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On December 14, 2015, TChadwick commented on Pizza-Pizza or Win-Win? Little Caesars, A Slice Above The Rest :

Hey Sam,

Awesome questions. On one, EDLP definitely portrays lack of quality but low price has more than made up for this perception. Similar to McDonald’s Dollar Menu, customers see the value as a compelling reason to buy.

On the second question, definitely. Little Caesars has experienced challenges trying to raise this price to keep margins.

On the third question, not yet but I now know what I am doing over break!

On December 14, 2015, TChadwick commented on Pizza-Pizza or Win-Win? Little Caesars, A Slice Above The Rest :

Vitali, great concerns raised. Interestingly, given the items I highlighted above, EBITDA margins to franchises is actually in the 20-30% range. The payback to franchises is also ~1.5 years which compares favorably to ~2.0 years for Domino’s/Pizza Hut and ~2.5 years for Papa Johns.

On your second point, pizza consumption in the US is declining. Despite this, Little Caesars has been able to grow Revenue/EBITDA/Store Count by taking market share from others.

On December 14, 2015, TChadwick commented on Pizza-Pizza or Win-Win? Little Caesars, A Slice Above The Rest :

It’s a great question Tony and love the comparison to Domino’s!

Thought about the issue of whether this is a race to the bottom or not. Spoke with both a Little Caesars franchise owner and Domino’s franchise owner and interesting the EBITDA margins on $5 pizzas is drastically different. For Little Caesars, it’s ~20-30% vs. break even for Domino’s. As a result, I think this mitigates a lot of the risk for a race to the bottom given higher costs for Domino’s. As to product differentiation and changing customer tastes, this is definitely a serious risk and a risk that all fast food/ fast-casual experience.

On December 14, 2015, TChadwick commented on Harvest Power :


Very interesting business. Seems like a win for all parties involved. I’m curious why a competitor would not come in at a lower price. Given Harvest prices at a slight discount to normal trash disposal providers yet generates additional return from the power sold and agriculture products produced, I would expect they make a profit above traditional players. This would indicate room for a competitor to undercut them and disrupt the market. Do you think this is the case or do the additional costs associated with producing the power/agriculture products offset the return that these services provide? Maybe the competitors just need to negotiate better prices with Harvest’s customers!

My other questions is what, if anything, does Harvest do to hedge their energy and agriculture risk? Both of these market prices can fluctuate considerably and I’m curious what impact this has on their business model.

On December 14, 2015, TChadwick commented on Build-A-Bear Workshop: Smarter Than Your Average Toy Store :


Very interesting post and I have fond memories of trips to Build-A-Bear in the late 90’s! The have turned buying Teddy Bears into an experience and have created a much more personalized experience for every child.

My concern is around the stuffing machine that they use for each bear. If I remember correctly, it takes anywhere from 5-10 minutes to fill a bear and they have 2-3 machines at each store. During the holidays, this can be a serious bottleneck and limit the number of bears sold. How do you think Build-A-Bear should overcome this and do you think this is limiting their income potential? Also, what barriers to entry are there for competitors to enter this space at a lower price?

On December 14, 2015, TChadwick commented on Less Than Clean Car Wash :


Incredibly interesting post and the most analytical of the ones I have seen. It seems like with only a few small changes, Shield’s could be a much better ran business. I’m curious why they haven’t made the wheel cleaning staffing change already. Seems like a very logical/quick change to add another person into this step when they get backed up. Instead, I’m curious if this is a demand issue where rarely are enough cars backed up to warrant this additional employee. If so, seems like improving customer perception, reducing prices and getting new customers into Shield’s are the most important areas to fix. If not, Shield’s could be a great acquisition target to buy and quickly make this change!

Also, how does the nearby competition drive/detract from their desire to improve? Appears that no meaningful competition is nearby which may be a big driver into their lack of innovation.

Very interesting post, Alex.

I’ve always wanted to try Alinea and the knowledge of their ticketing system will come in handy! However, I’m concerned that the ticketing system could be a negative on Revenue potential. It appears that this system would limit the number of upsells as well as the desire to spend additional money in the restaurant given everything is paid upfront. How do you think they overcome this limitation or given the high price per plate, do they even care. I also question the market potential for this ticketing system. Yes, it should work great for the very exclusive restaurants but a $20MM valuation implies larger appeal beyond the 1+ Michelin Star restaurants.

Lastly, this model appears to work great during good times but how would Alinea perform during down times? Is there food truly so good that they can fill up tables when a $300 meal becomes reckless?

On December 14, 2015, TChadwick commented on BlackBerry: How to Destroy $75 Billion of Value :

Very interesting post, Vitali.

It’s definitely true that RIM had many missteps along the way and it is incredibly unfortunate that given the massive pile of cash they sat on for years, that they never saw the light. At what point do you think RIM was truly a goner? Was it following the release of the Storm or even earlier when the iPhone was released? Do you think RIM would have been able to credibly survive against the iPhone and Android or was the company just delaying the inevitable? Also, why do you think no strategic buyer would step in as they began to falter until it was ultimately too late? Seems like it could have been a great platform for Google or a Chinese firm to enter the US smartphone market.

Lastly, if my memory serves me correctly, BBM was much more secure than What’s App or iMessage. Even as the company’s feasibility as a standalone smartphone provider disappeared, why do you believe this did not still remain the messaging platform of choice for business professionals?