Annual Financial Analysis – Restaurant

This downsized, publicly-traded restaurant serves the Seattle market with more than 80 dishes that include international, national, and local species of seafood. In addition to fish, they offer beef, salads and pasta dishes. Unfortunately, at this point, their diverse menu may not save them from potential financial failure. Our financial analysis of this restaurant shows serious problems which could easily lead to shutting their doors for good.

Download the restaurant financial analysis [PDF]

Revenues have been dropping yet the annual revenues are still not sustainable year after year, but with all the menu items the firm still can’t hold up its gross profit margins. It should be no surprise that operating expenses frequently match or exceed the gross profit margins.

Cash flows are slight to negative year after year. Working capital cash is decreasing substantially. Return on assets does not justify the risk of operating the business for the last four years. In fact the return on book assets has averaged a NEGATIVE 10% annually.

This is not what a well run restaurant should look like financially. Cash conversion cycle just meanders from good to bad to good to bad for no real reason other than lack of management oversight.

This company is a pernicious wealth destroyer of capital. Even if the food was great it would not justify this massive wealth destruction. The book equity has declined year after year. Check please!