same store sales - NoBullEconomics

Unit Level Dashboard – 8/22

• While 2Q comps for the $1B+ Chains increased +3.5% (+14% 3-yr. stack), RR’s consumer survey (which measures intentions to eat-out over the next month) continues to reveal a challenging 3Q sales outlook.
• Food prices continue to surge, breaking another record in July (+10.9% y/y & +14.8% 2-yr. stack).
• Recent passage of the California Fast Food Accountability & Standards Recovery Act increases QSR wages in the state by +40% to $22/hr. in 2023, aggravating labor inflation.
• Unit-level operating margins for the corporate owned stores of the publicly traded $1B+ Chain companies declined 4.5% to 16.5% during 2Q:22 vs. 2Q:21.

Insights: 1Q Same Store Sales

• 1Q22 same store sales for the $1B+ Chains increased +6.1% (+14.7% 3-yr stack) on slowing momentum (relative to +11.5% during 4Q21) with 7 of 30 chains reporting negative sales (compared to just 1 in 4Q21).
• With food-away-from-home CPI up +6.7% during the quarter, it is easy to see that comp growth is primarily attributable to menu price increases as opposed to traffic.

1Q22 Investor Call Summary

1Q:22 investor conference calls indicate staffing and commodity cost challenges somewhat off-set by higher menu prices and increased dine-in business.

RR Dashboard: Sales Look Good, but Looks Can Be Deceiving

• FSR 1Q:22 comp performance for $1B+ chains outperformed the annual average for the 3-year stack comp as the sit-down concepts continue their recovery.
• Conversely, QSR comps are slowing, mirroring recent industry commentary about how the higher income demo (FSR) has been more resilient to current economic conditions relative to the lower income demo (QSR).
• Record highs for many commodities and wages have prompted most of the public restaurant companies to raise their cost outlooks for 2022.

RR Dashboard: Sales Not Keeping Up with Cost Inflation

• Initial 3-year stack comp performance for the $1B+ chains reveal that QSR is still outperforming FSR despite less impressive headline sales numbers for 1Q:22 alone. Going forward prospects are less optimistic as indicated by RR’s recent consumer survey which measures intentions to eat-out over the next month.
• The BLS Foodstuffs Index notched another all-time high in April and is up +109.3% y/y on a 2-year stacked basis.
• While operators are working hard to lower controllable costs, they cannot drive sales sufficiently to maintain their store-level margins in the current inflationary environment.

Insights: 4Q & Full Year 2021 Same Store Sales

• 4Q:21 same store sales for the $1B+ Chains increased +11.5% (+10.4% 2-yr. stack) and increased +16.7% for full year 2021 (+11.0% 2-yr. stack).
• $1B+ Chain market share of the total foodservice industry (food away from home & grocery) increased +0.06% to 17.61% (-0.85% below its 2016 peak).

4Q21 Investor Call Summary

All you need to know about 4Q21 Investor Conference Calls

3Q21 Same Store Sales

3Q:21 comps increased +11.7% y/y for the $1B+ Chains and +11.3% on a 2 yr. stacked basis as all segments of the industry have fully recovered.

2Q:21 Same Store Sales

• 2Q:21 comps increased +37.9% y/y for the $1B+ Chains and +12.8% on a 2 yr. stacked basis as all segments of the industry have fully recovered.
• 3Q:21 comp trends are moderating, reflecting flat disposable income (less government assistance) coupled with significantly higher menu and gas prices.

Dashboard: July 2021

• Possible Pause from Astounding 2Q Sales Results
• Drive-Thrus Back in Favor
• FSR Feels Need to Discount More So Than QSR
• Food Inflation & Labor Shortages are a Thing