Sir Royalty Income Fund T.SRV.UN

Alternate Symbol(s): SIRZF

Consumer Cyclical Restaurants

SIR Royalty Income Fund (the Fund) holds investment in SIR Corp (SIR). The Funds' investment, SIR is engaged in the business of owning and operating full-service restaurants in Canada. SIR has concept restaurant brands, including Jack Astor’s Bar and Grill, Scaddabush Italian Kitchen & Bar, and Canyon Creek Chop House, signature restaurant brands, such as Reds Wine Tavern, Reds Midtown Tavern, Reds Square One, and The Loose Moose, which are used by SIR under a license agreement with SIR Royalty Limited Partnership (the Partnership. The Fund receives distribution income from its investment in the Partnership and interest income from the SIR Loan. The Fund indirectly participates in the revenues generated under the License and Royalty Agreement through its Investment in the Partnership.

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Sir Royalty Income Fund > What a mess

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Comment by BlueJay2020on Jan 08, 2021 2:15pm

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Post# 32255558

RE:RE:RE:RE:What a mess

You're absolutely correct, not that I (or probably you) would criticise Fowler for not foreseeing that eventuality. He had his own reasons for not franchising, and they may or many not have worked for him in the past, and may or may not when we get back to normality. If he still prefers a corporate model, then hopefully he will be able to stick with that, and not be forced to take a different route than his vision. Having said that, post-pandemic you'd think affordable leases will be plentiful and a fair bit less competition, and that might change his approach.

Speaking of the franchise model, MTY got hit as hard as SIR in March/April but it's rebounded tremendously - in fact I think it's overbought now. I rode it up to about $45 and decided to take profits at that stage. But perhaps it illustrates the differences in the businesses. MTY is another illiquid stock, funnily enough...

logicandinertia wrote:
I think your last sentence is where I was going with that. On that franchise point, it can't escape sir that had they been franchised, most of the rent (for the franchisees) would have been covered . Their existing structure meant that they hit the maximum subsidy, whereas recipe and other more franchised businesses saw their franchisees secure rent subsidy for each location. The structure of being all corporate owned stores has been a huge disadvantage for sir Corp in this downturn.

Correct. owning an operating company much different than the royalty with its fixed terms. But I think sir management has seen the risks associated with being a private co against larger better funded peers. Could grow much faster than current structure imo.