THE HBM: YUM, CBRL, KKD, SAFM

THE HEDGEYE BREAKFAST MENU

 

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

 

MACRO

 

SAFM reported a disastrous quarter yesterday and the stock was only down 2.3% on accelerating volume studies (+117%).  The short interest at 30% is the highest in the group and is a RED flag not to be short.  We are looking to pick our spots on the long side.

 

THE HBM: YUM, CBRL, KKD, SAFM - FP

 

SUB-SECTOR PERFORMANCE

 

The FSR names significantly underperformed yesterday.  I believe that the underperformance is due to a rumor in the market that the “KNAPP” numbers for August are looking ugly. 

 

EAT, DRI and TXRH are the notable standouts from yesterday’s performance

 

THE HBM: YUM, CBRL, KKD, SAFM - hfbrd

 

QUICK SERVICE

 

  • KKD Q2 SSS: Company-owned +2.5% vs consensus +3.5% and domestic franchise +6.3% vs consensus +4.5%
  • YUM - Taco Bell chief marketing officer David Ovens has resigned for personal reasons after four years.

 

FULL SERVICE

 

  • CBRL - As pointed out by Jonathan Maze at the Restaurant Finance Monitor Biglari Holdings owns the website domain name "enhancecrackerbarrel.com." (BH registered the domain back in July.) 
  • “This is a key element in the Biglari Corporate Takeover Playbook. When the San Antonio investor tried to win seats on the board at Friendly's, he started a website called "enhancefriendlys.com." That effort resulted in the chain's sale to Sun Capital Partners. He did so again when he tried to win board seats at Steak N Shake (enhancesteaknshake.com)—an effort that won him seats on the company's board and ultimately its chairmanship, from which he turned the chain into a hedge fund-style investment vehicle. A group of copycats last year did the same thing in an effort to win board seats at Denny's. That effort failed. The investors use the websites to help fuel a broad media blitz against the company. The sites are filled with numerous press releases and other information that is laced with hyperbole. Biglari has also employed billboards outside corporate headquarters in his proxy fights. (For now, at least, there is nothing on the enhancecrackerbarrel.com site.)”

 

THE HBM: YUM, CBRL, KKD, SAFM - qsr

THE HBM: YUM, CBRL, KKD, SAFM - fsr

 

Howard Penney

Managing Director

            

 

Rory Green

Analyst


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