CART
Goldman's Data leaked to The Information?
Instacart's (CART) experienced a decline of 9.2% following a report from "The Information" suggesting potential challenges for the company in the upcoming quarters. The report indicates that Instacart is anticipated to witness a slowdown in its revenue growth. Anonymous sources have informed the publication that Goldman Sachs analysts are projecting a maximum revenue growth of 8.0% for Instacart in the latter half of this year. This is a slowdown from the company's 1H23 performance, which reported a 1Q23 revenue growth of 50.3% and a 15.3% growth in 2Q23. It's worth noting that Goldman Sachs was one of the banks underwriting Instacart's recent IPO. Our CART model has 8% growth in 2H23, reaching our 2023 revenue estimate of $3.0 billion, so no shocker! Instacart has yet to announce its inaugural earnings report date since going public. We expect this to be a significant event, as the company has not publicly provided full-year guidance. Recently, Instacart revealed that Ravi Gupta, a partner at Sequoia Capital and former CFO and COO of Instacart, has been appointed to the company's board of directors. Furthermore, the board has chosen CEO Fidji Simo to also serve as the chair. In a letter to shareholders, Simo reiterated the potential of the grocery delivery industry, pointing out its $1.1 trillion tam in the U.S and the potential of the current 12% online market share of grocery sales to at least double in the future.
DPZ'S NEW AI Initiative
Domino's has partnered with Microsoft to improve pizza ordering and store operations using generative AI technology and cloud computing. The collaboration will utilize Microsoft Cloud and Azure OpenAI Service to enhance Domino's customer experiences, making the ordering process more personalized and straightforward. With Microsoft as its main cloud provider, Domino's has been exploring data and AI to improve store operations. The companies are in the initial phases of creating a generative AI assistant using Azure OpenAI Service. This assistant aims to assist store managers with inventory management, ingredient ordering, and staff scheduling tasks. The goal is to allow managers to focus more on team member experiences and customer service. The partnership also emphasizes enhancing the customer experience using Azure OpenAI to provide consistent and engaging ordering experiences and support store operations. Domino's and Microsoft plan to set up an Innovation Lab, bringing together leaders from both companies with top engineers to fast-track the development of intelligent store and ordering technologies. Both companies prioritize responsible AI practices, ensuring customer data and privacy protection. Domino anticipates testing generative AI-powered solutions in stores within six months.
Shake Shack's Sugarcane Oil Initiative
Shake Shack is trialing the use of sugarcane oil instead of soybean oil for frying foods in its Hudson Yards and Battery Park City locations. This change affects several items on their menu, including their iconic crinkle-cut fries. This initiative is a result of a collaboration with Zero Acre Farms, the producer of the sugarcane oil. If the sugarcane oil is successful, it could lead leading to a broader rollout across Shake Shack locations. The ultimate aspiration is to save the planet? I would argue the company need to spending more time on things that really matter to profitability.
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Why Sugarcane Oil?: According to Zero Acre Farms:
- Sugarcane is the world's highest-yielding crop.
- It requires 85% less land than canola oil.
- Producing sugarcane oil emits 86% less CO2 than soybean oil.
- The oil is made through a unique fermentation process that uses 99% less water than olive oil.
- Sugarcane oil contains over 90% monounsaturated fat, which is heart-healthy and heat-stable, surpassing even olive and avocado oil.
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Taste Test: Holly Branson from Virgin Group and Ian Boucher, a head chef at Virgin Limited Edition, conducted a taste test. They found the sugarcane oil to have a lighter consistency, not overpowering the food's natural flavors. Both agreed that the oil did not alter the taste of the food, which they viewed positively.
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Customer Acceptance: A significant concern is how Shake Shack's loyal customers will react to this change. The company previously faced backlash when they changed their fries a decade ago. However, the switch to sugarcane oil is not just about taste or quality but also sustainability, making the stakes much higher?
