makes a fascinating read in relationship to the types of decisions companies have to make to ensure their survival and growth

Companies which specialized in the infrastructure are a very capital intensive business and to continually have the best technology that the rest of the world accepts is a very tough decision. If the companies get it right, they make millions, get it wrong and your business plans need a major adjustment For capital intensive companies – they live in a world which expects to have pricing of services in a monopoly like conditions For non capital intensive companies competing on price is a given. For Rogers as cell phones became smaller, the prices fell and the average person needed one, Rogers revenues zoomed up, the debt fell and soon they could and now pay a dividend. At the moment the industry is driven by the data to sell to your devices.

Linking to dividend paying stocks, when a company pays a dividend its management can not and is not expected to bet the company on new technologies – that is for growth companies. Management must change from an very entrepreneurial one that hates the competition to using its assets to the best of its abilities to achieve a monopoly like competition for the bulk of its revenues. Most companies are not successful in the transition, the type of management required is different, which makes the process interesting.

There are more questions than answers, till the next time – to raising questions

Many of us have seen the movie(s) and read the books on the DaVinci Code. It makes for very interesting reading, the movie is fast paced and asks interesting questions. There are multiple books about the DaVinci Code and one of them is Dan Burstein’s Secrets of the Code – the Unauthorized Guide to the Mysteries Behind the DaVinci Code, CDS Books, NY, 2004. The book looks at the major claims by the DaVinci Code and asks are they true or could be true or maybe not. It is good for a book to do this because in all organizations are governed by principles, foundations and a constitution. The church is the same and similar to all constitutions or governance structures some things are put in and some are not. The organization does it for very valid reasons and overtime its public decides if the principles are the right ones. If they are, then the governance will change over time.

Linking to dividend paying stocks, the key is the governance will change, but the principles of the company have to remain strong with the public who buys the goods and services. If the governance goes off, so does the company until it decides what it stands for and what is good or not good. The easy method to do this is to read the President’s letters and the values and mission statement. Besides making money do you agree with them? If you do, then you can look at other financial aspects of the company.

There are more questions than answers, till the next time – to raising questions

Read an interesting book on a subject most of North America takes for granted. Over the course of a couple of days, many people will take something out of the freezer to eat. Back in the  1920’s and 1930’s when most people did not have a freezer, Clarence Birdseye was inventing how to freeze foods better. In an interesting book called Birdseye, The Adventures of a Curious Man by Mark Kurlansky, Doubleday, NY 2012, discusses his life and fast freezing. If something is frozen quickly the ice crystals are small and the food retains its flavours; if food is frozen slowly, the ice crystals are bigger and the food will be mushy. Prior to Mr. Birdseye’s invention frozen food was generally mushy and had a very low reputation for good food. Mr. Birdseye, eventually sold his company to what became General Foods, not only had to invent a better way to freeze, but after successfully doing it, the next big step was to find a method to distribute the food and convince people the quality expected would be delivered. With the backing of GF, grocers received freezers and eventually the public bought fridges with freezers, previously people used ice. The process and how that all came to place makes an interesting story.

Linking to dividend paying stocks, the above story has been areas where dividend stocks try not to tread. Inventions are great, inventions which money can be made within a short time period are even better. In the case of freezing foods, now days  they are accepted and eaten on a very regular basis, but the cost of the infrastructure is a high hill to get over. Once it is in place and acceptance is in the marketplace, revenues and dividends can flow. From this perspective, as a general citizen you should encourage people to be curious and always be looking for better solutions. When it comes to your investment dollars try to stay with those companies whose revenues are already flowing.

There are more questions than answers, till the next time – to raising questions.

Earlier this week the US Federal Reserve (fed) decided the economy was not as robust as it first thought it was and decided not to cut back on its stimulus package. This means interest rates will stay low in the US and elsewhere for the next couple of years There was an interesting reaction to this announcement – an Equities Managing Director at Barclays on NPR Business show said to the effect “the announcement will do nothing to help the economy. Investors had moved great amounts of money to companies which pay dividends and leaving growth companies to languish at lower prices” This blog disagrees with the statement. For investors who actually want returns on their investments the announcement is a very good thing. Investors have been buying profitable companies which pay dividends and companies with large cash balances have been paying income to shareholders. It is important to note the Equities person  has a bias is for new issues which generates much more fees to the investment company, but not necessarily to regular investors.

Linking to dividend paying companies, one of the best things to put in practice is to keep the bulk of your investments in profitable companies  which earn a good return with lower risk attached to it and to pay limited fees Over time that formula has proven to be the best one for the average investor. If you consider yourself above average, use part of your dividends to buy growth companies. Most will not be profitable, many will lose money on the share price,  but you never know which one will make up for all the others.

There are more questions than answers, till the next time – to raising questions

If you are a sports fan, it is often times to see easier to see business themes in sports  and one of those books where it is evident is Ron Jaworski’s book The Games that Changed the Game, The Evolution of the NFL in Seven Sundays, Random House, NY, 2010. Mr. Jaworski was a quarterback and maybe familiar to people as one of the broadcasters on Monday Night Football with the nickname of Jaws.

The NFL is a very profitable league, the TV contract is worth billions, each team is worth a billion or close to it, the owners are up in that category, which leads to parity in the league – any team has all the resources it needs to win. The variable is the coaching and intergrating the players into their coaching system. Winning management styles differ over the years – some coaches yell, some are soft spoken, but all expect results, and if they do not deliver their time as head coach is a generally a short one. Mr. Jaworski says there is no simple way to win a football game. There are many paths and that is why people watch and continue to care about the game. There are many levels to watch a game from on one level it is physical activity; another level it is a chess match; another level it is about quality of players; another level it is coaching style; another level it is putting everything together in to make a whole; another level it is entertainment.

Linking to dividend paying stocks, if you focus on the teams, all of the teams make money, lots of it. Even though they compete against each other, they share TV revenues and that is a large portion of the budget. From a financial point of view as long as the league does not expand, winning is not necessarily the most important element. Having said that, the owners of the teams over their careers have been successful and do not like to lose or they do not stand pat for long. In the case of your dividend paying stocks, the company has proven to be successful, the question for you is how much monopoly like conditions apply to your companies? Is this percentage likely to continue? if it is then you have little to worry about; if not there are industries that operate on monopoly or semi-monopoly like conditions – check them out.

There are more questions than answers, till the next time – to raising questions

If you are a sports fan, it is often times to see easier to see business themes in sports  and one of those books where it is evident is Ron Jaworski’s book The Games that Changed the Game, The Evolution of the NFL in Seven Sundays, Random House, NY, 2010. Mr. Jaworski was a quarterback and maybe familiar to people as one of the broadcasters on Monday Night Football with the nickname of Jaws. If you consider the National Football League from a business perspective – the most profitable sports league in North America is the NFL and essentially all the teams are worth a billion or more. Worldwide the most popular game is soccer also called football. In the NFL the object of the game is move the ball down the field and across the goal line to score 7 points or kick it for 3 points. That objective has not changed since the founding but the game has. Similar to most businesses, when the game was introduced, there were minor changes but everyone did very similar things. Often times losing teams needed to do something different to make them winning teams – and this is where the coaches become critically important. How the team prepares and practices for a game will determine the outcome. For example, since most people are creatures of habit – they do something before the action if the opposition can detect the habit, they can have a split second advantage which can be capitalized on or be taken advantage of.

One of the themes of the book is the coach trying to determine if there was a blank slate would we be doing the process the same way? Is there an better way? one coach said the field is 100 yards long and 53 yards wide, I want to use every inch of it and devised his plans to do so. Other teams were not using the whole field and had to adjust or see more losses than wins. Every year the players are faster and stronger and play smarter, trying to find a mismatch of skill set to take advantage of gets harder and harder but it is there to be found.

Linking to dividend paying stocks, Mr. Jaworski picked 7 games or turning points in the NFL, and whatever industry you are in, you should be able to pick a few turning points off the top of your head. Then ask the question, for your dividend paying companies  which thrives on a steady market share and profitability, what would change it? how does the company adapt or be flexible to the market and stay profitable? how good are the coaches in the company? or is the monopoly conditions so strong that even an average year would not make a difference?

There are more questions than answers, till the next time – to asking questions

Similar to most people, over the past number of years hearing about the story of Osama Bin Laden has been a continuing story in the news. It was with interest the book Seal Target Geronimo, by Chuck Pfarrer, St. Martins Press, NY, 2011 was read. The book outlines how the Bin Laden story ended. There are many elements  but the key ones are planning and logistics. Eventually Mr. Bin Laden was found by the courier system he used because in the end no one can exist in isolation. Having found him, then the operational aspects began – how was he protected? what are the threats? How will the latest and greatest technology work? It turned out, he was less protected than expected which was a good thing for the US. To secure the compound took 12 bullets from a very experienced and talented team and the latest technology worked.

Linking to dividend paying stocks, as a shareholder you can see how your company is performing the planning and Iogistics? for at this time of the year new products and services are introduced. How is the market accepting them? Can the company deliver the promises it makes to its customers? If it is a retail operation are the shelves stocked with the correct merchandise? If the company has its logistics and planning going well then it should be doing well.

There are more questions than answers, till the next time – to raising questions.