I'm shorting Krispy Kreme today

[DesertCat]

Ok, I've tried multiple ways to work out the model. I've reviewed the bankruptcy filing of "freedom rings", their PA franchisee (talk about ugly financials!), and looked through every SEC filing I could. The simplest way to approach the EBITDA is to look at their last 10Q (Q3, 2004). In it they broke down their segment profitability as follows

Company Stores $12.9M
Franchises $4.9M (royalties)
KKM&D $8.1M (Equipment/Supplies)
G&A -12.3M

It nets out to about $13.6M, or $54M in annual EBITDA. Since then however some things have changed. I'm convinced company stores cannot contribute any positive cash flow due to their declines. Franchisees are hurting as well, I'm convinced their contributions should be at least 20% less, but probably even less than that. KKM&D can no longer sell equipment which provided it's best margins, but I'm just ignoring that and applying their old margins to the new sales numbers.

I end up with the following (annualized)

Company Stores $0M
Franchises $16,093
KKM&D $30,274
Net EBITDA $46,366

So in this optimistic scenario, they can't even cover G&A anymore. If they can cut G&A in half, they'd have about $22M in EBITDA. Which is likely very close to their interest costs. No room for error here.