Taco Bell is extremely well positioned as the only $1B+ national QSR Mexican player and enjoys the added bonus of being able to tap into a material COGs outperformance to go deeper into value should that be warranted.
Taco Bell is extremely well positioned as the only $1B+ national QSR Mexican player (category of 1) with core equity around abundant value and craveable food with a bold flavor profile. A positive long-term sales outlook reflects: strong value equation; innovative marketing calendar; strong positioning with Millennials; ability to address multiple dayparts including breakfast, Happier Hour/snack & late night; access to expanded DSP marketplaces; and new store formats which increase capacity for off-premise digital.
• The following data is based on RR’s Annual Lender Unit Economic Survey representing more than 15,400 franchised units (14,800 QSR and 600 FSR across 29 chains) for FYE 2020.
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.
Opinion: In the end, the industry’s mission must be to find a way back to normal, not accepting a “new normal”; While 1H:20 franchisee EBITDA valuation multiples declined, it is +7.4% higher than the 12-year low set in 2009; The average 2019 EBITDAR margin for the $1B+ chains improved slightly to 18.8% (but remains near the 17 year low); Popeyes’ eye-popping success with its chicken sandwich…; Taco Bell must wait for an eventual return of the Millennials and late-night.
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.
The successful brands continue to add value in some form or another sufficient to drive higher tickets. It could be from menu improvements or innovation or digital order platform upgrades that add convenience to go with a higher check. It seems that those consumers with means can be cajoled into spending more if they perceive a value-added proposition in some form that resonates.
Key Points from 4Q19 results through 2/7/20.
Taco Bell is extremely well positioned as the only $1B+ national QSR Mexican player (category of 1) with core equity around abundant value, craveable innovation and a bold flavor profile. Its compelling value equation extends well beyond the notion of "cheap food" to...