Restaurant Research’s Capital Markets Dashboard for May 2024

May 1, 2024 | Dashboard, Restaurant Research

The S&P 500 declined -4% in April, slightly bested by QSR’s median -3% results but far outperforming FSR’s -8% median decline. Granted, there are a lot of disappointing macro, macro global & national political/military concerns. Further, there is the issue of the Fed’s reluctance to give the working poor a break by cutting rates. However, the companies are not doing so bad and the stock market is about earnings, right?? 

Overall Market Performance

  • A weak April 2024 stock market performance reflects investor capitulation regarding the hope of a potential Fed rate cut any time soon after recent inflation numbers came-in hotter than expected. Notably, a rate cut would be a bad thing for the US$ which must increasingly compete for its role as the world’s reserve currency.
  • Resultantly, we see the 10-year’s rate approaching 5% with strength in silver & gold inflation hedges.

Asset Class Price Performance Graph

QSR Stock Performance

  • Fast-food stock performance was particularly punishing during April for most all the names except for the usual cadre of growth players including Chipotle which reported an outstanding 1Q24.
  • Wendy’s strong April stock performance was notable given that the company is not expected to report until 5/2. We’re expecting great things!
  • In any case, we note that the chains are not dependent on Fed rate cuts to drive comp growth – sure it will help lower income consumers, but the fast-food players have been making do OK with high rates for the time being. This is why we would protest a -17% decline in JACK shares for instance…

QSR Stocks Performance

FSR Stock Performance

  • Brinker’s EAT shares increased +8% on 4/30 (explaining its entire April stock performance) after reporting decent results which included a +3.3% y/y comp increase (+3.5% for Chili’s & +1.7% for Maggiano’s) which was attributed to increased menu pricing & favorable dine-in traffic.
  • This followed Darden’s report earlier in the month that its blended -1% comp decline during 3QFY24 reflected: a -1.8% decline at Olive Garden; a +2.3% increase at Longhorn Steakhouse; and a -2.3% decline at its Fine Dining restaurants. Investors were none too pleased as evident by DRI’s -8% April decline.
  • So, the question for FSR investors: will Darden or Brinker be more representative of 1Q24 sit-down segment results? We will see…

FSR Stocks Performance

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