Ultra-Fast Delivery Call
On Monday, 3/14 @ 2 PM, we will be hosting a call with Matt Newberg, Founder, HNGRY. HNGRY is a subscription media platform exploring how Technology reshapes our food system through trends like ghost kitchens, micro grocery fulfillment, fungi-based proteins, personalized nutrition, and much more. The call will take a deep dive into the business models of the critical food delivery companies. We will also discuss the viability of the vertically-integrated convenience delivery model and the implications of critical players like DASH, AMZN, UBER, and others.
Subscribers CLICK HERE for event details (includes video and materials link)
Topics include:
- How big can the 1st party ultrafast delivery category be? Is this a positive for DASH's DashMart service?
- What are the drawbacks of vertically integrated quick commerce?
- Will traditional grocers get into quick commerce?
- How big will AMZN be in sub-same-day delivery?
Please email questions to .
Hedgeye clients can get a 20% off coupon to subscribe using code HEDGEYE20.
RRGB A DISASTER
RRGB is a SHORT
RRGB survived the pandemic on the back of the company's $30M ATM in June 2020. Red Robin reported 4Q21 EPS ($1.03) ex-items vs FactSet ($0.61) on revenue of $283.4M vs FactSet $287.5McAdjusted EBITDA $8.9M vs FactSet $11.9M and EBIT of loss of ($10.8M) versus a loss of $(10.6m) last quarter. Guidance of (A) EBITDA $80-90M vs. FactSet $80.6M looks positive on the surface, but the management there is no guidance for sales. Except to say, "We expect margin pressures to persist during 2022, but we expect our trajectory to improve through the year with increased staffing and dine-in sales, and reduced transitory costs." So margins will improve during the year as sales slow? They also don't expect to achieve a 2019 restaurant-level operating profit margin until 2023, which will also not happen. Other costs are rising with mid-to-high single-digit commodity and restaurant labor cost inflation, and G&A is going up to $145-$155M versus $117 in 2021. Lastly, capital expenditures of $40-$50M are barely enough to keep the lights on as the company units are declining by about 3% per year.
Food inflation
Food away from home accelerated to 6.8% in Feb. up from 6.4% in Jan. The differential widened to 1.9% in Feb. from 1.1% in Jan. Food at home inflation is accelerating at a higher rate than away from home. Limited-service (fast food and fast-casual) restaurant prices were up 8% year over, and prices at full-service restaurants rose 7.5%.
PTLO - SOME near-term concerns
There is a lot to like about PTLO, but there are also some concerns. The first thing I would like to see is some stability on Restaurant Level margins, which will likely not be until the Fall of 2022.
If there is a worse operating environment to operate a publically traded restaurant company, I have not seen it. PTLO same-restaurant sales increased by 10.3% in 4Q21 vs. FactSet +10.4. The company reported 4Q21 EPS ($0.52) vs FactSet ($0.44) and revenues miss of $138.9M vs FactSet $139.5M Adjusted EBITDA $23.2M vs FactSet $19.4M. The company said the omicron COVID variant impacted sales in 4Q21, particularly seasonal catering sales. Impacts also included staffing shortages that carried into the first several weeks of FY22. Portillo's (PTLO) saw sales trends and staffing levels improvements beginning in mid-January. Same-restaurant sales during period one of 2022 were 9.2% and improved to 13.6% in period two of 2022 and guided to same-restaurant sales for 1Q22E to be in the range of 7.5% to 8.5%—Portillo's increased certain menu prices during 4Q21 by approximately 3.0% and another 1.5% in 1Q22. PTLO warned of significantly high beef, chicken, and pork inflation during the earnings conference call. 4Q21 restaurant margin remains impressive 25.2% vs. FS 24.4%, but down 400bps YoY.
FY Guidance (Dec 2022):
- Seven new restaurant openings
- Commodity costs up 13%-15%
- General and administrative expenses ranging from $70M - $75M
- Pre-opening expenses between $6.0M - $6.5M
- Capital expenditures between $60M - $65M vs FactSet $45.9M
Long-term outlook:
- Restaurant unit growth of 10%;
- Same-restaurant sales growth in the low single digits;
- Total revenue growth in the high single to low double-digit range;
- Adjusted EBITDA growth in the low teens
