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To: marginmike who wrote (141315)	1/2/2002 2:37:12 PM
From: reaper	Read Replies (1) \| Respond to of 436258

Papa John's is no service; take-out only. Yes, Outback does have high food costs; I THINK this is precisely why people go, as it is a "good deal". I frankly hate CAKE too, as I feel like I'm getting ripped off; this is reflected in the fact that their food costs are VERY low relative to other restaurants, so I'm not really getting much food for my money. That said, I think people go for the experience and not the food. As far as sales per square foot, I frankly don't care. And I don't care about margins, either. All I care about is return on capital. It costs Outback about $1.5mm to put up a unit that does $3.5mm in revenue and +/- 18% unit-level margins. To invest $1.5mm to get a $630k (pre-tax) coupon back every year is in my opinion a great business. Yeah, CAKE has great sales per square foot, but those square feet are a LOT more expensive than Ouback's so they NEED more sales per foot to get the same capital returns. That said, as noted before I think CAKE's returns are in fact pretty good. Cheers