TALES OF THE TAPE: MCD, SBUX, PEET, GMCR, SYY, CMG, PNRA, COSI, KONA, CPKI, MRT, CAKE

Notable news items over the past few days and price action from Friday.

  • MCD may raise prices at its China outlets in the second half of the year, according to Tim Fenton, President for Asia, the Middle East and Africa.
  • MCD is being sued in the U.S. by a woman claiming that she was injured after chewing on a “large shard of glass” inside her spicy McChicken sandwich.
  • SBUX said on Sunday that it plans to announce a new product for the single serve market “in the near future.  I posted a note last night detailing my take on Starbucks’ direction.  My “coffee” strategy remains to be long SBUX and PEET and short GMCR.
  • I also posted a note last night titled, “THEY SEE INFLATION” on the news that SYY has raised prices as inflation takes hold.  The company's announcement cited produce shortages as being a major headwind.  This is acutely relevant for restaurant companies with high levels of exposure such as CMG.
  • PNRA outperformed the restaurant space, albeit on slowing volume, following the company’s 4Q earnings call during which they outlined guidance in excess of Street expectations.
  • COSI gained on accelerating volume, its share prices closed up 6.2%. 
  • CMG also saw its shares rise following 4Q earnings.  Despite management’s cautious outlook and the company’s vulnerable position from a commodity exposure perspective, the stock’s initial reaction was positive.
  • KONA and CPKI gained on strong earnings results.  Casual dining stocks generally gained on Friday, with the exception of MRT and CAKE. 
  • CAKE reported a low-quality earnings beat on Thursday after market close. 

TALES OF THE TAPE: MCD, SBUX, PEET, GMCR, SYY, CMG, PNRA, COSI, KONA, CPKI, MRT, CAKE - stocks 214

Howard Penney

Managing Director