Food Inflation
Food at home vs. away from home differential widened further to 3.5% in April from 3.1% in March.
How Fast they Fall
From best in class Restaurant IPO to class action lawsuit?
BROS 1Q22 GAAP EPS of -$0.10 misses by $0.07 and revenue of $152.16M (+54.0% Y/Y) beats by $6.6M. Opened 34 Shops and system-wide comps +6.0% missing FactSet +6.5%. Restaurant margin missed by (220bps). Adjusted EBITDA came in at $9.7M vs. $18.7M a year ago. Dairy costs well above historic levels drove increases in COGS. BROS also pointed to costs related to more rapid new unit growth, escalating minimum wage in select mature markets, and other factors which drove up labor costs. Certain maintenance and travel costs also contributed to increased operating and other costs.
April same shop sales were (3.7%) in 2022 compared to 22.6% in 2021, which is the largest comp of the year. For 2Q22, total shop openings are expected to be at least 30. Nearly all shops will be company-operated; same shop sales are estimated to be flat to slightly negative as we face macro-economic headwinds impacting consumer discretionary income and gas prices. Lowers FY22 adjusted EBITDA to at least $90M vs prior $115-$120M and below FactSet $114.9M; reaffirms FY22 revenue $700-$715M below FactSet $717.8M with CAPEX $175-$200M.
A missed opportunity on the SHORT side, but I, like many others, thought this was one of the better business models of the 2021 IPO class. In this market, I would not be surprised to see the stock trade between $8-$11, which is about 2x 2023 sales.
Time To Cover?
We are SHORT BYND
The BYND earnings call was filled with questions and nor real good answers. Why take on the global fake meat market when it's not working in the USA? Price compression on a superior product (0.2% gross margin?), 90% increase in OPEX? The cash burn and the balance sheet? What will you do for capital when you run out of cash? Let's not forget the C-suite turnover over the past two years. At $26, BYND still commands a $1.6 billion equity value and a $2.0B enterprise value and trades at 2.89x 2023 estimated sales. At 1.0x 2023 sales, the stock would trade at $11, where it could find a temporary home!
