Notable news items and price action from the restaurant space including our fundamental view on select names.

  • DRI - Red Lobster is focusing on value this summer with the limited-time offer of a $15 four-course meal.  The “$15 Seafood Feast” includes soup, salad, entrée, dessert and unlimited Cheddar Bay Biscuits and runs through July 25th
  • SBUX signed a deal with Chinese joint-venture partner Maxim’s Caterers Ltd., which gives the coffee company full ownership of Starbucks retail outlets in six Chinese regions. 
  • CMG was reiterated “Buy” with the headline “CMG: A $1,000+ Stock by Decade’s End?”  This is based on CMG’s strong comps and unit growth continuing to approximately 6,000 worldwide.
  • YUM CEO David Novak, speaking at an investor conference, says that the company’s acquisition strategy is focused on China.  The company, he says, is not interested in U.S. brands.  Food costs and labor inflation were also highlighted as challenges in China.
  • YUM supporting the use of food stamps in KY.  Under the federal food-stamp program, states may authorize that elderly, disabled or homeless people, who often have difficulty preparing meals, can use food stamps in restaurants. Three other states — Michigan, Arizona and California — already allow such purchases.
  • Also speaking yesterday was MCD CEO Jim Skinner. He said that MCD will open 175-200 stores in China this year with a focus on more drive-thrus.
  • McDonald’s Issuing Coffee Apology in Australia for serving bad coffee.  It should be noted that the McCafé concept originated in Australia in 1993 
  • A new strain of E coli is causing fears in Europe.  17 people have died due to infection and hundreds, primarily in Germany, have fallen ill due to the bacteria. 
  • The vast majority of restaurant names declined yesterday.  JACK, AFCE, PZZA, BOBE, and MSSR traded down on strong volume.
  • RRGB and DIN were the only names that we monitor to gain yesterday.  DIN was up 30 bps while RRGB gained 3.2%.




Howard Penney

Managing Director

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

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7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

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Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

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Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

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Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

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Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

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People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

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Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

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An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

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