Notable news items, macro data points, and price action pertaining to the restaurant space.





News hitting the tape this morning that consumer spending unexpectedly dropped in June for the first time in almost two years.  A slump in hiring, according to Bloomberg, caused households to retrench.


The ICSC chain store sales index ended its string of gains with a 0.3% decline last week.  Year-over-year growth moderated slightly but remained robust at 4%. The ICSC reported improved customer traffic at discounters.


U.S. comparable sales rose 4.5% in week ended July 30 year-over-year, according to Johnson/Redbook.  Month sales through July 30th were up 4.3% year-over-year, down -0.5% month-over-month.  Redbook sees August comparable sales up 4.6% year-over-year.




Full service restaurant stocks traded well yesterday ahead of TXRH earnings post-close and DIN earnings this morning.  Both earnings reports were a disappointment, however.


THE HBM: DNKN, MCD, SBUX, TXRH, DIN - subsector fbr




  • DNKN’s growth strategy has been questioned by Irwin Barkan, author of “Dunk’d, A True Story of How Big Money is Corrupting the Franchising Industry”.  Barkan rubbishes the “white space opportunities” that the company executives like to highlight, saying that “they’ve been trying to fill up that white space for 30 years”.
  • The coffee names traded strongly yesterday with the exception of SBUX.
  • MCD has entered a five-year IT support deal with Fujitsu.  The IT services provider will roll out “user-exchangeable parts” to McDonald’s 1,200 branches throughout the UK and Ireland.
  • MCD franchisee ARCO reported EPS yesterday.  MCD Brazil SSS +10.2%; NOLAD's (Mexico, Panama and Costa Rica) SSS +9.7%; SLAD's (Argentina, Venezuela, Colombia, Chile, Peru, Ecuador, and Uruguay) SSS +33.1%; the Caribbean division (Puerto Rico, Martinique, Guadeloupe, Aruba, Curacao, F. Guiana, US Virgin Islands of St. Thomas and St. Croix) SSS -0.3%.



  • TXRH posted 2Q earnings last night. EPS came in at $0.22 versus $0.23 consensus.  Sales were in line but the company guided down on full year EPS.  Inflation continues to be a concern.  See our note from this morning for more details.
  • DIN reported 2Q EPS of $0.90 versus consensus $1.02.  Same-restaurant sales for the Applebee’s system were +3.1%.  Two-year average trends were flat on a sequential basis.



Howard Penney

Managing Director


Rory Green


Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more