Dashboard: May 2021

Jun 2, 2021 | Dashboard

May 2021 Dashboard

Same Store Sales Trends

Strong 2Q21 Comp Prospects

  • 2Q quarter to date sales momentum on a 2-yr. stacked basis looks strong as the vast majority of restaurants are now open for dine-in and capacity constraints diminish across the country.
  • According to The Cheesecake Factory, QTD 5/31 comps increased +196% y/y and +7% on a 2-yr. stacked basis with off-premise accounting for 1/3 of the sales mix. Nearly all of the company’s restaurants are operating with reopened dining rooms at approximately 70% indoor capacity (75% including patios).
    Quarter to Date Sales
  • RR’s June Intent to Eat Out Index (our survey of 1,500 consumers’ plans to eat-out over the next month) suggests strong 2Q:21 results even as June’s prospects slowed compared to May.

TraffiCast 2Q21 Signal

  • Total food service sales increased in April by +3.1% on a 2-yr. stacked basis, with restaurants beginning to regain share from the grocery stores according to government data.

  • The restaurant industry’s recent share gain is notable given its significant CPI increases relative to the grocery stores.

Stock Performance

FSR Stock Profit Taking

  • The RR Index took a breather in May after 6 consecutive months of gains due to profit taking (especially among the FSR companies which are still up +35.7% YTD compared to +11.9% for the S&P 500).

Promotional Composition

Less Discounting = Higher Prices

  • The QSR value mix continues a downward trend while the average promotional price ramps-up.
  • We see the same trend for FSR

Economic Outlook

Uncertain Long-Term Economic Prospects

  • +10.3% GDPNow 2Q:21 forecast translates into a -21.1% decline on a 2-year stacked basis. This compares with +1.4% 2-year stacked results during 1Q21.
  • On an annualized basis, full-year 2021 GDP is expected to increase +2.9% on a 2-year stacked basis reflecting the benefit of ~$6T in government stimulus (which represents ~27% of 2021 GDP).
  • Rapidly rising gas prices (+59% y/y 5/21), higher interest rates and an elevated savings rate represent a headwind to discretionary spending.
  • The $28.6B Restaurant Revitalization Fund which started taking applications on 5/3 was closed to new applicants in mid May after more than $69B in applications.

Key Cost Trends & Forecasts

Commodity Inflation Aggravated by Act of Terror

  • 5/30 cyberattack on JBS Foods (one of the world’s largest food processing companies with extensive facilities in the U.S. and accounting for ~20% of the slaughtering capacity for cattle & hogs) shut down operations, threatening both the restaurant industry and US national security.
  • Even without this supply shock, the May BLS Foodstuffs index continued to extend its gains +57% y/y (+38% YTD 5/21), representing the highest level since 2011.
  • Commodity costs extending last month’s highs include: pork (+200%/7-year high); chicken wings (+98%/all time high); chicken (+140%/2-yr. high); and coffee (+29%/4-year high).
  • The 2021 PPI forecast was revised higher again for eggs, chicken, beef, pork & wheat.
  • According to Wingstop, prices for all chicken parts (including wings) are expected to remain elevated throughout 2021 as suppliers struggle to hire sufficient people to process chickens.
  • Soybean prices (used for both human and animal food) reached its highest level in more than 8 years in May and is +18% YTD May.
  • Lumber prices (+90% in April & +67% YTD 4/21) show no sign of abating and will add to new store construction costs.


  • Job openings continue to ramp-up as sales volumes surge, reflecting that a large pool of unmotivated unemployed makes it increasingly difficult to staff restaurants.

Franchisee EBITDA Valuations

Valuations Level Out as More Sellers Enter Market

  • More sellers are coming to market, driven by improving sales & profit and by the prospect of a significant increase in the capital gains tax.
  • Franchisee valuation outlook leveled-off with FSR holding an edge as dine-in prospects continue to improve.

Marcus & Millichap Cap Rates

More FSR Properties Coming to SLB Market

  • Higher cap rates partially reflect an increase in the number of FSR properties (6.83% cap rate vs 5.71% for QSR) coming to market as this segment’s prospects improve.

Restaurant Research

Email Sign-up

15 Second Posts

What is the Federal Government’s Job?

A couple of weeks ago we conducted a thought experiment in which the government became a nonprofit, and this week we propose another thought experiment in which the government becomes a public corporation. We suggest that this could provide very useful input into the debt ceiling debate.

The Importance of the Balance Sheet in Financial Analysis

While most investors are focused on sales growth & margins, they would be well served to further consider the strength of a company’s balance sheet. We look at BlackRock’s financial condition as an illustrative point.

The Importance of Free Cash Flow in Financial Analysis

Cash represents the lifeblood of all business enterprises which is why it is important to analyze free cash flow which we define as operating cash flow minus capex, dividends, and stock buybacks. We illustrate DoorDash as an example of why cash flow analysis is so important. 

Lessons From Tucker Carlson

There are many theories about why Fox booted Tucker Carlson, but it may be a very simple reason which can instruct everyone involved in the consumer retail segment.

It is Imperative that Climate Change Regs Incorporate Economic Reality

This week we spotlight efforts by international agencies to lower the earth’s temperature by imposing onerous regulations on energy producers. We suggest it will be better to: begin a process of implementing continuous improvements designed to support both economic & climate progress; and use international organizations to share tech & best practices as opposed to providing them with regulatory powers best left to individual nation-states.   

Part 3 – It’s Nice for the US to Save the Climate, But What About the Rest of the World?

In our last 2 posts, we outlined the probability that the UN’s push to lower the world’s temperature by -2 degrees Celsius could drive significant U.S. energy price hikes & shortages. How is this going to help as Asia ramps up the use of coal? Can humans lower the earth’s temperature anyhow?

Part 2: Who is Left to Make Investments in Fossil Fuels & Clean Energy?

There is not a lot of incentive for profit-seeking companies to invest in demonized fossil fuels or in clean energy projects lacking ROI. This points to substantially higher energy prices and supply shortages that will have a profound economic impact.

Part 1: Ramping Energy Demand Clashes with UN’s Environmental Goals

From 2021 to 2050, ExxonMobil forecasts that 85% of the population growth will be driven by developing countries, which in turn, will drive a +15% increase in energy demand.

What if the Federal Government Was Turned into a 501c3 Non-Profit?

Given all the focus on the debt ceiling, we propose a thought experiment in which all 100 federal agencies must compete for charitable donations. If taxpayers get to choose for themselves what to fund, what might we learn? 

Like Sinatra Croons: “So you see it’s all up to you, you can be better than you are.”

The top-paid hourly workers are currently enjoying the fastest wage growth, indicative of the current challenge to recruit & retain a skilled labor force.

Digital Marketing Opportunities
Restaurant Research

A Restaurant Research LLC Company