Resetting MY expectations for MCD/BYND partnership
I'm resetting expectations that MCD will roll out BYND in the US over the next 12-18 months. How much will BYND make is an unknown but MCD will make sure it's not much.
BYND is a SHORT
It's not a done deal, but all signs point to a rollout in 2023. As we laid out in our lase BYND deck, there are several direct and indirect connections between McDonald's Corp. and Beyond Meat. The franchise community is against rolling this out, but many believe that they will be steamrolled by senior management. An ex MCD CEO funded BYND initially and a few months back, we had BYND hire from a major MCD supplier, Tyson to manage the McPlant business; BYND is behaving like this will be rolled out. The BYND stock is coming to grips with the reality that it will be decades before it sees sustainable top-line growth and profitability will be elusive. The CEO of BYND has been aggressive in pushing the MCD story that a national rollout with McDonald's will move millions of pounds of BYND product (that is unlikely, in my view). Although it might help top-line temporarily, as marketing gets behind the initial effort, it will ultimately fail to bring sustainable TC's for MCD. The best we can tell is that the McDonald's Owner/Operators, who would fund an advertising campaign, are not in favor of the rollout due to the complexity of cooking the BYND product and lining the profitability of another company with their advertising dollars.
SBUX Earning AMC Tuesday
SBUX is a LONG
Comps +13.5%; Americas +17.3% International +3.3% (MCD Called out China as a problem for the industry). Revenue $8.00 B; Co-operated stores $6.78B; Licensed stores $769.5MM; Other $460.1M. Operating margin 16.7%. EPS $0.80
FY Guidance (Oct '22): Comps +HSD;Revenue $32.50B-$33.00B; EPS growth of "at least" +10%, implies $3.42; expects EPS to be lowest in Q2 before peaking in Q3
EAT 2Q FY22 Earnings on Wednesday
EAT is a SHORT
Since reporting 1Q22, sales have slowed, and inflation has accelerated, suggesting that guidance should come down.
EAT is scheduled to report 2Q22 earnings on 02/02 BMO. Company-owned SSS +19.9% (Chili's +12.9%; Maggiano's +77.4%). Estimates are for consolidated revenue of $928.1 MM (Company $912.3M; Franchise $17.2M); Cost of sales 27.6%; Restaurant margin 10.9%; Operating margin 4.3%; EPS $0.52.
Current FY Guidance (Jun 2022): EPS $3.50-3.80 ex-items; Revenue $3.75-3.85B; Capital expenditures $155.0-165.0MM; Commodity and labor inflation mid-single digits; Diluted weighted average shares outstanding $45.0-47.0 MM. Giidence could easy come down by $1.00 for FY22
