Inside Wall Street
QUEUING UP FOR DEALS ON MEALS
It isn't a new television company or another cable TV group. Transmedia Network caters to people who like to eat at fancy restaurants without paying fancy prices. Its charge card offers a 25% savings on meals in some 700 large and small eateries, mainly in Connecticut, Florida, New Jersey, and New York. Recently, the idea has proven appetizing to several money managers. Transmedia shares have jumped to 12 from around 3 in February.
Here's how it works: Using Transmedia's card, which costs members $50 a year, patrons get 25% off the tab (before taxes and tip) on their Visa or MasterCard bills at participating restaurants. Transmedia advances the restaurant, say, $5,000 in exchange for credits worth $10,000 to its card members. The $10,000 in tabs are returned to Transmedia, which has made $2,500 on the deal after rebating 25% to the restaurant patrons. The restaurant clears $1,000, since the cost of food and beverages usually amounts to only 40% of the gross tab.
Transmedia expects its membership to grow to 100,000 by the end of 1992--double the current number. Business is so good, says one big investor, that he sees sales growing to $13 million this year, $23 million in 1992, and $30 million in 1993, vs. $7 million last year. Earnings could rise to 50~ a share this year, 80~ to 90~ in 1992, and $1.25 in 1993, vs. 15~ in 1990. This pro thinks Transmedia is worth $24 a share based on its growth potential.GENE G. MARCIAL