Notable news items and price action from the restaurant space as well as our fundamental view on select names.






Beef Prices


The drought in Texas that we highlighted in our WEEKLY COMMODITY MONITOR on Wednesday is contributing to an increase in beef prices.  As previously highlighted, despite the short-term increase in supply, ultimately the smaller herd size supports prices.  As of July 1, the nation’s inventory of all types of cattle and calves fell to 99.69 million head, down 1.4% from the same date in 2010, according to a Dow Jones Newswires survey of analysts.  That would be the smallest herd for that date since the U.S. Department of Agriculture began compiling a July 1 figure in 1973.  This will likely keep beef prices elevated well into 2012.


Jim Robb, the director of the Livestock Marketing Information Center, was quoted by Bloomberg as saying “we are slaughtering animals that are potential productive-breeding animals…They are going into feedlots and beef-production systems. We’re not holding heifers for future breeding herd growth.”  The poor pasture conditions are making it less feasible for farmers to maintain larger herd sizes.





The rally in the consumer space recently has been led by categories that were previously lagging.  Within our universe, and related spaces, food processing has picked up performance-wise and full service restaurants have underperformed. 






  • MCD reported 2Q earnings this morning.  EPS came in at $1.35 versus $1.28.  Comps for the quarter were: Global +5.6%, US +4.5%, Europe +5.9%, APMEA +5.2%.  In June, comps were: Global +7.7% versus StreetAccount consensus +3.8%, US +6.9% versus consensus +3.3%, Europe +9.1% versus consensus +4.1% and APMEA +4.8% versus +3.3%.  The stock is trading up to all-time highs this morning.  July, according to management, is expected to bring global comparable sales of 4-5%.
  • TAST reported that its Burger King division’s same-restaurant sales for 2Q declined -5.2%.
  • SBUX, MCD, and now Chick-fil-A Inc. will be following the restaurant industry grain Monday when it debuts new steel-cut oatmeal on its breakfast menu.
  • COSI is cooked - reports Q2 system-wide comps (0.2)% vs. Q1 increase of +1.7% Company-owned +0.5% - Franchise-operated (1.3%)




  • RT reported a horrible 4QFY11; comps came in at -0.1% versus +0.1% consensus.  EPSS came in at $0.25 ex-items versus consensus at $0.31.
  • RT was cut to Underperform from Neutral at BofA.
  • BJRI reported strong 2Q results with EPS coming in at $0.28 versus $0.27.  Comps came in at +6.9% versus consensus +5.3%.  Trading at such a high multiple, the stock is priced for perfection.




Howard Penney

Managing Director


Rory Green




Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more