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Restaurants

Chain Restaurants’ Property Values Worth more than Company

According to a recent Bloomberg report many publicly-traded restaurant chains such as Ruby Tuesday’s and Cracker Barrel are now worth less than the property they own. Ruby Tuesday’s for instance owns $1 billion in real estate, but only has a market cap of $468 million.

Is this another sign of tough times? Well the answer is two-fold.

The first reason for this “strange phenomenon” according to the report is attributed a “gradual rebound in commercial real estate values,” that means that the economy is picking up which is good. However, the second, and most telling factor shows a “lingering weakness in the restaurant industry” all across the board. This is due to changes, mainly a decrease, in consumer income. Many people just can’t afford to eat out as much as they used to and that’s a bad sign.

[via huffingtonpost.com]