Restaurants
MCD is a LONG
A McDonald's restaurant in Medford, Oregon, is now hiring employees in their mid-teens as companies struggle to hire compete for workers in a tight labor market. 14- and 15-year-olds are allowed to legally work a maximum of three hours on a school day and 23 hours a week in the state. "There are always staffing issues, but this is unheard of," Heather Coleman told Business Insider, " the Biddle Road restaurant operator. Coleman, whose family has operated McDonald's franchises for 40 years, praises the younger workers' drive and work ethic, along with their ability to grasp the technology "really quickly." She says that the restaurant received about 25 new applications in 2 weeks after opening the door to younger applicants instead of disappointing results she got from raising the minimum wage to $15. Other restaurants are also dipping into the pool of younger employees. Texas chain Layne's Chicken Fingers has been promoting some 19-year-olds to management positions making over $50K because of a shortage of older, more experienced staff.
New CMG Rewards
Yesterday, CMG announced it would continue to evolve its digital experience with enhancements to the Chipotle Rewards program, which has already helped the business surpass $2 billion in digital sales this year. The Chipotle Rewards program now boasts 24 million members and remains among the fastest-growing loyalty programs in the history of the restaurant industry. In addition, Chipotle is rolling out Extras, an exclusive feature for Chipotle Rewards members that unlocks access to extra points, helping members get to free Chipotle even faster. Extras gamify Chipotle Rewards with personalized challenges to earn extra points and collect achievement badges. Chipotle is the first national restaurant brand to launch badges as part of its loyalty program. To celebrate the launch of Extras, Chipotle Rewards members can get double points on purchase through September 3rd. Chipotle Rewards members earn 10 points for every $1 spent in the restaurant, online, or the app – and now, with Extras, they can have chances to earn even more. Members can redeem their points in the Rewards Exchange, choosing from more than fifteen different reward options, including free guac, drinks, and apparel from Chipotle Goods. Members can also redeem their points to support a variety of Chipotle's non-profit partners like The Farmlink Project, the National Young Farmers Coalition, and the National Urban League. For more information on Chipotle Rewards, fans can visit chipotle.com/rewards.
Consumer Staples
Campbell plots path through inflationary pressures (CPB)
Campbell Soup reported FQ4 EPS of $.55, above consensus expectations of $.47, which was guided lower last quarter. Organic sales decreased 4%, lapping 12% growth. Gross margins contracted 420bps YOY. Inflation and other factors had a 640bps negative impact with slightly more than half from cost inflation as overall input prices increased 5%. The other pressure was from higher supply chain costs lapping last year’s manufacturing efficiencies. The Snacks division revenues grew 1% organically driven by Goldfish crackers and its salty snacks portfolio. Compared to two years ago, organic sales grew 7%. Operating margins improved 270bps sequentially and 170bps YOY due to lower marketing and selling expenses.
The CEO said, “we do expect a challenging environment in fiscal 2022 as COVID persists and inflation and labor availability remain highly volatile. However, we also anticipate our effective pricing actions, supply chain productivity programs, and cost savings initiatives to be significant offsets, resulting in an improvement in the second half of the fiscal year relative to the prior year and exiting fiscal 2022 with momentum as we continue to make progress on our strategic plan.” As a result, management issued EPS guidance for the next fiscal year of $2.75-2.85 vs. a consensus of $2.83. Revenue is expected to be down 2% to flat YOY, bracketing consensus expectations of -0.8%. Management expects inflationary pressures to accelerate but to be mitigated by price increases and productivity initiatives. As a result, management expects core inflation of HSD% for the year.
We presented our long case for Utz yesterday. Campbell’s salty snack business is slightly larger than Utz’s business. Moreover, Campbell's outlook for its snack business resembled what Utz outlined a few weeks earlier. We made the case yesterday that the salty snack category has secular drivers and traits that will offset the inflationary pressures.
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Spotted at Costco (STKL)
We spotted Planet Oat in Costco this week. Planet Oat is the market share leader in IRI reported outlets. SunOpta is the supplier of the oat base to HP Hood, the manufacturer of Planet Oat. Costco previously only carried a shelf-stable private label oat milk. In the U.S., shelf-stable dairy sells at a fraction of the rate that refrigerated dairy beverages do. So the shelf space gain for Planet Oat at Costco is a notable win for Planet Oat and SunOpta.
