Feasting on The Lack of Innovation: The Spicy Saga of Wendy's Boardroom Battles
Covering the WEN SHORT. Will there be another attempt to sell the company?
In the previous week, Wendy's shares dipped by 2%, seemingly indifferent to the brewing storm: Blackwells Capital, under the leadership of Jason Aintabi, is poised to shake the foundations of the fast-food giant's governance. According to a Reuters report from early December, citing those in the know, Blackwells is gearing up to propose a slate of directors for election to Wendy's 12-seat board. This maneuver heralds the onset of what could be a tumultuous showdown in the boardroom. The precise magnitude of Blackwells' investment in Wendy's remains mysterious. Yet, this twist unfolds against the backdrop of Blackwells' recent vocal disapproval of Nelson Peltz and his Trian fund. Peltz and Trian President Peter May occupy three of the board's chairs. The crux of Blackwells' critique? Allegations of nepotism and subpar performance by Peltz at Wendy's, echo their earlier grievances regarding Peltz's role in a contentious board dispute at Disney. Reflecting on a broader timeline, Wendy's performance narrative tells a tale of underachievement. Over a span of five years, its trajectory has lagged behind the S&P 500 by a significant 33%. This statistic alone paints a picture of stagnation and, perhaps, a vision for the company that has lost its luster and urgency.
November 2023 Casual Dining Report: A Closer Look at the Fluctuating Sales and Customer Traffic Trends"
In November 2023, the casual dining sector witnessed a notable shift in its performance metrics. The month saw a comparable sales increase by +1.8%. Compared over two years, this represented a slowdown of 210bps, bringing the figure to a modest increase of +2.8%. Additionally, there was a -1.8% decrease in comparable covers, which measures the number of diners. Over two years, this metric also experienced a deceleration of 150bps, resulting in a decline of -3.4%. These recent figures contrast to the same period in the previous year. In November 2022, the industry faced a more pronounced decline compared to November 2021, with comparable sales increasing by +3.8% and comparable covers falling by -4.9%. This year-over-year comparison highlights the evolving challenges and dynamics within the casual dining sector.
"November 2023 Performance Analysis: High-End Steakhouses Face Declining Sales and Customer Visits"
In November 2023, high-end steakhouses experienced a downturn in their business performance. The sector saw a -1.6% decrease in comparable sales, which, when evaluated over two years, represented a slowdown of 175bps, culminating in a lesser decrease of -1.0%. Regarding comparable covers, which measure the number of diners, there was a more significant decrease of -4.8%. Over two years, this metric decelerated 70bps, resulting in a -5.3% decrease. Comparing these results with the previous year's data provides further context. In November 2022, compared to November 2021, high-end steakhouses witnessed a smaller decrease in comp sales of -0.4% and a comp covers decrease of -5.7%.
Back to Business: How the Restaurant Industry Surpassed Pre-Pandemic Employment Peaks
As the calendar turned its pages to November 2023, a milestone was hit: the number of individuals employed in eateries finally surpassed the figures noted before the world was gripped by the pandemic, heralding a notable juncture in the sector's resurgence.
Delving into the specifics, the Bureau of Labor Statistics unveiled that the month witnessed an augmentation of 38,300 positions within this industry, a cumulative addition surpassing 6 million since the dawn of April 2020. Yet, this resurgence tapestry is woven with threads of disparity. While establishments offering full dining experiences still grapple with a deficit of 205,000 jobs compared to pre-pandemic levels, their counterparts in the limited-service niche are charting more robust growth. The geographical landscape of recovery paints a variegated picture: 23 states, along with the District of Columbia, remain in the shadows of their former employment zeniths, with Maryland (down 9%) bearing the brunt of this shortfall. In stark contrast, regions such as Nevada and Utah are riding a wave of significant employment amplification in this realm.
Key Highlights:
- Overall Recovery: Restaurant employment surpasses pre-pandemic levels with a net addition of 38,300 jobs in November.
- Segment Variation: Full-service restaurants lag in recovery, with 205,000 jobs below February 2020 levels, while limited-service segments show more robust growth.
- State Disparities: 23 states, including Maryland, are still below pre-pandemic employment levels, whereas states like Nevada and Utah have experienced significant growth.
- Job Distribution: The full-service segment was the hardest hit; cafeterias/grill buffets/buffets, snack and nonalcoholic beverage bars, quick-service, and fast casual segments show varied recovery levels.
- Long-Term Growth: Over 6 million jobs have been added in the industry since April 2020, indicating a robust overall recovery trend.
Starbucks Corporation Initiates New Dialogue with Workers United Union Amidst Ongoing Unionization Efforts"
In a recent development, Starbucks reached out to the Workers United union last Friday, proposing to resume bargaining talks in January with a selection of representative stores.
This move comes as a response to criticisms the Seattle-based coffee giant faced for delaying tactics. Starbucks has expressed a willingness to consider different approaches and guidelines for how these negotiations might proceed. The unionization movement within Starbucks stores, now two years in the making, has yet to culminate in a formal labor contract. Over 360 locations favor unionization, accounting for about 4% of Starbucks' U.S. store base. However, the rate of unionization has seen a recent slowdown. Adding a layer of complexity, 19 locations have submitted petitions to decertify with the National Labor Relations Board. Notably, seven of these petitions were dismissed due to findings of Starbucks' violations of federal labor laws during the union disputes.
