2Q23 Investor Calls & Same Store Sales

Aug 28, 2023 | Insights, Restaurant Research

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2Q23 Company Summary

FSR Commentary

A challenging y/y comparison reflects last year’s “revenge buying” with heightened purchases of alcohol, dessert, and appetizers.
Texas RoadhouseWhile management reports strong demand with consumers trading down into Texas Roadhouse, new customers are selecting value items, driving alcohol and entrée mix declines.

6.3% y/y growth for company stores reflecting +9.4% price and +4.6% mix offset by a -7.7% traffic decline. Notably, quarterly dining room traffic improved y/y.

BJ’s Restaurants
BJ’s restaurant-level margins reached its highest level since covid, with better-than-expected COGS & labor margins.

Darden reported that GDP weakness over the last 4 quarters is driving associated traffic declines across the restaurant and retail industries.
Denny’sThe return of its signature Super Slam (starting at $7.99) was a highlight of the quarter, with value mixing at 16%, up slightly from 15% during 1Q23. 75% of Denny’s restaurants operate 24 hours/day with a goal of getting to 90%.  
IHOPIHOP is focused on providing guests with more breakfast favorites, fresh ingredients, and great value.

Results reflected weak traffic trends, difficult comps and a slightly more hesitant consumer.

QSR Commentary

WingstopA clear line of sight to a $2MM AUV is based upon a strategy to: build brand awareness; drive menu innovation; expand delivery; and progress in digital transformation & data-driven marketing. Also, the brand has an opportunity to increase its penetration among heavy QSR users (those that drive 60%+ of all QSR visits) who have either not heard of, or have not tried Wingstop.
McDonald’sThe chain’s positioning benefits from leading value for money and affordability scores.
Burger KingResults driven by: effective marketing initiatives focused on its flagship Whopper; enhanced marketing analytics; and continued operational improvements which are helping to improve traffic trends. 
Jack in the BoxResults reflected continued staffing and operating hours improvement, particularly during late-night which benefitted from Jack’s Snoop Dogg promotion. 
ChipotleAs if Chipotle’s sales aren’t impressive enough, this leading fast-casual chain is investing in operational improvements sufficient to create additional throughput to meet demand.
StarbucksStarbucks’ digital prowess helped facilitate an all-time high food attachment during its fiscal 3Q23, driving a higher ticket and record average weekly sales.
KFCBuilding on 1Q momentum behind wraps, KFC launched its hand-breaded original recipe chicken nuggets (with 100MM nuggets sold in the first 8 weeks after launch) to expand its off-the-bone chicken offerings. 
Wendy’sResults benefited from: breakfast & late-night daypart strength; digital strength; and a focus on upselling big sandwiches & higher priced value offers.
Popeye’sSales benefited from: an extension of its chicken sandwich platform; Ghost Pepper Wings; beverage & dessert innovation; and +22% growth in digital sales.
Taco BellResults driven by: campaign to liberate Taco Tuesday in partnership with LeBron James; successful promotions of its $5 Cravings Trios & Deluxe Build Your Own Cravings Box; and extended hours that boosted breakfast & late-night daypart sales.
Shake Shack2Q23 in-Shack traffic increased +4.7% y/y with a +10.7% y/y increase in same-Shack sales in its in-Shack channel as more guests, who are migrating to their in-person habits, are using Shake Shack’s new kiosks which are driving mix & check.
SweetgreenThe fast-casual chain, Sweetgreen, which serves food with seasonal & organic ingredients, continues to gain financial and operational ground even as its comps slowed during the quarter.
Pizza HutResults helped by incremental individual occasion transaction growth primarily driven by sales of its attractive priced Melts platform (with new flavor profiles added during the quarter). 
Domino’sCarryout comps increased +5.6% y/y while delivery comps declined -3.5% y/y. New Uber Eats partnership should help drive sales growth and extend reach to a higher income demo. 
Papa John’sComp decline consisted of +2.2% company stores/-2.3% franchised stores. Company stores enjoyed ticket & traffic growth, while franchisee ticket growth (reflecting aggressive price increases) was offset by lower traffic. 

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