ON DRi EARNINGS we will get A look into Casual Dining Trends!
DRI is a SHORT - DRI is scheduled to report FY3Q22 earnings on March 24th before the open with Same-stores sales of:
- System +43.5%
- Olive Garden +36.7%
- Longhorn +29.9%
- Fine Dining +91.1%
- Other Business +59.6%
On one level, the company is currently over-earning. In the November quarter, marketing spend was $44mm lower, resulting in 230BPS of margin favorability leading to 230 of (A)EBITDA improvement. When sales are running up 35-45%, you don't need to run Olive Garden Commercials. What happens when the sales environment gets tougher beginning in the May (FY4Q) quarter? The revenue estimate for FY3Q22 is $2.52B; COGS 30.6% vs. 28.8%; Labor 33.2% vs. 32.3% and restaurant margin of 20.0% vs. FactSet at 21.7%; putting operating margins closer to 11% versus FactSet at 13.4%; the GAP EPS of $2.10 looks aggressive by $0.20. All of this depends on the level of marketing spend in the quarter.
What happens to marketing spending when sales slow is an issue the new CEO will need to deal with; Gene Lee is going out with a bang! The key for the quarter will be the 4Q22 guidance for same-store sales and any hints of what 2023 will bring. The current same-store sales estimates are:
- System +8.3%
- Olive Garden +6.3%
- Longhorn +4.7%
- Fine Dining +21.0%
- Other Business +13.3%
Icahn rant on MCD is bizzare
Icahn worth Billions owns 200 shares worth $50,000 is going after McDonald's for better treatment of pigs?
He said on CNBC that MCD has a "rubber stamp" board and is not moving fast enough over the alleged mistreatment of pigs. I'm guessing that 90% of the S&P 500 has rubber stamp boards so what? "I think the board over at McDonald's, in my mind, is sort of a rubber-stamp board. Just the Easterbrook fiasco shows that. We are going to bring all that out in the next few weeks, next month, and then hey, let's see what they do, let's see if they give a damn." Icahn last month nominated two board members amid a dispute with the company over its treatment of pigs. McDonald's has said by the end of the year it expects to source 85% to 90% of its U.S. pork volumes from sows not housed in gestation crates during pregnancy and its forecast is that 100% of its U.S. pork will come from sows housed in groups during pregnancy by the end of 2024.
"Ten years ago they absolutely promised to get rid of this thing, to get rid of buying from anyone who produced it, now they are changing their story and saying we are asking for more. We are not asking for more at all. We are asking them to get rid of this problem."
BETTER PAY AT DASH?
As of Monday afternoon, the petition passed 36,000 signatures.
Gennifer Hayes launched her Change.org petition last week aimed at DASH for better driver pay. Hayes has been a DoorDash delivery on and off over the last three years. In the last few months, she and drivers in various Facebook groups were increasingly frustrated with the cost of gas and the challenges in turning a profit as a Dasher. "I will log in, go through orders and decline them all until I log out because it's not even worth it. I've experienced this personally but this is widespread among Dashers" One morning in early March, Hayes took an idea from a driver Facebook group to start her petition asking the company and Chief Executive Officer Tony Xu to raise the base pay for workers. "As a longtime Dasher, I've never received more than $2.50 base pay for an order. This combined with $2-8 in tips for what's usually 30 minutes in work barely even covers my gas costs." Dashers earn a base pay for each order they pick up. Base pay is between $2 and $10 per order, depending on how large the orders are and how far they need to be taken. The base pay is the only earning drivers see when they open the map to look at orders. The total earnings, including tip and the full cost of the meal, isn't show until after the delivery.
