INVITE | PTLO BLACK BOOK FLASH CALL
Last October PTLO opened for trading at $26 per share after the IPO was priced at $20 per share; the stock traded as high as $57 and as low as $15
After the close, PTLO filed an S-1 on behalf of Berkshire to sell 8.0 million of the 36.7 million PTLO Class A shares that they own. Following the closing of this offering, funds managed by Berkshire are expected to own approximately 52.7% of the combined voting power of PTLO common stock. We are currently SHORT PTLO and will be hosting a FLASH call tomorrow, August 10th, @ 12:30 to review our SHORT thesis.
The power Lunch
Our in-house Demographer Neil Howe wrote about another casualty of the pandemic: the “power lunch.”
High-end destinations popular with the office crowd are losing ground to remote work and fast-casual chains. (The New York Times)
- Generations of power brokers have made deals and built business relationships over expensive plates of steak frites and sashimi. But in the age of remote work and high inflation, power lunches are becoming another casualty of the pandemic.
- In the first four months of 2022, the number of lunch reservations at restaurants with an average check of $50 or more were down -38% in New York City compared to the same period in 2019. In Washington, DC, the decline was also -38%; Chicago, -58%; and Philadelphia, -54%.
- Many of these meetings are now being conducted over Zoom over boxes of takeout food. With people’s availability and location changing day-by-day, it’s more difficult to schedule in-person lunches. And pricey restaurants say that with fewer high-paying customers, it’s more cost-effective to close for lunch and only serve dinner instead.
- To be sure, the business lunch was losing ground even before the pandemic. Tax deductions for business meals have steadily declined over time as public opinion has grown less favorable. The current limit, 50%, was enacted in 1994. This was down from 80% in the 1980s, and 100% before that. (In 2021 and 2022, the limit was raised to 100% again, but this is a temporary move intended as pandemic tax relief.)
- As David Moore, the owner of a Michelin-starred French restaurant in London, told The Times: “The business lunch was waning [before Covid] but still had a pulse. Covid and working from home have put the final nails in the coffin.”
We are SHORT both SG and SHAK, which are casualties of this trend.
DIN Earnings
DIN 2Q22 Non-GAAP EPS of $1.65 beats by $0.01; Revenue of $237.8M (+1.8% Y/Y) beats by $1.55M. Domestic system-wide comps Applebee's +1.8% vs FactSet +1.7%; IHOP +3.6% vs FS +3.8%
Consolidated adjusted EBITDA for the second quarter of 2022 was $66.1M compared to $71.7M for the second quarter of 2021. The company reiterates its fiscal 2022 guidance: Consolidated adjusted EBITDA to range between approximately $235 million and $250 million. Capital expenditures to range between $33 million and $38 million, reflecting incremental investments in the business to support sustainable growth.
We remain SHORT DIN!
