CMG is taking a big risk
CMG is a SHORT
"Our pricing power is strong, and the brand is resilient." CMG CEO
Nearly every restaurant company can make this statement to justify raising prices if you look at your competition in a vacuum. Aggressively raising prices comes with considerable risk. Raising prices is great for the P&L and getting paid millions if you are the CEO. Pricing power only lasts so long and becomes very expensive to undo. 2Q22 SSS was on track for the high end of the range until a mid-May slowdown with lower-income customers curtailing visits; how long till middle American consumers trade down? What then? This happened to CMG when it aggressively raised prices mid-single digits in 2008 and saw a mid-single decline in traffic in 2009, or was it the Great Recession that caused the decline in traffic? Will history repeat, or is the brand value perception different? Either way, the timing of the current rate of double-digit pricing looms ominously.
CAKE Earnings
CAKE is a SHORT
CAKE reported 2Q22 EPS $0.52 ex-items missing FactSet $0.77 with revenue below consensus and comps 4.7% missing FactSet +7.5%. Restaurant margin missed by (200bps) and operating margin missed by (210bps) despite COGS being (180bps) lower than expected. The company continues to aggressively open stores, with as many as 15 new restaurants in FY22, including as many as four Cheesecake Factory restaurants, four North Italia restaurants, and as many as seven FRC restaurants, including three Flower Child locations. This includes opening the first brick-and-mortar location of Fly Bye, FRC's newest fast casual dining concept offering Detroit-style pizza and crispy chicken, which opened after Q2-end in Phoenix, AZ.
WING EarningS
WING is a LONG
Hitting the whisper numbers and missing consensus Company-owned (4.9%) vs FactSet (0.8%); system-wide domestic (3.3%) vs FS (1.5%). 2Q22 Non-GAAP EPS of $0.45 beats by $0.09; Revenue of $83.8M (+13.2% Y/Y) misses by $2.31M; System-wide sales increased 7.5% to $633.6M; 67 net new openings in the fiscal second quarter 2022; Domestic system same-store sales -3.3% (Three-year domestic same-store sales increased 30.7%) and Domestic restaurant AUV of $1.6M, with digital sales of 60.5% of sales. FY2022 Outlook: Low-single digit domestic same-store sales growth; SG&A of between $70M - $72M; Stock-based compensation expense of between $7.5M - $8.5M; Depreciation and amortization of between $10.5M - $11.5M; Interest expense of approximately $23.5M; Diluted earnings per share of between $1.55 to $1.57 vs. consensus of $1.53.
