WTHUNTER,

Here is my current thinking. Every restaurant takes $10million to open. Each restaurant makes about $750,000 in profit a year.

I don't care how popular they are, based on those numbers this business cannot grow earnings fast enough to justify its current P/E (even though it is low by today's market's standards) without taking on lots of debt. Since D&B are planning to open 21 restaurants over the next 3 years at a cost of approx $200million and only approximately $30million can come from retained earnings, they will have a debt to equite ratio at the end of three years of about 1:1 and they will still be taking on debt faster than they are growing equity.

As long as they continue to generate only 7.5% on invested capital, they cannot grow the business faster than that without increasing leverage. But the current P/E is only justifiable with growth rates vastly exceeding 7.5%.

I guess what I'm saying is that it just costs too much to open a complex compared to trh profits they are making from them. That just means that opening more complexes makes the business a worse capital sink than it already was.

Yrs,
StrikeItLucky