Menu prices save the day; what are the long-term implications?
CMG is a short
CMG charged customers more over the past six months, especially in the 1H22, to maintain pushing its profitability on consumers' earnings results past consensus estimates. CMG reported 1Q22 EPS of $5.70 ex-items, beating FactSet's $5.64, up 6.3% YoY with revenue above. Comps +9.0% beat FactSet +7.9% with dine-in +33.1% and digital percentage of sales +41.9%. Although restaurant margin down buy (160bps) and missed by (100bps) with food/beverage/packaging costs +70bps higher than expected. Average restaurant sales +16% y/y to $2.684M. Expects Q2 comparable restaurant sales growth, assuming current sales trends continue, of 10%-12% vs. consensus +9.3%. Assuming construction and permit delays don't worsen, plans to add between 235 to 250 new restaurants in 2022 (including 5-10 relocations to add a Chipotlane). Authorizes an additional $300M common stock. Digital Sales were 41.9%, down 4% in the quarter.
Will prices catch up with CMG time will tell, but in the meantime, price/mix shift will be challenging to manage. So far, the company has very little resistance to the pricing. Still, as the in-store business goes up and slows as a percentage, you’ll see some shift in the number of entries per ticket just because the in-store occasion is more particular than the digital occasion. As the company said on the call, "transactions are up, 5%, but our check is down 6%. The longer the inflation pressures margin and consumer spending, the likely hood of CMG by 300bps looks slimmer. The company left expectations of $3.0MM in AUV and a 27% restaurant-level margin, a very aggressive target.
Wingstop plans to double its restaurant count in Indonesia
The company announced an expanded development agreement in Indonesia with its current brand partner, doubling its commitment from 60 to 120 restaurants by 2028.
This new agreement highlights the proven portability of Wingstop across the globe and is expected to accelerate its pace of openings for the market. With this new accelerated path forward for development in Indonesia, WING is accelerating international development. Wingstop believes it can operate 7,000-plus global restaurants, 3,000 of which are expected to be outside the U.S.
CHEF BEATS Handly
CHEF is a SHORT
CHEF is currently an inflation beneficiary, but decelerating restaurant volumes will take center stage in 2H22!
The Chefs' Warehouse 1Q21 Non-GAAP EPS of $0.10 beats by $0.09. Revenue of $512.1M (+82.7% Y/Y) beats by $31.18M. Adjusted EBITDA was $21.5M for the first quarter of 2022 compared to a negative adjusted EBITDA of -$9.5M for the first quarter of 2021. The full Year 2022 Guidance: Estimated Net Sales for the full year of 2022 will be in the range of $2.13 billion to $2.23 billion (consensus $2.17B); estimated gross profit between $500.0 million and $524.0 million and estimated adjusted EBITDA between $103.0 million and $112.0 million.
