Some interesting news items and price action over the last 24 hours.
- MCD will introduce a fourth Angus burger flavor on February 1st MCD: the Chipotle Angus Third Pounder. The newest member of the Angus Third Pounder line will not only come in sandwich form, but also in the not-as-good Snack Wrap form (but only for a limited time).
Hedgeye Thought: MCD need to be more focused on burgers. A few years from now, after month over month of flat same store sales, someone in Oak Brook will come up with the idea of simplifying the McDonald's menu to make the operation more efficient and faster. This person will be hailed as a “genius and a visionary”
- WEN management today announced that it is exploring strategic alternatives for Arby’s restaurant group. Nelson Peltz, Chairman of Wendy’s/Arby’s Group, said, “We believe the way to maximize shareholder value is to focus all of our management and financial resources on continuing to build the Wendy’s brand.”
Hedgeye thought - But I thought putting the two brands under one roof was the best way to maximize shareholder value?
- Casual dining (EAT, CHUX, PFCB BJRI and RT) down on accelerating volume.
Hedgeye thought - December and January sales have slowed and the weather continues to have an impact in January. The biggest losers are the chains with a heavy concentration in the southeast.
- SONC declined on accelerating volume. CEO Hudson Clifford acquired common stock earlier this month.
- COSI underperformed yesterday on accelerating volume. I remain positive on this stock as management continues their shrink-to-grow strategy.
Howard Penney
Managing Director