Changes to the Restaurant Position Monitor
Restaurants are in a Hedgeye "Quad Three" environment with growth slowing as inflation is accelerating giving a market narrative of stagnation/stagflation. As we look to 1H22 where the market narrative will likely turn to "deflation," we are adjusting our longs and shorts ahead of that shift. As such we are adding MCD, SBUX, WING, and YUM to the LONG list and removing DASH, TOST, and TKWY-NL from the long list. All of this will manifest itself in a very challenging top-line environment in 2Q22. We go over all of our thoughts in an upcoming Restaurant Themes Call focused on the following themes.
- Flight to Quality
- Aggressive 2Q22 Sales Estimates
- Margin Pressure Could Get Worse
As it is related to DASH it's starting to feel like 2018 all over again when GRUB was spending aggressively against the "upstart" DASH for delivery market share in the US. In 2022 will have a significant increase in spending around its global grocery initiative. Instant Groceries where urban-dwelling consumers buy food and other essentials and can get them delivered in 15 minutes or less continue to be a big business. One of the biggest, GoPuff, raised $1.5 billion with a valuation of up to $40 billion. From the TechCrunch reporting, the funding is being structured as a "Series X" convertible note from Guggenheim Partners. The speculation is now that GoPuff will most likely IPO in 2022. All of this will increase pressure on DASH spending plans. On top of that DoorDash is doubling down on its first-party DashMart initiative, creating an entirely new class of W2 labor that goes against its part-time gig model. Under vertically integrating, DoorDash doesn't have to worry about take rates from third-party restaurants or grocers– it is the merchant of record. By hiring its own bikers through its new DashCorps subsidiary, it can better control the working conditions and minimum wages that have previously left its Dashers out in the cold. This change in the business model is a net negative. The changes in Europe's labor laws are another incremental negative for growth internationally. The same holds true for Just Eat Takeaway - the purchase of GRUB in the USA will be a drag on the financial performance for the balance of 2022.
ICR Preview
The ICR Conference is one of the largest consumer investment conferences of the year. The conference has grown in attendance over the years by bringing together company management teams, buy-side, sell-side, and private equity professionals. As a leading investor relations advisory and communications firm, ICR's Conference features numerous companies that have recently become public. Today's premier growth companies most likely presented at the ICR Conference in years past. As the first investment conference of the year, it has also been a preview of what is to come.
The conference will be virtual again, but its place in the investment calendar is secure. We are publishing a Guidebook to provide a reference guide for many presenting companies in our Restaurants, Consumer Staples, and Cannabis sectors. The Guidebook will provide an investment summary of our focus companies presenting at the conference. Each company section will provide an investment overview, brief company synopsis, and questions and discussion points for the management teams.
Several companies in Restaurants, Consumer Staples, and Cannabis are scheduled to present at the ICR Conference on January 10 and 11.
- In Restaurants Darden, Red Robin, Domino's, Dave & Busters, Shake Shak, BurgerFi, Dutch Bros, First Watch Restaurant Group, Krispy Kreme, and Portillo's are scheduled to present.
- In Consumer Staples, Black Rifle Coffee Company, Stryve Foods, SunOpta, Vintage Wine Estates, and Zevia are scheduled to present.
- In Cannabis Green Thumb Industries, Verano, Curaleaf, Tilray, and Trulieve are scheduled to present.
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CLICK HERE at the time of the event for the live conference preview webcast or to download the Conference Guidebook. |
CMG's PLANTS
CMG today announced Plant-Based Chorizo is available for a limited time at U.S. locations. Plant-Based Chorizo is made using all real, fresh ingredients grown on a farm, not in a lab (CMG taking a shot at BYND). The company tested the Plant-Based Chorizo in Denver and Indianapolis in August 2021. The company notes that the "strong" test results drove the brand to feature its second-ever vegan protein on a national stage. According to the PR "We are thrilled to introduce guests to our new, flavor-packed Plant-Based Chorizo during a season when healthier options are top of mind," said Chris Brandt, Chief Marketing Officer, Chipotle. "Plant-Based Chorizo is our best chorizo ever and proves that you don't have to sacrifice flavor to enjoy a vegan or vegetarian protein." Chipotle peppers, ripe tomato paste, crushed garlic, Spanish smoked paprika, and extra virgin olive oil combine with natural protein from freshly grown peas to deliver a full-flavored vegan protein. Plant-Based Chorizo is certified vegan, packed with 16 grams of protein per 4oz serving, and is made without artificial flavors, colors, preservatives, grains, gluten, or soy. The company is expanding its "Lifestyle Bowls" with three new Lifestyle Bowls powered by Plant-Based Chorizo. Lifestyle Bowls are preconfigured entrées made with real, fresh ingredients that align with nutritional preferences like Whole30, Keto, Paleo, High Protein, Vegan, and Vegetarian.
New Lifestyle Bowls include:
- Whole30 Salad Bowl: Supergreens Lettuce Blend, Plant-Based Chorizo, Fresh Tomato Salsa, Fajita Veggies, Guacamole
- Vegetarian Bowl: Supergreens Lettuce Blend, Pinto Beans, Plant-Based Chorizo, Fresh Tomato Salsa, Fajita Veggies, Cheese
- Vegan Bowl: White Rice, Black Beans, Plant-Based Chorizo, Corn Salsa, Fresh Tomato Salsa, Shredded Romaine Lettuce
