I talked with Paul Motenko this evening, and confirmed that plans are on track. He seemed very optimistic, and attributed the stock price action to a general lack of interest in retail restaurant stocks.
The months of April, May, June, and July will see four new large format pizza restaurants with brewery open. He also indicated that more large format restaurants are likely for later in year 2000. It seems to me that the growth rate is picking up, though management will have to be careful about overextending lines of credit, etc.
The new restaurants will require debt financing, but several banks have already indicated a willingness to finance the new restaurants. There has been some delay with new restaurant development, mostly due to regulatory delays.
Earnings will be somewhat depressed near term, because pre-opening expenses must now be expensed, and near term growth plans are ambitious. The revenue growth should be good, with revenue targets of $3 million per new restaurant. Same store sales continue to increase for existing restaurants.
I still see CHGO as a neglected bargain, and value stocks are out of favor at the present time. |
