Boston Chicken, Inc.
Boston Chicken developed a new segment of the fast food restaurant business, home-cooked food. To take advantage of thisinnovation the company sought to grow rapidly by signing franchise agreements with large area developers. However, it also provided sizable loans to the developers to help them finance new restaurants. These loans have, in turn, been financed through public stock and convertible debt issues made by Boston Chicken. The case is used as a comprehensive security analysis case, covering strategy analysis, accounting analysis, financial analysis and valuation.
Questions to Guide/Be Addressed in Your Case Analysis:
1. Assess Boston Chicken’s business strategy. What are its critical success factors and risks?
2. How is the company reporting on its performance and risks? What are the key assumptions behind these policies? Do you think that its accounting policies reflect the risks?
3. What adjustments, if any, would you make to the firm’s accounting policies?
4. What questions would you ask management about the company’s performance?
5. How is Boston Chicken performing?
6. What assumptions is the market making about the company’s future performance and risks? Do you agree with those assessments?