I have listened to the whole call, and while I understand the chemistry of the pizza argument, the big 4 have such a massive distribution/sourcing network that introducing a new formulation for take and bake would not be a huge issue if they saw a growth opportunity. I concede that the fact that they have watched PM get so big should give us comfort. Did not hear anything on the call regarding the regulatory hurdle for the big guys so it’s down to brand protection and product formulation. I think a cool scenario would be for Pizza Hut to actually acquire Noble to get the take and bake concept and use it in their own locations (since the company does not have owned locations that would need to be sold to avoid duplication. They could just let the franchise agreements lapse as they expire). What do you guys think of that possibility? How old is the Chairman/CEO? How long is the typical franchise agreement at the take and bake store?

To show how conservative I think I’m being, my recent valuation case has the stock valued between $2-$6 with them having only 39 take n bake individual stores by 2017. The CEO thinks the can get 50 in Central Indianapolis alone and much more including the rest of the state.

Who knows if he is right.. we will see, but they already have three open in only a couple of months and six more for the first half of 2013.

At this price, I think this segment is really a free call option– and potentially VERY valuable.

I very much disagree. This is still a small market opportunity relative to the big pizza player’s market share. To attack this market and risk their reputation among their other stores does not make sense in my opinion.

For example, look at how much Domino’s spent to rebrand their pizza image with “fresh ingredients” every time. Look at how many stores they have in the U.S. Do they really want to risk that brand image for the take n bake market?

I just don’t think it is worth it. Also, they could have easily entered before Papa Murphy’s amassed 1300 stores. You may disagree, but not sure anything else I tell you will convince you then.

In terms of legal situation and pizza sauce/yeast vs. NROM’s method in take n bake, listen to call as it describes better than I can.

Best, Connor

My question remains largely a legal/regulatory one. Does anything about the food stamp regulation preventing Pizza Hut from offering uncooked pizzas in exchange from food stamps tomorrow?

Good question. The large pizza players (like Pizza Hutt) are very unlikely to enter the market. There are several reasons for this including:

1) It would compete against their delivery services
2) It would cannibalize their existing brand image
3) They would have to significantly change how they make their pizzas (their current method of sauce and yeast would not work in take n bake market)

For more on this, listen to the following interview which I did today with two other investors and the NROM CEO, Paul Mobley earlier today. He addresses this question directly in going through the investor presentation.

http://microcapclub.com/2013/01/microcapclub-invitational-noble-romans-nrom/