Investing the Waffle House Way
Do you take your companies scattered, smothered, covered, or diced? Rick Munarriz offers sizzlin', hot-off-the-grill investment advice. Plus, eBay launches eBay Canada.
Updated: Dec 21, 2016 at 5:19PM
Published: Apr 10, 2000 at 12:00AM
Move over Warren Buffett. Benjamin Graham, Peter Lynch, George Soros? Step aside. I've found me the ultimate guru of financial wisdom -- one whose sage investment advice is well-served by our Rule Breaker collection. Those who have had the pleasure of roadside dining in the South know full well what I'm talking about -- that's right, Waffle House.
With 1200 domestic locations, it's awfully hard to miss the greasy spoon diner boxes that line the highways this side of the Mason-Dixon. To the unfortunate few who have yet to come across the golden signage with big-block lettering, pity. They've served a quarter of a billion waffles since the first store opened in 1955. I'll admit to claiming about a dozen of those.
The Waffle House menu offers many Southern basics, but no hungry forward-thinking investor can deny the wisdom that comes hot-off-the-grill with the chain's signature hashbrowns. You can have them done up with onions ("scattered & smothered"), cheese ("covered"), ham ("chunked), chili ("topped"), and/or tomatoes ("diced"). Awesome. What an amazing approach to portfolio management.
It's not my intention to shake the walls of professional money management. I'm not trying to imply that a short order cook can outsmart the Wise. Wait a minute. I think I am. Here are the six golden rules of investing, thanks to the stock savants at Waffle House:
Are you diversified? Have you picked out a few choice equities -- and preferably in a few different industries -- or do you take a shine to one line brokerage statements? No matter how strong your conviction may run on a particular company, heading out to Vegas and laying all your chips on a single wager is a poor use of adrenaline.
While I can't see Rule Breaker ever losing its Internet slant, there is always room for a company that can command juicy premiums on something as basic as coffee or out to revolutionize the medical research industry as we know it.
How intimate are you with the companies you own? I'm not asking that you spoon-hug your stock certificates every day, but how familiar are you with your holdings? Being on a first-name basis with a stock is good. Being on a first-ticker-symbol basis is bad, bad, bad. Peter Lynch has always advised investors to buy what they know. And, while he's no Waffle House side dish, he's right. Warren Buffett has also been a major believer in understanding the companies one owns.
Some of our most successful investments, in companies like America Online(NYSE: AOL) and Iomega(NYSE: IOM), came from daily immersion. While they were still young, and possibly unproven, we laid out lawn chairs at the grass roots level and it made for the easiest of buy decisions.
A diamond in the rough is great, but one that has been certified by at least one gemologist is even better. A stock under analyst coverage will be more compelled to come clean with the investing community when results are running ahead or behind expectations. Naturally. Someone has to project projections in order to expect expectations.
This certainly doesn't excuse an investor from due diligence. No way. External voices are not crutches, they are tools. Analyst coverage is a great way to check your math after you have done the homework. Don't feel guilty if you become illuminated along the way. That's the beauty of consulting a second mind. Or a third. It's why our recent launch of Motley Fool Research is so important, but only to the extent of your thirst for knowledge and validation.
Is the balance sheet bulked up? A great concept will always fall short if the financials are too skimpy to see it through to completion. You'll want to keep an eye on those accounts receivables. There can always be too much of a good thing.
But if you strive to seek out the cash-rich and the debt-averse, you will rest a lot easier at night. At the very least, make sure the company reports way more in current assets than in current liabilities.
Not all Fools have been receptive to the AOL buyout of Time Warner(NYSE: TWX), and a major sticking point has been the large amount of debt the company will be assuming in the process. I'm from the optimistic camp. I favor the deal. For an entertainment and broadband hungry online giant like AOL I think the new company will be great. I reflect back to my six-year-old's keen cartoon-influenced insight that AOL did what Wiley E. Coyote has never been able to do: land RoadRunner. But I too worry about these mixed balance sheet marriages.
Are you buying the top dog? Why would you buy anyone else? Let's head out to the thoroughbred race track. You get the program. I'll get the hypothetical. Imagine if you could freeze-frame any live racing event. You see the horses all laid out down the stretch. Now, imagine if you were able to place a bet at that point. The payout odds would be huge for the laggards, sure, but wouldn't you be inclined to side with the leader?
Now, sometimes there will be a late starter coming round the bend with enough momentum to turn heads. You can't ignore this. Owning the top buggy whip maker or the top banana in themed restaurants isn't going to get you very far. If the upstart seems genuinely capable of evolutionary change, rethink your strategy to consider who will be the top dog in the future. Otherwise, don't let the cynics tell you that quantity and quality can't come hand in hand.
Remember, more often than not, the "next Microsoft" turns out to be the "last Iridium."
One of the joys of equity ownership is just that: ownership. With that comes the temptation to dream big and let subjectivity brand you an optimist. Now is the time to temper your smothering. Don't get carried away. Never resist the exercise of slicing a company into pieces to see what makes up the sum. Objectively.
It's all too easy for one tainted sector to poison an otherwise sound company. It's also possible for a breakthrough in one subsidiary to create some tremendous upside for the company as a whole.
Concepts like America Online and Amazon.com(Nasdaq: AMZN) were actually picked over by higher ranking execs than Steve Case and Jeff Bezos at the companies they worked for. A cash cow like Post-it notes came out of a 3M(NYSE: MMM) project gone bad. So, peel away the layers of a company. If you find yourself in tears you either wound up with an onion or a pretty lousy stock.
Speaking of welling up, today we see eBay(Nasdaq: EBAY) closing close to 14% lower on the very day it launches eBay Canada. Granted, the tech stocks were weak as the Nasdaq Composite fell nearly 6% today. Our collection of stocks also shed more than 7% with Celera(NYSE: CRA) giving back some of last week's spectacular gains.
eBay's new trading site offers the same cozy feel of the eBay original. A few categories, like CASCAR (Canada's NASCAR auto racing equivalent), have been added -- though the race to be the first listing in that niche was still on earlier this afternoon.
On the surface, the new venture might not seem all that necessary. The flagship site already has more than 175,000 Canadian sellers. Close to half of the 4.3 million auctions on eBay right now have checked off on global delivery. Why the localized touch?
Aesthetically it makes perfect sense. Now Canadian buyers and sellers won't have to sift through millions of auctions they can't participate in. Canadian currency also becomes the primary listing price. But, more than that, it sets up just one more barrier to entry for any company with delusions of competing against eBay.
Besides, until we get a Waffle House built up in Canada, this is at least one brand of hospitality we can graciously export.
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Why Is Waffle House Going After Companies Like UPS and Fedex?
NEW YORK (TheStreet) -- It's not just Uber that wants to own a piece of the sharing economy -- Waffle House wants to get in on the act, too.
The restaurant chain is taking aim at the package delivery business, joining forces with a fellow Atlanta-based firm, start-up Roadie.com, to use drivers "already headed in the right direction" as the backbone of a neighbor-based shipping service.
Roadie is an app-based platform that connects people who have items to send with drivers who frequent Waffle Houses. According to the Roadie website, drivers could earn cash for deliveries, but the restaurant chain plans to offer free food and beverages, and "provide a convenient meeting location for both drivers and senders." Roadies will get a free waffle upon downloading the app and a free beverage each time they deliver a package to the Waffle House nearest its intended recipient, who can then stop by the restaurant to pick it up.
No mention was made about how much the service will charge to have a package delivered.
The new local service will start off as a small and unlikely challenger to shipping industry leaders UPS (UPS) - Get United Parcel Service, Inc. Class B Report and FedEx (FDX) - Get FedEx Corporation Report . UPS said it delivers nearly 17 million packages each day in 2013, the last year for which the company has made figures available. FedEx says it averages 10.5 million package deliveries each business day, while the U.S. Postal Service says it averaged slightly more than 10 billion packages each day in 2013.
UPS shares were up 0.38% to $102.16 and FedEx was down 0.17% to $178.00 in early afternoon trading in New York.
Roadie's goal is to put "unused capacity in passenger vehicles to work by connecting people with stuff to send with locally available drivers." The company is backed by a number of investors, including the UPS Strategic Enterprise Fund, Eric Schmidt's TomorrowVentures, David Bonderman founder of TPG Capital, Guggenheim Partners' Executive Chairman Alan Schwartz and Square co-founder Jim McKelvey.
Waffle House CEO Walt Ehmer says of the new alliance: "For the last 60 years, Waffle House has been a place for travelers and a preferred meeting place for our customers. Roadie combines the two making it easy for senders and drivers who love waffles to meet at the nearest Waffle House. And who doesn't love waffles?"
Roadie founder and CEO Marc Gorlin adds "Waffle House provides a friendly, comfortable place for our folks to meet, and grab a plate of scattered, smothered and covered while they're at it."
The breakfast, lunch and dinner-serving restaurant chain plans to promote the Roadie app with in-store signage, as well as through social media and email outreach to its Regulars Club members. Roadie will offer members of its community a variety of special offers through its free mobile app, which is available for download in Apple's (AAPL) - Get Apple Inc. (AAPL) Report iTunes Store and from Google (GOOG) - Get Alphabet Inc. Class C Report Play.
Waffle House has more than 1,750 restaurants located near interstate off-ramps and highway interchanges in 25 states. The stores closest to New York City are located in eastern Pennsylvania.
-- Written by Gary Krakow in New York.
To submit a news tip, send an email to [email protected]
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.
UPDATE: April 14, 2020
Waffle House announced via social media that their precious mix is back in their online store.
Each bag contains enough mix to make at least 20 waffles, and retails for $15. Now go forth and win breakfast.
ORIGINAL STORY: April 10, 2020
24-hour restaurant chain Waffle House is usually a very reliable spot. Any time more than a handful of its locations have to close, it means FEMA is probably monitoring the “Waffle House Index” to understand the size and scope of a natural disaster. But with the COVID-19 pandemic inspiring a widespread, record-setting wave of closures at more than 600 locations, fans of the southern staple have been desperate for their waffle fix over the past few weeks.
That likely explains why the company’s waffle mix has been selling like hotcakes (sorry) recently. According to CNN, Waffle House’s specialty Waffle Mix sold out in a matter of four hours when it went up on the company’s website earlier this week.
Sold in units of three 13-ounce bags, his “Signature Sweet Cream” Waffle Mix comes with all the batter you need to make five or six waffles. For $20 plus shipping, that yields about 15 to 18 waffles, so not too bad of a deal all things considered.
Given that most of the restaurants closed by COVID-19 from coast to coast operate on razor-thin margins, Waffle House is far from the first place to sell some of its ingredients to customers. Restaurants ranging from individual bistros all the way up to Panera and Subway have pivoted to sell off their wholesale shipments, helping to help their fans skip the grocery store and acquire bulk foods while bringing in at least some revenue in the hopes of staying afloat.
Though there’s no specific timeline for when Waffle House’s popular Waffle Mix will be back in stock, that’s not the only thing in their web store that people might want at a time like this. You can also stock up on coffee or even a Waffle House-themed version of Monopoly. And if there was ever a time to actually sit down and play a game of Monopoly from start to finish, it’s pretty much right now.
Last Updated on 06/29/2021 by GS Staff
Can you purchase Waffle House stock?
Waffle House is a private company and is not publicly traded. The general public cannot purchase shares of Waffle House stock on a stock exchange. You can, however, purchase shares if you work for Waffle House and its subsidiaries. According to a Wall Street Journal article from 2019, the employee-owned stock has consistently increased every year over at least 57 years. In fact, after five years, a Waffle House manager can make over six figures with stock options. It’s not an easy job but the pay appears to be quite nice once your time is put in.
Will Waffle House Ever Be Public?
Waffle House has been a private business since the first restaurant opened in 1955 in Avondale Estates, Georgia. We would speculate that the company will remain private for the foreseeable future. The founders, Joe Rogers Sr. and Tom Forkner, both died in 2017 but there have been no significant changes to the business since their deaths. While anything is always possible in the world of business, don’t expect a Waffle House IPO any time soon. The franchise model likely allows the company to operate without taking on significant debt or require it to raise funds through a public offering.
Waffle House Publicly Traded Competitors
Since you cannot purchase Waffle House stock, you may wish to look into a few of its primary publicly traded competitors for investment. Some of these notable companies are:
- IHOP – IHOP or the International House of Pancakes trades under the stock symbol DIN. It is owned by Dine Brands who also owns the popular restaurant chain, Applebee’s. IHOP was first opened in 1958 and now has over 1770 restaurants in all 50 states, DC, Puerto Rico, and Guam. The restaurants are 100% franchised owned. 2020 revenue was $689.27 million for Dine Brands.
- Denny’s – Denny’s trades under the stock symbol DENN. The company has approximately 1,650 franchised, company-owned, and licensed restaurants in the U.S., Canada, Puerto Rico, Philippines, and several other countries. Similar to Waffle House, its locations are open 24/7 (at most locations). Its breakfast menu is the most popular with guests and is available any time of the day. 2020 revenue was $288.61 million for Denny’s.
About Waffle House
Waffle House is headquartered in Norcross, Georgia, and operates in 25 states with a strong presence in the South. There are roughly 2,100 locations with the most locations being in Georgia, North Carolina, Florida, South Carolina, and Alabama. The company has stated that it is the world’s top seller of waffles, ham, pork chops, and T-Bone steaks. Waffles, being the company’s biggest moneymaker, is why the company is called Waffle House. While Waffle House is a private company and its financials are not disclosed, it is estimated that the company brings in over $1 billion in revenue per year. If you live in a place like Michigan where Waffle House doesn’t exist, this may be hard to believe. However, a quick trip to Georgia or the Carolinas and you will have no trouble understanding how huge Waffle House really is.
Image Credit: Bob B. Brown/flickr
House ticker waffle
Waffle House Stock
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Waffle House Inc. - Company Profile, Information, Business Description, History, Background Information on Waffle House Inc.
Norcross, Georgia 30091
History of Waffle House Inc.
Waffle House Inc. (not to be confused with Waffle House of Indiana) operates a chain of about 1,000 Waffle House Restaurants located in 20 states. The restaurants, which are either company-owned or franchised, pride themselves on serving good food fast, at a reasonable price, in a diner atmosphere. The menu includes everything from waffles and eggs to steaks and salads. Family-owned, Waffle House Inc. is known for being an extremely private company.
Waffle House, according to information released in 1995 for the company's 40th anniversary, began as the dream of two neighbors who envisioned a company dedicated to both its customers and employees. The partners wanted to create a place where friends and neighbors could get together to enjoy good food served with a friendly smile. On Labor Day in 1955 they opened the first Waffle House restaurant in Avondale Estates, Georgia, a suburb of Atlanta. The first Waffle House restaurant was a smash, and the owners soon opened other Waffle House eateries throughout Georgia.
Waffle House made a name for itself during the late 1950s and 1960s by living up to its promise of "Good Food Fast," which became one of the company's mottos. Waffle House located many of its restaurants along interstates, and truckers and travelers came to know that the Waffle House sign meant good food and friendly service. The company eventually spread outside of Georgia's borders and into neighboring states including Alabama, Louisiana, North Carolina, South Carolina, and Florida. As the U.S. interstate system expanded throughout the Southeast during the 1950s and 1960s, new Waffle House outlets were added along major arteries like Interstate 75, which trails from the southern tip of Florida through Tennessee to northern Michigan, and Interstate 85, which traverses Virginia and extends southwest into Alabama. Waffle House eventually built up a network of several hundred restaurants throughout the Southeast.
Waffle House also began franchising its name and concept to individual operators, which allowed the company to expand without assuming heavy debt and without having to sell shares to the public. Keeping Waffle House private was very important to its owners, because taking the company public would have required them to release financial and operating information. "There are three types of companies," explained Bryan Elliott, analyst at Robinson-Humphrey, in the September 19, 1988, Atlanta Business Chronicle. "There are public companies that trade stock and have to share information. Then there are private companies that don't trade stock but are somewhat open about their operations and numbers. And then there are the companies that won't even acknowledge that they exist. And that is Waffle House. They are a very, very private and tight-lipped company." For that reason, details about the growth and expansion of Waffle House and about the lives of its founders and executives are scant.
During the 1970s and 1980s, the roadside restaurant market became dominated primarily by two styles of eateries: fast-food chains like McDonald's and Burger King, and large sit-down restaurants like Shoney's and Cracker Barrel. The traditional diner-style eatery, in contrast, declined in popularity, with the chief exception of Waffle House. Indeed, Waffle House restaurants in the 1990s looked much the same as they did 40 years before. An exposed grill was located behind a long counter, at which customers could sit on stools. Other guests were seated in the booths that lined the restaurant. Waffle House continued to advertise solely through word-of-mouth, relying on its loyal clientele instead of promotion to reach new customers.
Even the Waffle House menu of southern fare had changed little since the 1950s. The restaurants still emphasized their famous T-bone steak, waffle, and egg meals, and claimed to have "America's Best" coffee. Meals that became a tradition at Waffle House included the "King Size T-bone & Eggs" dinner, which included a ten-ounce steak, hashbrowns, and two eggs or a salad--for just $8.99 in 1995. Other signature menu items included pecan waffles, Bert's chili, raisin toast, and cheese 'n' eggs. Waffle House took particular pride in its hashbrowns, which it served six different ways: "scattered" (on the grill); "smothered" with onions; "covered" with cheese; "chunked" with hickory-smoked ham; "topped" with chili; and "diced" with fresh tomatoes.
Besides its proven menu items, Waffle House prided itself on cooking all of its meals to order, and on using only the best ingredients in its food. Waffle Houses used only Kraft cheese, Minute Maid orange juice, and Heinz sauces, for example. The company also distinguished itself by staying open 24 hours a day and 365 days each year, which let highway travelers know that they were always welcome. In addition to proclaiming itself "America's Best Place to Eat"--a slogan that supplanted "Good Food Fast"--Waffle House touted its organization as "America's Best Place to Work." Workers were referred to as associates, rather than employees, and the company sought to provide good jobs and careers for them.
Although Waffle House's operating strategy had changed little by the 1980s, the size of the chain had. In 1987 Dun & Bradstreet reported that Waffle House had 351 franchisees in addition to its network of company-owned stores. It was also reported that Waffle House employed a work force of 4,500 people, had a financial worth of roughly $60 million, and had total assets of about $81.2 million. Nation's Restaurant News estimated that in 1987 Waffle House had generated about $210 million in sales, up from about $175 million a year earlier, including receipts from franchise units. Excluding franchise sales, company revenues were about $87.5 million, which was up only slightly from a 1976 estimate of $84.6 million.
Waffle House remained a closely held company, with virtually all of the ten million shares of stock owned by company employees and the company still being run by the Rogers family. Joe W. Rogers, Jr., served as president. (His father, Joe W. Sr., had co-founded the company and presided over its expansion during the 1950s, 1960s, and 1970s.) M. Michael McCarthy, who joined the company in 1973, served as secretary-treasurer. J. Michael Upton, a former general manager of Old Hickory House, was a vice-president, as was Robert Bowman, who had worked with Arthur Andersen & Co. before joining Waffle House in 1976.
Going into the late 1980s Waffle House was operating in ten states; Alabama, Arizona, Louisiana, Florida, Georgia, Mississippi, Oklahoma, North Carolina, South Carolina, and Texas. It was also operating two subsidiary companies; WHI Inc., a real estate holding company that had its own vending machine subsidiary called Metro Distributors Inc.; and LaVista Equipment Supply Co., a designer and retailer of restaurant equipment. The real estate company reflected Waffle House's hefty property holdings: unlike many other chains, Waffle House owned much of the property on which its restaurants were built. According to Dun & Bradstreet in 1987, retained earnings had increased and the company's total debt was in line with its net worth. McCarthy confirmed in 1988 only that company sales were up in 1987 as a result of new restaurant openings, higher menu prices, and increased sales per store.
Waffle House grew rapidly partly as a result of its franchising. Announcements in 1988 made by Waffle House management, however, cast doubt on the financial success of the franchising strategy. Nancy Wilson, an employee in the franchising division, told the Atlanta Business Chronicle that the company planned to cease all new franchising efforts, making the statement as part of an effort to exclude Waffle House from the newspaper's list of top Georgia franchises. Joe Rogers, Jr., refused to confirm the report, stating, "It's our policy never to share information with the press."
Some industry insiders at the time cited the rumor that Waffle House had stopped franchising as evidence that the chain was stagnating in a rapidly changing restaurant industry and that it needed to update its image and menu. However, Waffle House didn't change much during the next few years, nor did executives squelch the franchising program. In fact, Waffle House expanded at a rapid clip during the late 1980s and early 1990s, opening restaurants in existing markets and branching out into Arkansas, Colorado, Illinois, Indiana, Kentucky, Missouri, New Mexico, Ohio, Tennessee, and Virginia. Interestingly, the stores in Indiana were named "Waffle and Steak" because the Waffle House name was already being used when Waffle House Inc. entered that state. Waffle House celebrated its 40th anniversary in 1995 by opening Unit #1000, the chain's 1000th store. The shop was located just a few blocks from the site of the original Waffle House #1 that had opened its doors in 1955.
Principal Subsidiaries: WHI Inc.; LaVista Equipment Supply Co.
- Private Company
- Incorporated: 1955
- Employees: 6,000
- Sales: $79.2 million (1993 est.)
- SICs: 5812 Eating Places
Further ReferenceCooper, Ron, "More Waffle Houses Making Themselves at Home in Area," Business First-Louisville,December 6, 1993, p. 1.Fullam, Peter, "SunQuest Systems Reveals Plans," Indianapolis Business Journal,October 20, 1986, p. 1.Welch, Mary, "Is Waffle House Cooking Up Changes? Restaurant Halts Franchise Growth," Atlanta Business Chronicle,September 19, 1988, p. 3A.
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