THE HBM: CONFIDENCE, GMCR, WEN, BKC, PNRA, THI, DRI, EAT, BWLD, RRGB

THE HEDGEYE BREAKFAST MENU

 

Notable news items and price action pertaining to the restaurant space. 

 

MACRO

 

Confidence

 

University of Michigan Consumer Confidence was a BOMB this morning, coming in at 54.9 versus 62 expectations and 63.7 prior.

 

THE HBM: CONFIDENCE, GMCR, WEN, BKC, PNRA, THI, DRI, EAT, BWLD, RRGB - UMICH CONF


 

According to the Bloomberg consumer confidence index, sentiment dropped 1.5 points, to -49.1 for the week ended August 7; dropping back near its mid-May low and only 5 points from its all-time low. 

 

THE HBM: CONFIDENCE, GMCR, WEN, BKC, PNRA, THI, DRI, EAT, BWLD, RRGB - bloomberg conf

 

 

Retail Sales

 

Retail sales rose 0.5% in July, the largest gain in four months; excluding autos core sales grew 0.3%, down from the upwardly revised 0.5 June figure.  In July, growth was led by miscellaneous retailers, gasoline stations and electronics and appliance retailers.   On the down side were Sporting goods and hobby stores, department stores, and building supply stores.

 

Subsectors

 

Thank in large part to GMCR, the QSR category has performed strongly relative to its peers.  What we would call out here is the improving performance in Food Processing, a space that has been heavily beaten down throughout the recent phase of high levels of inflation in agricultural commodities.

 

THE HBM: CONFIDENCE, GMCR, WEN, BKC, PNRA, THI, DRI, EAT, BWLD, RRGB - subsectors fbr

 

 

QUICK SERVICE

  • WEN discussed the new coffee program at breakfast and a new prototype to drive sales during its earnings call yesterday.  Other than that, it wa just an OK quarter!  SSS for Wendy’s company-operated stores were flat sequentially on a 2-yr basis at -0.3%.
  • BKC SSS grew by +6.8% in Latin America and +2.2% in Europe, Middle East, Africa and Africa and Asia Pacific (EMEA/APAC) and declined by 5.3% in the U.S. and Canada.  BK has been testing smoothies, salads, parfaits and oatmeal at 100 locations.
  • PNRA was upgraded to “Buy” from “Neutral” at Miller Tabak.
  • THI was upgraded to “Buy” from “Hold” at TD Newcrest.

FULL SERVICE

  • DRI has entered into an agreement with CMR, a Mexican casual-dining restaurant operator, to develop and operate Red Lobster, Olive Garden and The Capital Grille brands in Mexico.
  • EAT was downgraded to “Neutral” from “Buy” at SunTrust Robinson Humphrey.
  • BWLD was upgraded to “Buy” from “Neutral” at Sterne, Agee.
  • RRGB has named Stuart Brown CFO of the company, according to reports out this morning.

THE HBM: CONFIDENCE, GMCR, WEN, BKC, PNRA, THI, DRI, EAT, BWLD, RRGB - stocks 812

 

 

Howard Penney

Managing Director

 

Rory Green

Analyst