PZZA is a LONG
Papa John's (PZZA) reported 3Q21 Non-GAAP EPS of $0.83 beats by $0.12; GAAP EPS of $0.79 beats by $0.10. Revenue of $512.78M (+8.4% Y/Y) beats by $11.85M. Comparable sales up 6.9% in North America and 8.3% Internationally; Global system-wide restaurant sales of $1.2 billion, up 11.2% driven by the continued benefit from innovation strategies and accelerating unit growth. Two things to note:
- After the end of 3Q21, the board approved a new share repurchase program for up to $425.0M of the company's common stock representing approximately 9.4% of the company's currently outstanding common stock based on the closing stock price as of 10/29.
- The quarter benefitted from the lapping of temporary franchise support of $13.5 million ($10.0 million of discretionary marketing fund investments and $3.5 million of royalty relief). These benefits more than offset higher costs associated with labor shortages and commodity inflation experienced within our domestic company-owned restaurants and supply chain.
BurgerFi
BurgerFi International (BFI)is announcing the successful completion of its pending acquisition of Anthony's Coal Fired Pizza & Wings from L Catterton for $156.6 million. Ophir Sternberg explains that "This acquisition marks a significant step forward in BurgerFi's ongoing growth strategy and transition into a premium multi-brand platform," which will like to be a defining moment for the company because this does not exist in the restaurant industry - bringing fast-casual and casual dining restaurants under one roof does not produce any synergies. However, my skepticism aside, management adds, " We committed to our growth strategy here at BurgerFi, and will continue to scan the market for potential M&A opportunities that we can leverage and unlock value from."
CAKE IS A SHORT
Cheesecake Factory (CAKE) reported 3Q21 Non-GAAP EPS of $0.65 misses by $0.05; GAAP EPS of $0.64 misses by $0.07, Revenue of $754.47M (+45.7% Y/Y) misses by $8.98M. Management suggested they are well-positioned for 7% unit growth next year. On the call, the company inflation comments:
"Looking ahead to fiscal 2022, due to the disruptions in the supply chain impacting the restaurant industry and the broader economy, our purchasing team is still in the process of contracting, as you would expect in these circumstances. Note that while we currently have 3% pricing in The Cheesecake Factory menu and plan to remain at that level for the remainder of this year, as David mentioned, should the cost pressures prove not to be transitory, we will implement further pricing actions at our menu change during the first quarter of next year to protect margins. Specifically, if commodities were to remain at current spot pricing levels for the full year of 2022, it would require us to take an additional 1.5% to 2% of menu pricing for a total of 4.5% to 5% of menu pricing to support our margins. The labor market is also dynamic and inclusive of known minimum wage increases; we are currently anticipating Inflation could be around the 5% level we are experiencing at our restaurants this year so far."
Our current MACRO in-house view is that Inflation is not looking transitory!
