EVENTS THIS WEEK
Tuesday, 3/28 @ 11:00 AM - The Pitch with Keith McCullough
Wednesday, 3/29 @ 2:00 PM Consumables Idea Hunt
We are hunting for longs and shorts where our estimates differ materially from consensus expectations and where the multiple could be re-rated. We will present our analysis after a further round of vetting on a handful of companies. Our best ideas often are sourced from vetted Idea Hunt companies. Stay tuned to see whether we are leaning long or short on each company, our analysis, and our next steps in the research process. I will be looking at:
- Kura Sushi (KRUS) is a Japanese restaurant chain serving customers through a revolving sushi service model. They have an Enterprise value of $655 million or $16 million per store, 4x the annual revenues per store.
- Vita Coco Company (COCO) is a $1.0 billion enterprise value. It has established itself as the leader in packaged coconut water, proving over the past decade that strong global demand for this healthy beverage option represents a significant opportunity.
- Cracker Barrel Old Country Store (CBRL), better known as just Cracker Barrel, is a restaurant/retailer that has a nationwide presence. The company has a $2.9 billion enterprise value and prides itself on providing "a caring and friendly home-away-from-home experience while offering guests high-quality homestyle food to enjoy in-store or to-go and unique shopping - all at a fair price."
Thursday, 3/30 @ Consumables Digest @ 13:30
For Institutional subscribers to talk about top LONGS and SHORTS and to hear feedback from what we are saying out top names. Plus, other important topics that have come up over the past month.
Friday, 3/31 Consumables Pro Q&A @ 12:30 - an AMA forum for ConsumablesPro subscribers.
Send questions to
Blackbox
As the Placer.AI traffic data continued to show the upward boost created by the easier comparisons due to Omicron starting to fade in February, restaurant same-store sales and traffic growth started moderating back to where they were at the end of last year. Yes, February’s sales and traffic results still benefited from easier laps owing to the Covid spikes early in 2022, but at a magnitude much smaller than what we saw in January. And the trends continue to slow in March. Black Box officially reported that same-store sales grew 6.8% in February, down 7.3% points compared to January. Despite the drop in sales growth, industry performance was still much better than the sales growth of 4.8% reported for December 2022. Regarding traffic, same-store growth was 0.4% in February, which represented a slowdown of 4.6% compared to January. Traffic growth has been positive for two straight months, which has not happened since the end of 2021. This is far from being a sign of strength for the industry and more of a result of the favorable comparisons from what was hopefully Covid’s last big impact. Another expected shift in the industry is a softening in average guest check growth. As commodity and labor cost pressures start to ease, menu price increases and their effect on average guest checks are projected to moderate this year. The average check grew by only 6.5% year over year in February, the lowest it has been since February of 2021.
Online Grocery
Is all of DASH's incremental order growth coming from the online grocery channel? Oddly enough, the reduction in SNAP benefits might be helping.
COVID-era increases in supplemental food assistance were rolled back over the past few weeks, and lower-income Americans are beginning to show the effects. One of the biggest signs in the Civic Science data can be seen in the dramatic increase in online grocery shopping over the past several months, particularly on Amazon. When asked why they’re buying more groceries online, 36% of U.S. adults making under $50k in household income attribute it to one or more financial motivations – either because they can find lower prices online, reduced SNAP benefits, or gift cards they can redeem. With SNAP rollbacks only hitting several states in early March, they expect this trend to accelerate.
What is going on at PZZA?
First, the shake-up in the C-suite; Starboard is out, and now this - Papa John’s Sued for Allegedly Denying Blind Employee’s Request for Service Dog
The U.S. Equal Employment Opportunity Commission (EEOC) has filed a disability discrimination lawsuit against Papa John’s Pizza, alleging the company unlawfully denied a blind employee’s request to keep his service dog on site and away from customers and food preparation activities during his shifts. EEOC v. Papa John’s USA, Inc., No. 23-0030 (M.D. Ga., filed March 14, 2023). In a press release, EEOC said the employee applied for a job at his local Papa John’s in early 2020 after hearing from a friend that the company hired individuals with visual impairments. The employee—who is legally blind and relies on his service dog for his commute—applied for a job and was hired, but could not start until the company formally granted his accommodation request to bring his service dog. Papa John’s denied the request and fired him before he worked a shift. EEOC asserts that such alleged conduct violates the Americans with Disabilities Act of 1990, which prohibits discrimination on the basis of disability. “The ADA prohibits employers from terminating employees because of a disability and denying them equal employment opportunities,” an EEOC attorney said in a statement. “The ADA protects employees seeking reasonable accommodations involving service animals. Employers must evaluate such requests on their individual merits. They may not, as Papa John’s has done, reject such requests based on vague and unspecified ‘health and safety’ concerns.” EEOC is seeking back pay, reinstatement or front pay, compensatory damages and punitive damages, as well as injunctive relief.
