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Papa John’s 2024 Abbreviated Report

Papa John’s 2024 Abbreviated Report

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.

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IDR Unit Economics 2024 Abbreviated Report

IDR Unit Economics 2024 Abbreviated Report

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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PepsiCo 2QFY24: Waiting on a Rebound

PepsiCo 2QFY24: Waiting on a Rebound

Pepsi reported that price-conscious U.S. consumers are looking for more value, and even higher-income consumers are skipping out on expensive restaurants & adjusting to more affordable places to eat or staying at home (creating their own entertainment moments or fun moments at home). While consumers are cautious, they are willing to spend when they see value & will compromise on their decisions.

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Levi Strauss & Co 2QFY24: Strong Sales Driven by Women’s Segment

Levi Strauss & Co 2QFY24: Strong Sales Driven by Women’s Segment

Levi’s global women’s business delivered +22% y/y growth during the quarter in its direct-to-consumer (DTC) channel (strategic focus). Management reported domestic market share gains, with growth in its women’s denim bottoms (#1 in the U.S.) & in its key youth target group of 18- to 30-year-olds, while maintaining its dominant leadership position in men’s.  

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American Outdoor Brands 4QFY24: +10% Sales Growth Driven by Shooting Sports & New Product Innovation

American Outdoor Brands 4QFY24: +10% Sales Growth Driven by Shooting Sports & New Product Innovation

American Outdoor Brands reported +3% growth in full-year FY24 shooting sports category sales (solutions for target shooting, aiming, safe storage, cleaning & maintenance as well as personal protection) despite a -5% decline in background checks helped by strong 4Q results. Sales also benefit from the company’s ability to clear out some slower-moving inventory in the personal protection category. 

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Lowe’s Investor Presentation

Lowe’s Investor Presentation

While 2Q24 weather challenges have pressured seasonal category sales, DIY continues to improve while appliance unit sales are beginning to rebound (particularly refrigerators & freezers) with less promotional activity expected during 2H24. The Pro category is expected to continue generating strong results & Lowe’s expects to deliver positive FY24 comps.

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Conagra 4QFY24: Overall Sales Decline Despite Frozen Meal Rebound

Conagra 4QFY24: Overall Sales Decline Despite Frozen Meal Rebound

Conagra reported that a significant boost in optimism is driving higher demand for frozen meals & convenience from consumers who had been previously focused on make-from-scratch value meals & leftovers. Notably, the company’s frozen meal business has enjoyed a +4% compound annual growth rate over the last 40 years, representing the strongest grocery category. However, its foodservice segment sales continue to struggle along with depressed restaurant traffic.  

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General Mills 4QFY24: Sales Fell -6% in a Tough Macro Environment

General Mills 4QFY24: Sales Fell -6% in a Tough Macro Environment

General Mills reported volume & sales weakness in its retail, international & pet segments with a +4% increase in its foodservice sales driven by growth in breads, cereal & frozen biscuits. Around 87% of its food is now consumed at home & its food-away-from-home mix is not soon expected to increase given a challenging macro environment. In any case, management reported that food inflation is declining.

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Wingstop 2024 Abbreviated Report

Wingstop 2024 Abbreviated Report

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.

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Popeyes 2024 Abbreviated Report

Popeyes 2024 Abbreviated Report

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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NIKE 4QFY24: Sales Struggles Aggravated by Investor Lawsuit Tanks NKE Shares

NIKE 4QFY24: Sales Struggles Aggravated by Investor Lawsuit Tanks NKE Shares

NIKE reported a cautious macro environment although new product releases are working well. 1QFY25 revenue is expected to decline -10% y/y, reflecting: aggressive actions in managing its classic footwear franchises; continuing NIKE Digital challenges; muted wholesale order books; and a softer outlook in Greater China. Notably, the company was hit with a class-action securities fraud lawsuit alleging that it misled investors.

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DICK’S Sporting Goods 1Q24: Strong Top-Line Results!

DICK’S Sporting Goods 1Q24: Strong Top-Line Results!

DICK’S Sporting Goods reported that its 1Q results through 5/4/24 demonstrated that the chain is the go-to destination for sport & sports culture, a positioning that benefits from a very strong product pipeline from its key brand partners & its vertical brand portfolio. Management raised its full-year FY24 outlook & now expects comp sales growth in the range of +2% to +3%.

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Walgreens Boots Alliance 3QFY24: Weakness in U.S. Retail & Pharmacy Segments

Walgreens Boots Alliance 3QFY24: Weakness in U.S. Retail & Pharmacy Segments

Walgreens used targeted promotions & markdowns to drive traffic from very price-conscious consumers during the quarter, pressuring its near-term profitability. Management expects FY24 retail comp sales to decline -3% y/y. The company also reported that it is finalizing a significant multiyear footprint optimization program to close certain underperforming U.S. stores.

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CarMax 1QFY25: Affordability Issues Pressuring Sales

CarMax 1QFY25: Affordability Issues Pressuring Sales

Though CarMax’s average retail selling price declined y/y, unit sales during the quarter were pressured by vehicle affordability challenges aggravated by widespread inflationary pressures, higher interest rates, and tightened lending standards. In any case, management reported a slightly positive sales comp June month to date.

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Casey’s General Stores 4QFY24: Strong Food Sales Driven by QSR Trade-Down

Casey’s General Stores 4QFY24: Strong Food Sales Driven by QSR Trade-Down

Casey’s General Stores drove solid top-line & margin performance over the last 2 quarters. Management reported that while a couple of larger QSR chains are becoming sharper on value (with some aggressive combo offers), many franchisees must maintain elevated menu prices as they are not well positioned to absorb their inflated operating costs.

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Best Buy Co. Investor Conference: State of the Consumer & Brand Positioning

Best Buy Co. Investor Conference: State of the Consumer & Brand Positioning

Best Buy revealed third-party research indicating that the purchase of non-discretionary goods is pressured by the 50% of consumers who believe they are in a recession. In any case, the company’s long-term prospect benefits from a return to electronic product innovation & the preparation for an AI future which is expected to proliferate in TVs & the smart home.

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WK Kellogg Investor Conference: Marketing & Innovation Upgrades

WK Kellogg Investor Conference: Marketing & Innovation Upgrades

Management’s decision to spin out W.K. Kellogg Co (the North American cereal business) as an independent company from the much larger Kellogg Company reflected its opinion that it had been a “deprioritized” operation hidden in a conglomerate. The company’s 9% EBITDA margin reflects management’s initial success in implementing marketing & sales strategy improvements.

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Walmart Investor Conference: E-Commerce Progress

Walmart Investor Conference: E-Commerce Progress

Walmart’s sales success in the face of a difficult macro environment reflects enhanced e-commerce capabilities, including: delivery in less than 3 hours; & a larger product assortment (helped by third-party sellers) enabled by its increased fulfillment center capacity.

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Dave & Buster’s 1Q24: Tough Start to the Quarter

Dave & Buster’s 1Q24: Tough Start to the Quarter

Dave & Buster’s reported a complex & challenging macro environment, especially for consumers making <$75k. The company’s half-off food promotions during the second half of the quarter helped improve results and management reported benefits from its significant investment in remodels & upgraded tech while its new menu continues to drive a high attach rate & elevated consumer guest satisfaction scores.

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Highlights from Domino’s Pizza Investor Conference

Highlights from Domino’s Pizza Investor Conference

Domino’s has been driving profits by maintaining prices while its commodity costs have declined. A recent upgrade to its loyalty program & new AI tools are expected to drive market share gains & operational improvements. Notably, the year after initially launching its first loyalty program during 2014, its comp growth accelerated from +7.5% to +12%.

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Darden 4QFY24: Cautious Consumer

Darden 4QFY24: Cautious Consumer

Darden reported that >$75k households are concerned about inflation and, now increasingly the job market, driving lower transactions. There is price sensitivity in every aspect of consumer spending as non-discretionary inflation has been increasing faster than wages for a few years, pressuring discretionary spending. Management would like to see lower inflation in things that people have to buy & rent, including utilities & childcare.

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Domino’s 2024 Abbreviated Report

Domino’s 2024 Abbreviated Report

Domino’s is well positioned, ranked #1 in both delivery & carryout pizza with a focus on feeding families/groups at a reasonable price per person. While Domino’s is well positioned in the solid pizza segment, the chain must continue to find ways to offer its price sensitive customers with convenient, cost-effective delivery options that will keep them from choosing to cook for themselves at home.

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2024 Unit & Sales Growth Abbreviated Report

2024 Unit & Sales Growth Abbreviated Report

Restaurant Research’s Unit & Systemwide Sales Growth Report provides a 10-year history for 58 $1B+ chains including: (1) total units; (2) new units; (3) closures; (4) systemwide sales; and (5) system sales market share.

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Kohl’s Corporation 1Q24: Recovering From Last Year’s Discounts

Kohl’s Corporation 1Q24: Recovering From Last Year’s Discounts

Kohl’s reported that last year’s elevated clearance activity drove a -6% drag on its 1Q24 comps as the chain emphasized regular price sales which were strong through the first 8 weeks of the quarter before softening in late March & into April (reflecting spring seasonal product weakness). While its regular price comp sales did increase low single digits during 1Q24 (best performance since 2018), they were below expectations.

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Lululemon 1Q24: Flatlining Domestic Results Offset by International Strength

Lululemon 1Q24: Flatlining Domestic Results Offset by International Strength

Lululemon’s +10% revenue growth during 1Q24 was driven by a +35% increase in its international segment which compensated for +3% results in the Americas (on flat comps). International sales accounted for 21% of its FY23 total & management sees the potential for that mix to reach 50% over the long term. For the time being, the company’s growth is driven by product innovation, with significant upside noted in new performance fabrics & colors for women and ShowZero tech for men’s polos (hides the appearance of sweat).

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United Natural Foods, Inc. 3QFY24: Turnaround Underway

United Natural Foods, Inc. 3QFY24: Turnaround Underway

United Natural Foods has identified a current & potential customer base totaling $90B+ of sales which includes many conventional, specialty, natural & ethnic operators. This market is expected to grow at a low single-digit rate over the long term (led by natural & specialty volumes). While industry promotions continue to gradually increase, they remain a little lower than pre-covid levels in terms of frequency & depth.

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Dollar Tree 1Q24: Results Boosted by High-Income Demo Trade-Down

Dollar Tree 1Q24: Results Boosted by High-Income Demo Trade-Down

Increased sales & traffic during the quarter were driven by trade down from higher-income consumers into Dollar Tree stores, with specific strength in refrigerated & frozen consumables like its $4-5 pizza which can feed a family of four. Both its Dollar Tree & Family Dollar chains continue to gain consumables market share with dollar growth exceeding the market by +1.8% & unit growth exceeding the market by +0.8%.

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Wendy’s 2024 Abbreviated Report

Wendy’s 2024 Abbreviated Report

“Choose wisely, choose Wendy’s” QSR+ positioning is supported by a growth strategy designed to: reinforce its quality leadership around its cooked-to-order burgers (distinguished by square patties) made with fresh, never frozen North American beef; raise consumer expectations with its chicken products; leverage its equity in bacon (Baconator); and drive unique visits with salads, beverages, innovation & value. While Wendy’s is executing against a well-considered plan which magnifies its significant brand equity, the chain’s positioning would further benefit from an increase in frequency, average check, and store level profits.

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Red Robin Gourmet Burgers, Inc. 1Q24: Traffic Rebound Expected During 2H24

Red Robin Gourmet Burgers, Inc. 1Q24: Traffic Rebound Expected During 2H24

Red Robin’s North Star 5-point brand improvement plan is driving elevated guest satisfaction scores & should help reverse the chain’s sales pressure. Increased marketing for the brand’s 30 bottomless menu options is expected to drive traffic and Red Robin seeks to leverage its strong gourmet burger positioning to help turn around 2H24 sales.

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AutoZone 3QFY24: DIY Weakness Offset by Commercial Strength

AutoZone 3QFY24: DIY Weakness Offset by Commercial Strength

AutoZone reported that significant domestic discretionary spend pressure spans back to covid & that stressed consumers struggle to afford the cost of replacing brakes, starters, alternators, batteries, etc. (AutoZone’s core business) which can run a few hundred dollars. All the same, management is confident that cash-strapped consumers will continue to maintain their cars to save money over the long run.

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Dollar General Corporation 1Q24: Profits “Shrinking” Away

Dollar General Corporation 1Q24: Profits “Shrinking” Away

Dollar General reported that it expects value to continue to be the most important consideration for its customers across all income ranges while the promotional environment continues to climb to pre-covid levels throughout 2024. Sales mix pressure reflects that consumers continue to prioritize consumables over higher-ticket discretionary items. Shrink (theft) losses, which have been trending worse than expected, are expected to eventually improve.

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Cracker Barrel Old Country Store, Inc. 3QFY24: Start of A Brand Turnaround…

Cracker Barrel Old Country Store, Inc. 3QFY24: Start of A Brand Turnaround…

Cracker Barrel reported that its traffic is down almost -20% since 2019, including a -5% y/y decline during the quarter. However, management was encouraged by KPI improvements during the quarter (guest satisfaction, speed, hourly turnover & average skill level for key job roles) that are highly correlated with same-store sales growth. Notably, the chain’s struggles primarily relate to its dinner (35% mix) equation which lacks relevant, experiential factors.

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CAVA Group, Inc. 1Q24: Outstanding Results!

CAVA Group, Inc. 1Q24: Outstanding Results!

CAVA management reported that its differentiated cuisine (where taste & health unite) & its compelling value proposition are resonating more than ever. Resultantly, 1Q results included: a +30.3% y/y increase in CAVA revenue; CAVA same-restaurant sales growth of +2.3% y/y (+30.7% on a 2-year basis); net new restaurant growth of +22.8% y/y; and a doubling of its adjusted EBITDA to $33.3MM.

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Burlington Stores, Inc. 1Q24: Strong Performance Reflects No Price Increase in 2 Years

Burlington Stores, Inc. 1Q24: Strong Performance Reflects No Price Increase in 2 Years

Burlington Stores reported that investor concerns about lower-income consumers may be overblown. While lower-income shoppers were crushed in 2022 by a higher cost of living & the end of covid era benefits, income for this demo has stabilized over the last 5 quarters. Consumers are still fragile (as evidenced by the impact of delayed tax refunds in February), however inflation has declined & real incomes at the lower end are not shrinking the way they were in 2022. While the consumer situation is not yet improving, neither is it deteriorating.

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Hyatt Hotels Corporation 1Q24: Tech Company Business Travel +30%

Hyatt Hotels Corporation 1Q24: Tech Company Business Travel +30%

Hyatt Hotels reported that while it expects y/y overall growth rates to moderate, sales are significantly above pre-covid levels & there are no signs that consumers are reducing their leisure travel. Management expects another solid year of demand for domestic group meetings & events with reservations for U.S. full-service managed properties currently up +7% for May through December 2024.

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Choice Hotels International, Inc. 1Q24: Solid Quarter & Healthy Growth Prospects

Choice Hotels International, Inc. 1Q24: Solid Quarter & Healthy Growth Prospects

Choice Hotels International (lodging franchisor and leader in mid-scale & extended stay) reported that while it expected 1Q to be soft, April turned positive & management expects to see RevPAR (revenue per available room) improvement from here forward. Family travel is up this year & budgets are higher. Consumers continue to prioritize travel & employed consumers will travel even as they cut back on fast food & retail. Research shows that consumer resiliency is expected to continue & management pointed out that +5% middle-class wage growth continues to outpace inflation.

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Ross Stores, Inc. 1Q24: Nice Quarter!

Ross Stores, Inc. 1Q24: Nice Quarter!

Although Ross Stores performed well during the quarter, ongoing macroeconomic & geopolitical concerns are prompting management to remain especially focused on delivering a wide assortment of branded values in order to gain share.

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Arko Corp. 1Q24: Rural C-Store Consumer Weakness

Arko Corp. 1Q24: Rural C-Store Consumer Weakness

Arko reported that hesitant convenience store consumers are stressed by persistent inflationary pressure, including elevated gas prices. The company’s strategy is to appeal to customers who are buying less gasoline & cigarettes with attractive food service value (pizza, hot dogs & chicken). April sales performance, which resembled 1Q during the first couple of weeks, started to improve during the second half of the month.

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Grocery Outlet Holding Corp. 1Q24: Strong Top-Line Reflects Brand Positioning

Grocery Outlet Holding Corp. 1Q24: Strong Top-Line Reflects Brand Positioning

Grocery Outlet Holding is well positioned as a key player in the secondary sourcing market (offering a 40% average basket savings by buying surplus inventory from large consumer packaged goods suppliers & offering these products at steep discounts), especially with the recent bankruptcy of the $0.99 chain. Strong 1Q sales results were attributed to its compelling assortment of high-quality “wow” items (offering a treasure hunt experience) which drove traffic. Management reported that the closeout buying environment remains very strong (with great availability of product across all categories) & that SNAP payments have returned to pre-covid levels..

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