This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Restaurants Simplify by Selling Real Estate

Stocks in this article: DRI RT DENN CBRL BOBE SONC JACK LUB KKD FRS WEN

Not all restaurants offer franchises, but there are several others with vast real estate holdings. Some, such as Darden Restaurants  (DRI), find themselves in the crosshairs of activist investors, pushing the company toward separation of the company's 1,048 owned locations, (Darden also owns 802 buildings on leased land) into a separate real estate investment trust, as a potential way to unlock value. For its part, Darden has been pursuing a spinoff of its Red Lobster chain, a move opposed by the activists.

Then there's the current crop of struggling restaurant chains, most notably Ruby Tuesday (RT), which owns 324 locations, and an additional 265 buildings on leased land. Ruby Tuesday has a current enterprise value (market cap plus debt, minus cash) of about $600 million; much of that reflects the value of the real estate, with little value being placed on the restaurant business itself. Ruby Tuesday has its work cut out for it in order to resurrect its struggling business, and the real estate may ultimately have to be monetized, but it's a potentially nice arrow to have in the quiver.

RT Chart
RT data by YCharts

Other chains that own significant portfolios of real estate include Cracker Barrel  (CBRL) (412 locations), Bob Evans  (BOBE) (482 plus 78 building only), Sonic  (SONC) (219, plus 177 building only), Jack in the Box  (JACK) (224, plus 641 building only), Luby's  (LUB) (86), Krispy Kreme  (KKD) (42, plus 23 building only) and Frisch's Restaurants  (FRS) (80 plus 15 building only).

Owning real estate is not a prerequisite for running a successful restaurant operation, but those companies that do may have an opportunity to create value by monetizing those assets.

At the time of publication the author is long KKD.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

2 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs