Why are restaurants not seeing or talking about reality?
Here are the current headlines making the rounds in Restaurant trade magazines and other recent quotes from presentation and earnings calls:
ARE CONSUMERS GETTING USED TO HIGHER PRICES? - Technomic's Take: Restaurant menu price inflation continues to tick up. But consumers are showing few signs of cutting back on eating out.
THE YEAR HAS APPARENTLY STARTED OUT STRONG FOR A LOT OF RESTAURANTS - The Bottom Line: What recession? Companies like Texas Roadhouse and Golden Corral said their traffic was way up in January, and federal data backs them up. Here's why that might be happening.
Geral Morgan, CEO of TXRH, last week:
"Turning to 2023, we have been impressed by the strength of the consumer. We are pleased to see our sales momentum carry over from 2022 into the beginning of this year."
The midpoint of our guidance range and the assumption that the consumer remains healthy and we see modest growth moving through the year and what level of growth, that's going to be up to you guys to determine."
Dave Deno, CEO of BLMN, Last Week:
"While the consumer has remained resilient to date, we believe the short-term decision will have long-term benefits for our customers. In terms of 2022 performance."
Kevin P. Hourican, President, Chief Executive Officer & Director, Sysco Corp. at CAGNY
"The punch line here is the industry is back. We are back as a company. The industry is back. We are above where we were at the high-water mark pre-COVID. And if you look at that January statistics, January was particularly strong with a really strong performance. And that's just not Omicron overlap because versus 2019 January was a very strong month."
Neil A. Russell Senior Vice President-Corporate Affairs, Chief Communications Officer & Interim Chief Financial Officer, Sysco Corp. at CAGNY
"So this is going to be a very strong year for Sysco." (The CFO is very confident in his $4.05 guidance for FY2023)
This is what Walmart CFO John Rainey said yesterday:
"The consumer is still very pressured."
"And if you look at economic indicators, balance sheets are running thinner, and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year"
Will the restaurant industry narrative change during the March/April time frame to match the WMT commentary?
Domino's Pizza Enterprises (DMP.AU)
Management Comments imply a slight headwind for DPZ:
This is what happens when you raise prices too aggressively - "Higher delivery pricing (including service fees and higher bundles) reduced delivery customer acquisition and retention."
- "Domino's anticipates Same Store Sales growth will be below the medium-term outlook of +3-6% growth, as a result of most-recent tumultuous trading conditions.
- "New store openings are still expected to be strong in FY23, but maybe below the medium-term outlook of +8- 10%, depending on franchisee sentiment.
- "Based on the strength of the company's operations at a store level and the performance of its digital platforms, Domino's management is confident in the ability to return to positive Same Store Sales growth once it is able to balance the value equation for customers."
CMG discounting to reward members
Two days in a row, I received an email promotion from CMG. The big shift in strategy will come when and if they discount to the general public.
