TSX:SRV.UN - Post by User
Post by
logicandinertiaon Dec 09, 2020 12:14pm
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Post# 32067991
One big difference between SIR and others
One big difference between SIR and othersIf you read the AIFs of each of the restaurant royalties, one aspect makes SIR unique - including ALCOHOL SALES as part of the 6% royalty agreement. Typically, most of the these restaurant royalties do not include alcohol sales as part of this agreement, just food.
Alcohol sales are usually between 25-30% of sales, have lower labour costs, don't spoil (long shelf life) and are more profitable for restaurants. During a visit to Scaddabush in the summer, it looked like three quarters of the tables had wine on them.
So the fund investors for SIR were hit two-fold, by closures/capacity limitations, and the material decline in alcohol sales, as food delivery became a larger part of the business during the pandemic.
The good news? In Q2/2021 and beyond, the reopening of SIR restaurants will provide more torque to the royalty stream than comparable restaurant royalties. Because the return of guests will bring along alcohol sales to the royalty funnel, which are non-existent in the food delivery format.
Good luck...