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• We decided to survey franchisees to check comments from some 1Q21 investor calls in which management teams portrayed the labor market as possibly one of the worst ever.
• Despite a relatively high level of unemployment, it seems clear that the industry is facing a labor shortage.

Insights Journal: November 2020

• 2020 new build ROIs continued a declining trend, reflecting: higher construction costs; moderating new build AUV growth; and store-level margin pressure.
• A ramping build vs. buy ratio reflects the above trends in addition to declining acquisition multiples.
• This suggests that growth minded operators are more likely to buy than build for the time being.

2Q20 Investor Call Summary & Analysis

Hopefully the trough of a shocking Black Swan event, 2Q20 gave us an average comp decline of -15.4% for 23 $1B+ chains under coverage. Notably, there was a very wide dispersion of results with a comp high of +32% (Wingstop) all the way to a low of -59% (IHOP) as consumers decidedly shifted away from dine-in to low-contact off-premise solutions.

1Q20 Investor Calls: Key Points & Analysis

In a shocking Black Swan event, the industry suffered the forced closing of all dining rooms in late March 2020. While this shock was less troublesome to concepts already heavily oriented towards drive-thru and off-premise, the devastation for sit-down oriented chains has been previously unimaginable.

Insights Journal: May 2020

Encouraging comp recovery trends with: QSR doing more than holding its own; chicken chains continuing to amaze; pizza perfectly suited for circumstances; and sit-down better than expected. Also included is some good news from Starbucks China. Finally, we include executive summaries for McDonald’s and Wendy’s.

McDonald’s

McDonald’s is gaining traction with an extremely ambitious modernization program with many moving parts that include efforts to: retain existing customers by bolstering core strength in family occasions & food-led breakfast; regain lost customers by improving food taste, quality, convenience & value; and convert casual customers to committed by elevating & leveraging the McCafé platform (snacking daypart) while also improving its food health profile. The brand seeks to attract a new, hipper, technophile customer who can afford higher prices.

Key Points from 4Q19 Results

Key Points from 4Q19 results through 2/7/20.