Congress Fails the Industry
Thousands more independent restaurants could close. SYY is a SHORT
Congress this week finally reached a bipartisan agreement on their annual spending bill. However, the omnibus agreement is silent on replenishing the Restaurant Revitalization Fund (RRF), and no new funds will be directed to complete the mission and fund the 177,000 applications still pending. We are waiting for the dust to settle in Washington to identify other avenues to replenish this sorely-needed program.
New Management and a new Dream; same challenges
The pandemic changed the industry forever, but it did not make Applebee's brand relevant again. DIN is a SHORT
At the investor day DIN, new management put out some lofty (2026) targets for profitability, many of which will be very difficult to achieve. The new management thinks they can get back to levels of profitability not seen since 2009. The company operates 18% fewer Applebees restaurants, and 37% of the business is carry-out/delivered, which carries a significantly lower contribution margin. Labor costs are also 75% higher than in 2009 and going higher. They see Adjusted EPS CAGR in high-teens, to $14.50+ in 2026 from $6.54 in 2021; Revenue growth in mid-single digits to $1.10B+ (incl. ad revenue), vs $896M in 2021; Revenue ex-advertising growth in mid-single digits to $750M+ from $621M in 2021 EBITDA growth in high single digits to $350M+ vs $253M in 2021; EBITDA margin 47% vs 41% in 2021 and Adjusted FCF $225M vs $166M in 2021. They will have to accomplish these targets in 2-3 years because 2022 will be a challenging year. Including guidance for little or no growth in EBITDA in 2022. Management repeats 2022 guidance, including Adjusted EBITDA $235-250M vs FactSet $245.1M and 2021 coming in at $244.2M.
What has changed in the past two years will allow Applebee's new management to grow AUVs by 17% in the next 2-3 years when it's significantly lower since 2009?
RRGB Earnings AMC
RRGB is a SHORT
Red Robin Gourmet Burgers (RRGB) will announce 4Q21 earnings results on Thursday, March 10th, AMC. The consensus EPS estimate is -$0.58 (+67.6% Y/Y) and the consensus Revenue Estimate is $292.14M (+45.3% Y/Y). The 4Q21 SSS estimate of 40% looks aggressive by 5-10%, and the 1Q22 estimate is off by the same amount.
