[allie]

I didn't realize his lines were worth so much.

Martha Stewart buys Emeril franchise

[KyleW]

I thought it was pretty cheap. In today's world $70MM borders on peanuts, and $20MM of that isn't guaranteed. The article mentioned that Emeril Live has been cancelled. To me the cheap price for the Emeril name, the cancellation of Emeril Live and Molto Mario are an indication of how small a minority we kitchen freaks really are. FoodTV brought the kitchen to the world but they can't make any money on plain old cooking shows. Unless there is a gimmick like Sandra Dee's Semi Homemade of a winner/loser like Bobby Flay's Throwdown most people don't watch.

[KYHeirloomer]

Kyle, 5x earnings is a good rule of thumb when purchasing a company. And that puts the 70-large right on the money.

Keep in mind, too, that there's a synergy. How much of that $14-million results from the impact of Emeril Live? Indeterminent, of course. But I'd venture to say a lot of it. Let's face it: Essense is just another cooking show. It was Emeril Live that turned him into a presence; and Emeril Live that drives the Emeril brand. So he needs a major media outlet as much as the outlet can use him.

Presumably, the "benchmarks" referred to relate to that synergy.

Allie, you may not be aware of how extensive the Emeril lines are. There is the stainless cookware, and clad cast iron, and three different lines of foodstuffs. Plus the books, which continue to sell in amazing numbers. And the TV shows. And special appearances.

Frankly, I was surprised that income was only $14-million.

[KyleW]

I'm not questioning the valuation. It just seems to me too that $14MM in revenue, considering the breadth of the product line, is pretty paltry.

[KYHeirloomer]

Now that I'd agree with---maybe.

On the face of it, 14 large does seem kind of paltry. But I would want to compare it to the revenue of other celebrity chefs with similar lines: Mario, Wolfgang, etc.

If nothing else it would be interesting to see what the total revenue is for celebrity chef-branded goods. It's quite likely that there's a high total figure, but that none of them has a dominent share of market.

I'd also be willing to bet that Rachal Ray, with a much smaller line, does at least at well---if not better---than the chefs with full lines.

Another facet that might prove of interest: Now that the Food Network has it's own line of goods, how does that impact the sales of chef-branded stuff? I would suspect that due to price point and targeted demographic, FN is going to become a real player---but only if it expands into other outlets.

[MuskyHopeful]

I know they weren't part of the deal, but does anyone have any idea what the gross numbers might be for his eleven restaurants. Would his top location gross $2, $3, $4 million? Much more? What's a reasonable profit percentage goal for a restaurant like that, 10-20%?

I really have no idea. I think it was pretty interesting to see a number put on a chef's brand like that. If the brand was profiting $14m that doesn't seem paltry to me.

Kevin

[KyleW]

Originally Posted by MuskyHopeful

If the brand was profiting $14m that doesn't seem paltry to me.

Kevin

The brand wasn't profiting $14MM, it had $14MM in revenue. It had $8MM in EBITDA.

[MuskyHopeful]

KYHeirloomer mentioned 5x earnings. I assumed earnings were, well, earnings. If the revenue is $14mm, I agree, that doesn't seem like much.

Kevin

[KyleW]

Originally Posted by MuskyHopeful

I assumed earnings were, well, earnings.
Kevin

Earnings are indeed earnings But earnings are not not the same as revenue. Earnings are net and revenue is gross. Nor are earnings EBITDA (see below) which is the number sited in most artlicles I've seen about this deal.

All this obsures my original point, which was that in the grand scheme of things $14MM of revenue in 2007 doesn;t amount to much. In their reported 3 months period WalMart had earnings of $3.59 Billion


Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

An indicator of a company's financial performance which is calculated as follows:

EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.

EBITDA first came into common use with leveraged buyouts in the 1980s, when it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector - even when it isn't warranted.

A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it's key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA.

[KyleW]

Originally Posted by MuskyHopeful

I assumed earnings were, well, earnings.
Kevin

Earnings are indeed earnings But earnings are not not the same as revenue. Earnings are net and revenue is gross. Nor are earnings EBITDA (see below) which is the number cited in most artlicles I've seen about this deal.

All this obsures my original point, which was that in the grand scheme of things $14MM of revenue in 2007 doesn;t amount to much. In their reported 3 month period WalMart had earnings of $3.59 Billion


Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

An indicator of a company's financial performance which is calculated as follows:

EBITDA can be used to analyze and compare profitability between companies and industries because it eliminates the effects of financing and accounting decisions. However, this is a non-GAAP measure that allows a greater amount of discretion as to what is (and is not) included in the calculation. This also means that companies often change the items included in their EBITDA calculation from one reporting period to the next.

EBITDA first came into common use with leveraged buyouts in the 1980s, when it was used to indicate the ability of a company to service debt. As time passed, it became popular in industries with expensive assets that had to be written down over long periods of time. EBITDA is now commonly quoted by many companies, especially in the tech sector - even when it isn't warranted.

A common misconception is that EBITDA represents cash earnings. EBITDA is a good metric to evaluate profitability, but not cash flow. EBITDA also leaves out the cash required to fund working capital and the replacement of old equipment, which can be significant. Consequently, EBITDA is often used as an accounting gimmick to dress up a company's earnings. When using this metric, it's key that investors also focus on other performance measures to make sure the company is not trying to hide something with EBITDA. From Investopedia

[allie]

Allie, you may not be aware of how extensive the Emeril lines are. There is the stainless cookware, and clad cast iron, and three different lines of foodstuffs. Plus the books, which continue to sell in amazing numbers. And the TV shows. And special appearances.

Ok, I admit it, my ignorance in big business is shining through. I really didn't realize that stuff would be valued that much. I knew he had cookware....have seen it in the stores but know no one who has any of it. I see his seasonings, pasta sauces, etc. in the stores but see them on the clearance racks so often that it doesn't seem they sell that well.......why I haven't tried any of them. I guess it does make sense when you break it down.

[MuskyHopeful]

Originally Posted by KyleW

Earnings are indeed earnings But earnings are not not the same as revenue. Earnings are net and revenue is gross. Nor are earnings EBITDA (see below) which is the number cited in most artlicles I've seen about this deal.

All this obsures my original point, which was that in the grand scheme of things $14MM of revenue in 2007 doesn't amount to much. In their reported 3 month period WalMart had earnings of $3.59 Billion

Thanks. I know earnings are net. Revenue is gross. I had only read a brief article that mentioned the price Martha was paying. In your post you said revenue, KYHeirloomer said earnings. I believed the earnings when I should have believed revenue.

EBITDA as an indicator is kind of smoke mirrors, isn't it?

If you compare every company's earnings to WalMart, you must be a tough stock evaluator. LOL.

Kevin

ETFC

[Botanique]

Ahhhhh.... Money. Used to have it, now it's all tied up. However, I have true love -- not a fantasy kids, it exists

I hope Em is happy. The logistics are not, in my opinion, our business -- unless we own stock in either interest.

I believe in quality, not quantity.

How about a Cheftalk show? We have a number of winning personalities here

Cheers! S

[Mezzaluna]

How about a Cheftalk show? We have a number of winning personalities here

That'd be wild!!