Limited Service Idea Hunt
We are hosting a Quick Service idea hunt on Thursday, October 12th, at 2 p.m. ET. We will have one pitch on MCD, WEN, QSR, YUM, and JACK on the call. We recently removed McDonald's (MCD) as a Long. In this presentation, we will showcase why we removed MCD and highlight some of the pressures this industry faces ahead of the 3Q23 earnings period.
EVENT DETAILS:
|
September Jobs
The food service and drinking places employee count increased by 60.7K to ~12.4M workers. That figure accounted for 1 of every 5 jobs created or 18% of the overall non-farm payroll increase of $336K. Over three years since the beginning of the COVID-19 pandemic in the U.S., the restaurant industry's workforce has finally rebounded to its pre-pandemic size.
Employment Growth in September: Eating and drinking establishments added 60,700 jobs in September, based on seasonally-adjusted preliminary data from the BLS. This increase in September was the most significant since January and marked the 33rd straight month of employment growth in the restaurant sector.
Third Quarter Employment Data: During the third quarter, there was a net addition of 100,400 jobs in eating and drinking places. This improved from the second quarter, which saw a modest increase of 36,300 jobs—the third quarter marked the 10th instance in the past 11 quarters where the restaurant industry added over 100,000 jobs.
Overall Recovery and Growth: The journey to recovery has had challenges, but eating and drinking establishments have added over 6 million jobs since the lowest point of restaurant employment in April 2020. By September 2023, the number of jobs in eating and drinking places surpassed the February 2020 peak by nearly 30,000.
Consumables Show
EVENT DETAILS:Date & Time: Monday, October 9, at noon ET. Webcast & Slides: CLICK HERE (refresh shortly before the call). |
Every Monday at noon ET, our Consumables Team will host a live event where we will go through Timely and Topical events/data that have occurred in our respective industries and preview the coming week. We hope you can grab your lunch and join us as we break down the Restaurant, Consumer Staples, and Cannabis space. We will explore several topics, including recent position monitor changes, top questions from client meetings, most frequent inbounds, pushback on our most recent calls, and updates on some of our best ideas.
DNUT SHORT?
We are adding DNUT to the SHORT Bias List.
Immunity to GLP-1 Impact Concerns: DNUT seems to have been unaffected by concerns related to GLP-1 that are impacting Consumer Packaged Goods (CPGs) and its competitors, implying that the company has a unique positioning, product mix or risk management strategy that shields it from the adverse effects that others in the industry are experiencing. We don't think so.
CEO Departure: At the end of September, it was announced that CEO Michael Tattersfield would step down. Tattersfield's resignation from his role since 2017 will be effective Jan. 1. Krispy Kreme named Josh Charlesworth, the donut giant's current global president and chief operating officer, as Tattersfield's replacement. The time departure of a CEO can be a significant event for a company. Combined with the sale of Insomnia, the uncertainty about the company's future direction, potential changes in strategy, and concerns about leadership continuity.
Stagnating Domestic Growth: The company's growth in its home market is slowing down, and margins have benefited; strong pricing will roll off in 2024. Stagnating growth can be a concern, and there are questions about points of access strategy.
Desperation to Sell 'Insomnia': Insomnia margins were lower in the latest quarter, and the sale further indicates that this part of the business is underperforming. Does this suggest that the company could settle for a lower price, which might not be disappointing?
