Restaurants
DASH Developments
New York City is set to pass a package of bills seeking to improve pay and delivery conditions for food delivery drivers; employees of Grubhub (GRUB), DoorDash (DASH), and Uber Eats (UBER). The measures, which Mayor Bill de Blasio supports, include minimum payments per trip, greater tip transparency, and removing fees charged to drivers for insulated bags and other items. Additional rules include requiring restaurants to grant drivers restroom access and allowing drivers to set limits on where they are willing to deliver. According to a Cornell study, the average hourly wage for an NYC delivery driver is $12.21, after expenses, with tips amounting to $4.34 of that number. NYC's minimum wage is $15 an hour for employees. In a surprising turn, Grubhub said through a spokesperson that they support the proposals, unlike the recent fee cap legislation over which the three food delivery platforms are suing NYC. DASH is seeing a lot of developments hit this morning to send investors scrambling. After PlainSite tweeted that the company is part of an ongoing FTC investigation over fee caps and worker protections, shares are lower. Separately, DASH is leading a fundraising round in German grocery delivery player Flink SE. Sources indicate the round gives a valuation of $2.1B to the startup. In addition, DASH has expressed interest in expanding in Europe through M&A.
DENN
Denny's (DENN) relaunches its digital website, mobile app, and Denny's on Demand in the next phase of its digital transformation to increase ticket size and guest frequency, along with giving the diner a quicker way to add new features. The company's new mobile app features enhanced ease-of-use and provides customers with up-to-date Denny's news items, including menu updates. The guest experience through Denny's on Demand has been streamlined, allowing for frictionless customer ordering and smart upsell and cross-sell options. Denny's app and website will allow customers to personalize their profiles and save favorite meals and locations. In addition, Denny's Rewards members will have access to a new digital wallet to save rewards and promotions. The company is moving towards a more digital focus because of staffing issues experienced in the restaurant industry nationwide.
Consumer Staples
Where's the beef (TSN)
According to the USDA's monthly report, the supply of beef, pork, and poultry in cold storage was 14% lower during August than last year. Total pounds of beef in freezers were up 4% from the previous month, but down 8% from last year. Frozen pork supplies were up 4% from July but down 1% from last year. Inventory of pork bellies was down 37% from last month and down 44% from last year. The total supply of beef in cold storage at the end of August was estimated to be 7.7% lower than in 2020 and 12.6% lower than the five-year average. The beef cuts in cold storage inventory were 2.2% lower than the low inventory levels last year and 17.9% below the five-year average.
Beef cows, at 31.4 million head, are down 2% from a year ago. Cattle in the feedlots totaled 13.4 million head on July 1, down 1% from last year. However, in July, beef exports were up 17.9% from the prior year. Total beef exports from January through July 2021 were up 21%. Exports to China accounted for nearly all of the increase year to date. The Biden administration recently blamed meat prices for much of the inflationary pressures in food. Lower inventories, higher exports, and a smaller herd size are all inflationary.
RTD innovation (SAM)
Drizly, the online alcohol delivery service, said, "For the first time in the last couple of years, we saw hard seltzer's share decline YOY in this past month, while RTDs' share has been continuing to grow steadily at about 85% YOY." The ready-to-drink cocktail category is seeing an explosion in launches in the past year. Boston Beer has announced plans to launch several hard seltzer/beer brands and collaborations in recent months, including Bevy Long Drink, Beam Suntory, Mountain Dew, and Sauza.
Off-premise liquor sales
The Pennsylvania Liquor Control Board released financial results for the year ended June 30, 2021, reflecting the most extensive annual sales increase in its history. The Board oversees all wine and spirit sales in the state and is one of the largest purchasers of alcohol in the country. Sales grew 13.7% to $2.9B, 8.9% higher than the previous record (the year ended June 30, 2019).
A Harris Poll reported that after a year and a half of the pandemic, nearly 17% of Americans said they had two heavy drinking days in a single week at least twice in the previous month. Heavy drinking was defined as four or more drinks for women and five for men. AS SEEN IN THE CHART BELOW, Generation X and Baby Boomers reported more heavy drinking than the younger generations. A study by the Rand Corp. last year reported that the frequency of alcohol consumption rose 14% during the pandemic. Thus, drinking habits like weight gain during the pandemic appear to be driven by a segment of the population than the average.
