Restaurant Research’s Capital Markets Dashboard for July 2024

Jul 1, 2024 | Dashboard, Restaurant Research

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An increasing disconnect between the dialogue of waning consumer strength (representing the single largest GDP growth driver), shocking geopolitical & domestic political risks and Wall Street’s outperformance is well worth noting!

Overall Market Performance

  • Last month we discussed how crypto & hard assets enjoyed such strong performance during May only to disappoint in June (see below). This time around we see extremely strong results for stocks like: FedEx; tech leaders like Tesla, Oracle, HP & Apple; and entertainment companies like Caesars, Carnival & Expedia (summer vacations). It seems that the risk-off trade is back!
  • However, we believe it is worth repeating our comment from last month: Surprisingly, stock indexes have been doing well despite: a growing acceptance that we are not getting interest rate cuts any time soon; material & intensifying geopolitical tensions (were Russia subs just parked off the coast of Cuba??); and let’s not forget the very real possibility that Biden will be replaced by who knows while Trump will face the possibility of actual jail time on July 11!

Asset Class Performance July 2024 Chart

QSR Stock Performance

  • The distinction between investor preference for high growth chains and the rest of the QSR universe was evident by June’s stock performance. Notably, Dutch Bros & CAVA were both up double-digits last month while the QSR median declined -0.7%, with 10 of the 17 names down during June. This suggests that while investors are still looking for a consumer recession, they are all too happy to pay up for chains adding locations at a rapid pace…     

July 2024 QSR Stock Performance Chart

FSR Stock Performance

  • The FSR (sit-down) stock median outperformed QSR again during June which we continue to believe is inconsistent with the theme of a weakening consumer environment. Once again, it is notable that Brinker (Chili’s) is up +65% during 1H24 & we suggest a review of our 1Q analysis for Brinker here in order to decide whether this is warranted (although EAT’s shares are only trading at 7.9x EV/EBITDA to be fair). Maybe investors are looking to Brinker & Red Robin as possible take-over candidates?

July 2024 FSR Stock Performance Chart

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