NoBull Posts
Switching Jobs Paid Big Time in April
While declining labor turnover was a common theme during the 1Q23 investor calls, wage data shows that there is still good reason for employees to job-hop.
-1.59% Spread Between the 10-Year & 3-Month T-Bill
The NY Fed’s yield curve model forecasts a 68% recession probability. Since 1960, a yield curve inversion (as measured by the difference between 10-year and 3-month Treasury rates) has preceded every recession on record.
ChatGPT: Shall We Play a Game?
AI is striking fear in the hearts of managers & employees. We decided to test things out…
April 2023 Senior Loan Officer Opinion Survey Provides Valuable Insight
Very recent SLOOS (Senior Loan Officer Opinion Survey on Bank Lending Practices) data shows a sharp tightening in the business loan market, with important implications for future economic growth.
Chair Powell’s Press Conference on May 3, 2023
Powell’s optimistic comments: the Fed is no longer saying that additional firming may be appropriate; the banking system is sound; and the case of avoiding a recession is more likely than that of having a recession.
Zillow’s 1Q23 Report Provides Housing Insight
Zillow reports that the current housing macro environment is very challenging with no clear indications of a turn. Supply continues to be low (as potential sellers are locked into their existing low-rate mortgages) & high demand to move supports a stable pricing environment.
Markets are Easily Destabilized by Precarious Bank Funding Model
Rapid interest rate hikes are stressing the prevailing banking business model which relies on fickle short-term deposits to fund long-term loans & investments.
Checking on the S&P 500
The VIX is a useful gauge of perceived stock market risk, and the lower its price, the better. Even though recent concerns about bank stocks are currently pushing the VIX higher, its price remains relatively low on a post-covid basis.
Amazon’s 1Q23 Reports on the Consumer & AI
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 1Q23 Results Shine Light on Low-Income Consumers
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.
RR Posts
Panera Bread
While Panera is well positioned for the long-term with a healthy halo and digital strength, near-term results may be tempered by the need for more value in a difficult economy and the need for a higher level of labor efficiency to support store-level profitability.
4Q:22 Investor Call Analysis
4Q:22 Investor Call Summary provides a concise analysis of how the $1B+ chains performed including sales, costs & popular promotions.
Restaurant Finance & 2H:22 Valuations
RR’s Finance & Valuation report is based on survey responses (equally weighted) from 60 finance companies including traditional cash flow lenders, sale leaseback companies, SBA lenders and equipment finance companies.
Unit Level Dashboard Mar 2023
4Q:22 margins improve sequentially & Y/Y. 2023 operating costs are moderating, but still above average.
Dashboard: Capital Markets
You couldn’t tell by February’s restaurant stock performance, but the industry is holding its own for now.
Church’s Texas Chicken 2023
Church’s is executing around a well-conceived strategic plan, the chain’s performance is currently challenged by ongoing inflationary pressures that are particularly hard on its core low income target market.
Sonic & Annual Databook Insights 2023
Sonic enjoys strong brand equity (particularly in core South & Central Plains markets) around its unique drive-in format with car stalls, friendly carhops and a plethora of specialty drinks & frozen treats. While Sonic’s unique positioning provides valuable brand equity, the chain’s prospects will also be a function of the success of its burger repositioning and, likely, the strength of its value equation given the current economic environment.
Dashboard: Unit Level
With restaurant stocks through the roof in January, it seems that investors are expecting a material improvement in unit-level profitability for 2023.
Dashboard: Capital Markets
Bullish investors’ sentiment towards restaurant stocks during January reflects an outlook for continued consumer resiliency and moderating costs. Notably, this seems somewhat contrary to McDonald’s base case for a mild to moderate recession this year.
New Unit Investment
New Unit Investment Report provides average building cost estimate details (excluding land) for the $1B+ Chains in addition to new store ROI, franchisor incentives, franchise fees and new prototypes.
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