Restaurant industry Traffic
Casual Dining traffic has improved sequentially for the 6th straight week - sales have improved from down 11% in early July to 3% for the week of 8/15.
WEN E Coli issues
We are starting to see traffic soften for WEN. Nationwide traffic is down 6.8% over the last two weeks.
The Centers for Disease Control and Prevention said it had linked 84 E. coli cases to an outbreak that includes cases in Indiana, Ohio, Pennsylvania, and Michigan. The agency said the specific food has not yet been confirmed as the source of this outbreak, but most sick people reported eating sandwiches with romaine lettuce at Wendy's restaurants before getting sick. In reaction, Wendy's (WEN) is taking the precautionary measure of removing the romaine lettuce being used in sandwiches from restaurants in that region. The restaurant chain uses a different type of romaine lettuce for salads. Michigan is the worst performing market, with traffic down 2% in the last two weeks, followed by OH and PA down 14%. The company is guiding a 4%- 5% comp in 2H22.
Conference call commentary - "We held overall total QSR dollar share within Q2. What’s really given us the confidence has been the sequential Global same-restaurant sales acceleration that we saw each month in Q2. And, as GP just pointed out, we exited June really strong, had a lot of momentum with $5 Biggie Bag, had a lot of momentum with the launch of the Summer of Strawberry with the Strawberry Frosty and the Summer Strawberry Salad, and that momentum continued into July to start Q3. So we’re starting from a position of strength. We continue to see strong check growth. It has been offset a little bit by a decline in customer counts in Q2. And we have seen a little bit of a decrease in mix, driven by a reduction in items per transaction. That’s really due to a decrease in party size and fewer attachments along the way."
We see 15-20% downside to WEN.
Instacart Going Public?
Hard to imagine that the company can go public in 2022, but it's putting up strong numbers. DASH does not seem to be slowing Instcart's business.
A story from the WSJ states that Instacart's Q2 revenue grew 39% YoY to $621mm vs. 15% in Q1 when it was still lapping high comps from '21. Orders increased 25% YoY to 60mm+. The company made several announcements last week, including the ability to batch orders across multiple retailers in a single delivery and the ability to fulfill bulkier furniture and electronics from retailers like Container Store, Office Depot, and Staples.
