The loss of approx 200 stores which only a third are company...

The loss of approx 200 stores which only a third are company stores hasn't been felt yet.....130 stores not paying franchise fees comes straight of the top revenue lime and has negligible effect on expenses.

i like using the term operational leverage. Everyone should understand this, so let me explain operational leverage. Lets assume a business has gross margins of say 50% and net margins of 10%.......so for any additional 1 dollar in sales will add 50% to gross profit and 10% to net profit.......this is pretty much the norm for most businesses including the listed businesses.......but some businesses have operational leverage...where the additional sales will add much more 50% to gross profit and much more than 10% to net profit..........think Realestate.com a decade ago.........given its costs were largely fixed any additional revenue just dropped straight to net profit before tax......these are fantastic businesses if sustainable but i am getting off track now.

My point being that RFG had operational leverage......when they added a new franchisee store and revenue from same largely dropped straight to the bottom line......you got new revenue with largely no additional expenses......you dont have to pay staff or buy inventory etc.

The problem with operational leverage is it's a 2 bladed knife if you have cracks in your model.......just as rising revenues mostly drops to npbt then falling revenues will drop in ecactly the same way.