No promotions (VLGEA)
Village Super Market SSS increased 3.2% in the quarter ended July, a 20bps deceleration sequentially. SSS growth was driven primarily by inflation. Gross margins expanded by 100bps YOY due to 50bps from increased departmental margins, 40bps from dividends and rebates from Wakefern, 10bps from lower promotions, and 20bps from lower LIFO charges partially offset by 20bps of higher Wakefern warehouse assessments, and 5bps from unfavorable product mix. Operating expenses deleveraged by 60bps driven by self-insured claims, repair and maintenance, security, technology, and legal/consulting fees. EPS grew 18.4% YOY. Village Super Market seemed to have benefited from lower costs in the perimeter departments that it did not fully pass through to customers. Grocery stores have structural operating cost deleverage, which puts an emphasis on the promotional environment not intensifying in order to maintain margins. In a typically competitive industry, promotions have yet to pick up. Does that change with inflation re-accelerating?
Craft beer volumes decline (SAM, TLRY)
At-the-brewery sales from January to May 2023 increased by 2.6% compared to the same period in 2022, according to Arryved. Arryved specializes in craft brewery POS systems, and the analysis utilizes 600 breweries that had sales in the timeframe. The growth was less than half the rate of the 5% inflation, implying volume declines. Nationwide, the average price of a pint was $6.74 in May, up from $6.05 in January 2021. In the last two years, food sales have been the largest driver of sales growth, increasing to 18.4% of sales in the three months ended in May compared to the same period in 2021 with 15.8% of sales. Non-beer beverage alcohol sales have grown as well but were only 8% of sales. Craft beer sales have been even weaker in the off-premise channel. At-the-brewery sales have been driving the growth this year for the industry, which apparently includes food growth. There are a myriad of sellers in the craft beer industry for Tilray to acquire. Maybe they should consider why for longer. Tilray is on the Cannabis best idea short list.
Chick-fil-A was voted #1 (LANC)
Savanta used the opinions of more than 72,000 people from its marketing intelligence platform, BrandVue Eating Out, for the rankings. The number one restaurant overall was Chick-fil-A again followed by Starbucks. Every restaurant brand in the top 100 improved its ranking YOY. Chick-fil-A was ranked highest for brand love among chicken restaurants, followed by Raising Cane’s. Olive Garden was ranked highest in the Italian/Pizza category. Lancaster Colony makes the sauces and dressings for a number of restaurant concepts including Chick-fil-A and Olive Garden. Lancaster Colony is the best way for investors to participate in the growth of Chick-fil-A. Chick-fil-A represents a total of 26% of Lancaster Colony’s sales, up from 24% in F2022. Lancaster Colony’s revenues grew 8.7% last year, Chick-fil-A sales represented half of the company’s revenue growth.
