Unit Level Dashboard May 2023

May 3, 2023 | Dashboard, Restaurant Research

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Unit Level Dashboard

Strong Top-Line

1Q23 same-store-sales results for the $1B+ public companies that have reported (13 out of 22 ~60%) have been strong with several chains indicating positive traffic growth (including a significant portion of Wingstop’s +20.1% comp increase, +6% traffic at Starbucks & +4.3% traffic at McDonald’s).

1Q:23 SSS Chart

However, 2Q23 restaurant comps could be pressured by a reversal of a 2022 and 1Q23 trend in which restaurant price inflation was more subdued relative to grocery price inflation.

Unit-Level Margins

Margin Relief on the Way

Commodity prices are falling rapidly with many at, or approaching, the LTM low with the exception of beef (at an LTM high). Denny’s recently reported: (1) pork, dairy & egg prices are expected to decline in the next 3 quarters; (2) poultry has improved dramatically with further improvements expected; (3) beef prices are likely to inflate beyond 1Q levels; and (4) potatoes “are really the punch in the stomach so far this year”. Notably, construction costs are also beginning to moderate with lumber prices currently at an LTM low.

Key Cost Trends May 2023

A combination of lower commodity costs and significant menu price increases are boosting 1Q23 y/y store level operating margins as outlined below.

Public Co Margin Summary April 2023

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