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Papa John’s 2024

Papa Johns’ brand positioning emphasizes: long standing “Better Ingredients. Better Pizza. Papa Johns” messaging; menu innovation; digital strength; and effective marketing. While Papa Johns is executing around a solid strategy, its upscale positioning may have to wait for an economic recovery before it regains traction.

Papa John's Building

IDR Unit Economics 2024

RR’s Unit Economic Report provides: (1) FYE 2023 unit-level AUV along with COGs, labor, royalty, advertising, other operating and EBITDAR margin estimates for 46 chains; (2) a 5-year history of unit economic performance; (3) an analysis of food and labor cost drivers; (4) leverage ratio ranges from RR’s annual lender survey; (5) franchisee G&A & rent data; and (6) an overview of minimum wage trends.

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Dr. Dave’s Ag Lending Midyear Report

Dr. David Kohl stated in a Farmer Mac presentation that our current ag cycle is worse than the 2013 – 2020 “profit desert”. At that time, ag prices declined but operating costs were not inflated, and interest rates were at zero. The current ag cycle is marked by lower prices, higher operating costs & elevated interest rates – “margin compression on steroids”. One banker recently reported about a farmer who lost -$100k despite producing a record corn & bean yield.

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The Game of Inflation Number Rounding

June’s CPI increased +2.97% y/y, representing its best month since March 2021’s +2.61% results. Not a big deal compared to last month’s swings in food commodity prices. In any case, it now looks like the Fed is likely to wait until after the November election to give consumers a badly needed rate cut now that Biden’s re-election chances appear beyond resuscitation.   

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RR’s Promotional Database Analysis for June

While FSR players have lowered their average promotional pricing during June (-10% below the LTM average), the June stats for the QSR players show an LTM high average promotional price point even after McDonald’s rolled out its $5 Meal Deal.

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Paychex, Inc 4QFY24: Small & Medium Sized Business Update

Paychex reported that small & midsized businesses continue to face a challenging operating environment due to complex regulations, a historically tight labor market & persistent inflationary pressure. The company’s June small business employment survey reveals a generally stable market.

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Wingstop 2024

Wingstop is the only $1B+ QSR chain with an exclusive specialization in wings. Its “Wing Expert” brand attributes include: cooked-to-order chicken wings that are hand-sauced & tossed in a choice of 12 flavors ranked by heat; and convenient off-premise/digital access. While it is readily apparent that Wingstop is well positioned for long-term growth, the chain’s journey is vulnerable to dramatic wing price cycles that can periodically sabotage its value equation.

Wingstop Building

Popeyes 2024

Popeyes is the largest domestic player in the $1B+ QSR chicken segment and is known for its iconic “Love that Chicken from Popeyes” tagline which emphasizes the brand’s unique, flavorful Louisiana heritage. Popeyes solid execution against a strategic plan that covers all aspects of its business is confirmed by the chain’s ability to drive comp growth in a tough economic environment which necessitates the continued provision of compelling value to its core lower-income demo for the foreseeable future.

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Convenience Store Industry Stats

Casey’s General Stores provided a great slide on the C-store industry which is very fragmented & ripe for consolidation (63% of the industry is owned by operators with less than 10 stores). This has important implications for the restaurant industry as Casey’s continues to consolidate smaller operators while updating their operations with competitive food services offerings.

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Retail Company 2Q24 Preview

In this post, we outline the 2Q24 reporting calendar for the 75+ retail companies under our coverage & provide a snapshot of aggregate Wall Street analyst expectations for this group. Notably, analysts are looking for a +3% y/y median revenue growth during the quarter with nearly +6% EBITDA growth as the management teams continue to cut costs in a moderate growth environment.

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RR SubscriptionExtensive platform of reports & data which analyze & benchmark the $1B+ restaurant chains with a franchise finance orientation.
Consumer Weekly ReportSuccinct analyses of quarterly & investor presentations from the top 75+ consumer companies and key, timely economic insights.
Quarterly Benchmarking ReportsSubscription includes 7 report platforms that analyze & benchmark the leading 75+ consumer companies.
Digital MarketingExplore cost-effective ways to reach a target market consisting of restaurant executives, large multi-unit operators & franchisors.
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