4Q SALES PROSPECTS ARE BEGINNING TO IMPROVE
4Q22 sales outlook is beginning to improve according to RR’s forward looking intent to eat out consumer survey. This data is supported by the recent reporting of Cracker Barrel’s FY4Q22 results ending 7/29/22 which included restaurant comp growth of +6.1% y/y (driven primarily by +7% pricing) and retail comp growth of +3% y/y. Cracker Barrel’s revenue guidance for FY23 is up +7% to +8%. Also, Darden’s sales during FY1Q23 (8/28/22) were up +6.1% y/y with a +4.2% increase in same-store-sales for all its brands (including +2.3% for Olive Garden, +4.2% for LongHorn & +7.6% for fine dining). Admittedly, these sales outlooks must be tempered by the industry’s ongoing margin pressure.
Restaurant sales benefit from increasingly expensive food-at-home options. This likely explains low cost CostcoGrocery division’s +20% y/y sales growth (including third-party delivery) during the quarter ended 8/28/22.