Not content to just enjoy the growth and profits from its Wendy’s and O’Charley’s restaurant franchises, Meritage Hospitality Group (MHGU: PK) is now also looking to develop luxury hospitality projects in the Bahamas as well.Even though the Bahamian Island named Eleuthera seems like a mouthful, the company is aiming to acquire and develop the property, primarily along the oceanfront.
“Our opportunity is centered on the thesis that Eleuthera, a pristine Bahamian out-island, is in the early stages of a development cycle,” CEO Robert Schermer said in a recent press release. “We believe that Eleuthera is in its development infancy, similar to Hawaii 50 years ago. The geography of these properties represents one of the finest opportunities in the Caribbean.”
Just as it found proven brands like Wendy’s to franchise with, Meritage says it plans on partnering with a variety of hospitality brands.
“While Meritage’s role will vary from project-to-project, we hope these projects will provide opportunities to generate development fees, real estate sales and marketing fees, and land inventory appreciation,” Schermer added. “The total land inventory is estimated to cover 8 to 10 years of development, subject to absorption rates.”
In its most recent quarterly report, Meritage showed a decrease in its losses, down to $726,000 in Q1 2007 compared to $1.6 million in 2006. The company said the first quarter is typically more sluggish for the restaurant business, but that it has managed to fine-tune efficiency and other factors to improve on the loss.
“We have already reduced overhead by approximately $1.0 million which should be fully realized in fiscal 2007,” Meritage said in its report. The company currently operates 53 restaurants, with 49 of those being Wendy’s restaurants. It employs 2,000.
Meritage is also one of the founding companies of the Pink Sheets new exchange, OTCQX. It has a 52-week range of $2.50 to $5.50, and was trading at $3.50 at noon Wednesday.