Knapp Track September
Casual Dining Monthly
In September 2023, the estimated Same-store sales, compared to YoY, increased by 0.6% or 1.3% below August 2023, which stood at 1.9%. The 2-year remained flat at 3.8%. In September 2023, the estimated Same-store Traffic, when compared YoY, declined by -4.0% or 0.9% below August 2023, which stood at -3.1%. The 2-year declined to -3.1%.
The final week of the month significantly improved the month's overall performance. Although I didn't investigate the potential influence of holiday calendar changes, there was a week-over-week acceleration of 150 basis points when compared to last year.
CASUAL DINING WEEKLY
High-End Steakhouse
In September 2023, the estimated Steakhouse Same-store Sales, compared to YoY, increased by 1.9% or 0.2% above August 2023, which stood at 1.9%. The 2-year remained flat at -2.7%. In September 2023, the estimated Same-store Traffic, when compared YoY, declined by -2.6% or 0.3% below August 2023, which stood at -1.8%. The 2-year declined to -3.6% or 30bps deceleration.
Knapp Track Casual Dining - CA, FL & TX
A notable divergence in September with TX seeing a MoM deceleration of 240bps and the 2-year down 95 bps (traffic down 200bps and 2-year 105 bps) versus FL SSS up 170 bps (flat on a 2-year) and traffic up 220 and flat on a 2-year.
Luke warm bullishness on Instacart
Following last month's IPO, where CART issued 22.0 million shares priced at $30, which opened at $42 and now is (40.1%) lower and (30%) below the IPO price, several analyses have initiated coverage on CART. Analysts are mostly positive about CART. None mentioned the potential WMT concern that we expressed in our IPO deck:
- They highlight its dominant market position, citing it has the edge of being one of the earliest players in third-party food delivery.
- Impressive profitability with potential for even better margins, especially with growth opportunities in its advertising business.
- However, there are concerns. Some analysts are wary about CART's market share in a world recovering from the pandemic.
- They're also looking for clear catalysts that would spur Gross Transaction Value (GTV) growth before giving a more favorable assessment.
Positive Ratings:
- JPMorgan: Rated "Overweight" with a price target of $33. The analyst, emphasized Instacart's status as a U.S. digital-first leader in the online grocery space, collaborating with over 1,400 national and regional retail partners. He said the platform has a strong connection with more than 7.7 million monthly active orderers and recognizes the online grocery industry's potential, but also highlighted increasing competition for CART. Appreciation a sizable ad business and saying the company's valuation attractive at approximately 6x the firm's adjusted 2025 EBITDA estimate.
- Citi: Rated "Buy" with a price target of $34.
- Piper Sandler: Rated "Overweight" with a price target of $36.
- Baird: Rated "Outperform" with a price target of $31.
- Stifel: Rated "Buy" with a target of $48.
- JMP Securities: Rated "Buy" with a target of $33.
- Oppenheimer: Rated "Overweight" with a target of $34.
Neutral/Cautious Ratings:
- Bank of America: Issued a "Neutral" rating.
- Bernstein: Rated it "Market Perform".
Negative Ratings:
- CFRA: Rated "Sell" They highlighted possible growth deceleration for Instacart in a post-pandemic world. Moreover, pointed out challenges faced by online grocery services, including elevated service fees, quality assurance issues, and the sustainability of their current high EBITDA margins, particularly as grocery stores aim for improved online profitability.
