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The Call @ Hedgeye | March 28, 2024

Looking at the table, below, it is clear to see that the restaurants’ rip in equity prices is slowing into year end.  Some notable items:

  • QSR volume was light yesterday with all stocks besides PEET and KKD generally flat or down
  • An article on Nation’s Restaurant Review titled “NPD forecasts modest recovery” highlights unemployment among the young adult age cohort as being a particular concern for QSR
  • Additionally, short interest in the QSR space is particularly low, 6.6% on average.  If we exclude the coffee concepts, it stands at 4.3%.  Over the course of 2010, these stocks have risen an average of 44%
  • CMG has also slowed and was downgraded last week
  • MCD is planning massive expansion in China – boosting investment by 40% in 2011, according to media reports.  This is certainly relevant for YUM
  • In casual dining, following a downgrade, BWLD declined on volume slightly up versus trailing 30-day average volume.  It is also interesting to see insider selling having picked up in BWLD over the past 60 days (with roughly equal proportion of selling over the period)
  • CAKE underperformed the space on high volume following a downgrade

TALES OF THE TAPE - stocks 1215

TALES OF THE TAPE - casual dining selling 60 days

TALES OF THE TAPE - casual dining selling 30 days

Howard Penney

Managing Director