Corporate Insights

Darden reported that industry same-restaurant sales increased +0.9% and industry same-restaurant guest counts decreased -4.2% during its fiscal 1Q24. The chain’s comps outperformed the industry by +4.1% and its traffic outperformed by +4.3% (= flattish traffic for Darden during the quarter).

While general merchandise prices are lower y/y, they remain elevated compared to 2 years ago. As Walmart does not believe general merchandise and food (dry grocery) & consumable prices are ever going to completely disinflate, management suggests the need for a country-wide wage increase rebalancing.

DoorDash reported very resilient growth in its core U.S. restaurant category with frequency at an all-time high, showing that restaurant delivery has legs post-covid.

Modest y/y product cost deflation was driven by center-of-the-plate categories despite slight grocery inflation. +5% growth in independent restaurant cases and +7% growth in both healthcare & hospitality was offset by a -4% chain restaurant decline (reflecting weak traffic).

Aggregate advanced retail sales (including e-commerce) growth flatlined during 2Q23 & while government data for e-commerce sales performance by itself is unavailable during this period, Amazon’s performance during its recently released 2Q23 report looks solid. 

While eBay makes good points about the strength of its positioning (especially during periods of economic stress), its pool of buyers and gross merchandise volume has been steadily trending down, providing an important clue to consumer spending patterns.

Marriott’s 2Q23 systemwide constant dollar RevPAR (revenue per available room) comp increased +13.5% y/y worldwide, +6% in the U.S. & Canada, and +39.1% in international markets. This has important implications for consumer spending…

While consumer spending growth is currently running +7% to +8%, FedEx’s growth is closer to +2% to +3% because of the post-covid e-com reset & economic pressures which are shifting consumer spending share back towards in-store shopping for non-discretionary items (like groceries) & away from online purchases & delivery for discretionary goods.

Customers seek to stretch their budgets further & are focused on value. This is not the case for enterprises looking to implement AI, and Amazon is ready to capitalize on helping implement this burgeoning tech which is poised to transform customer service. 

Domino’s reports that there is only a 15% customer overlap between delivery & carryout. With certain low-income consumers pulling away from expensive delivery fees to eat at home, there is apparently another low-income consumer segment stepping up for carryout.