Knapp High-end Steakhouse - JUNE
Big slowdown in sales consistent with business travel trends
In June 2023, HIGH-END STEAKHOUSES had a -3.4% comp sales decrease, and a -5.2% comp covers decrease. The spread between the weekly high comparable sales results and the low comparable sales results for the U.S.A., in JUNE 2023, was 6.9 percentage points. The high week was the 3rd week which contained (FATHER’S DAY) had a comparable sales result of 0.6%. The low week was the 2nd week at -6.3%. The comp sales run rate for the first 2 weeks of JUNE 2023, is -6.0%. The comp sales run rate for the last 2 weeks of JUNE 2023, is -1.1%. If you remove the week containing Fathers day, the remaining 3 weeks have a comp sales average of -5.140%.
Black Box May
After experiencing a softening in YoY growth every month since January, restaurant sales growth improved during May. But the upswing was relatively small, did not come from a substantial increase in guest counts, and the industry is still experiencing an erosion in sales performance compared to recent months. Restaurant same-store sales growth was 1.9% during May, up from 1.3% the previous month. The comparison to 1Q23 performance is tricky because the favorable Omicron lap created unusually strong growth rates during the first months of this year. But what is clear is restaurant sales growth is not as strong as it was during the last months of last year, immediately before the Omicron boost came into effect. As a comparison, restaurant same-store sales growth averaged 4.4% for the months included in 4Q22. However, despite consumers battling significant inflationary headwinds and the continued concerns for a slowing economy, the slowdown in sales growth is not coming from an erosion in traffic growth but rather from a deceleration in average check growth. But the news is far from positive when it comes to traffic growth. YoY traffic growth remains persistently negative, as it has for many years. Same-store traffic growth was -3.5% during May, an uptick higher than the -3.6% reported for April. Performance for the industry is not very different than the average -3.7% traffic growth recorded for the months during the last quarter of 2022. Average guest check growth has been moderating recently, largely due to menu price increases decelerating this year. Average check grew by +5.8% year over year during May, up modestly from 5.2% the previous month but significantly lower than the average 8% for the last three months of 2022.
Hedgeye Consumer Call Tomorrow
The Consumer Cross Currents | Presentation Of Consumer Sector Heads Penney, Jordan, McGough
On July 6th, Hedgeye Consumer Analysts Howard Penney, Todd Jordan, and Brian McGough tackle US Consumer cross currents.
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EVENT DETAILS:
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For 3 years, the bifurcation among the subsectors of the consumer space has been dramatic. Catalyzed by the pandemic and government action Goods and Services trends have diverged unlike any period in US history. Brick and Mortar shutdown, forced food at home, an ecommerce boom, and no travel in 2020, to the two stage reopening, travel and spending binge from multiple distributions of stimulus. We saw consumer spending ramp to new highs, but with significant variations in the consumption patterns of Durable Goods, Non Durables, Food at Home, Leisure, and Food Services. With our Macro team reiterating concerns around the health of the US consumer, there remains unique long and short opportunities across the consumer landscape.
There is no better team to address the consumer cross currents than our Hedgeye Consumer veterans Howard Penney (Restaurants/Consumables), Todd Jordan (Gaming, Lodging, Leisure), and Brian McGough (Retail/Consumer Discretionary). We’re hosting a call on Thursday July 6th at 12:30pm to review the consumer landscape. In a panel discussion we’ll map out what has happened since the start of the pandemic, where the consumption cycle currently stands, and where we think the various subsectors are heading over a TREND and TAIL duration while highlighting top longs and shorts in each industry.
