Consumable SHOW TODAY
We will digest this week in Restaurants and review all position monitor changes in our weekly Consumables Show Today at Noon!
CLICK HERE to Join Us For Lunch Today at 12 pm
Changes To The Position Monitor
Adding EAT back to the Best Idea LONG list.
EAT Trending themes:
- Solid sales and traffic growth: In 4Q24 Chili's reported 14.8% comparable sales growth and 5.9% traffic growth in Q4, significantly outperforming the industry. The company is seeing continued momentum, with high single-digit sales growth and positive traffic in July and early August.
- Success of value offerings: The $10.99 "Big Smasher" burger promotion has driven traffic. In 4Q24, the "3 for Me" value platform performed well, accounting for about 18% of the sales mix.
- Improved operations and guest experience: Significant operational improvements have led to better guest metrics; the company has invested in labor and facilities to enhance the guest experience.
- Marketing effectiveness: Increased advertising spending and a renewed focus on social media/TikTok have helped drive brand awareness and traffic. The company plans to continue investing in marketing in FY2025.
- Menu innovation: Plans to relaunch the fajitas platform in Q4 2025. Continued focus on core menu items like margaritas, chicken crispers, burgers, and fajitas.
- Profitability improvements: Restaurant operating margin expanded 180 basis points year-over-year to 15.2% in Q4. The company expects 30-50 basis points of margin improvement in FY2025; this could be low!
- Cautious outlook on industry trends: Baked in assumptions of 4-5% industry traffic declines for FY2025 guidance. Seeing some softness in July, though still outperforming the broader industry.
- Focus on Maggiano's turnaround: New leadership driving menu innovation and operational improvements. Plans to accelerate new unit growth for Maggiano's.
- Capital allocation priorities: Continued focus on reinvesting in the business and paying down debt in FY2025. May consider more shareholder returns in FY2026 and beyond.
Table for 30,000: Restaurant Industry's Job Menu Expands in August
The August jobs report suggests that while the restaurant industry is recovering, the recovery is uneven across segments and states, with full-service restaurants and certain regions still facing challenges in reaching pre-pandemic employment levels:
Recent growth: In August, restaurants added 29,900 jobs, the most robust monthly increase in a year. This follows an uneven 4-month period of alternating gains and losses.
Overall trend Slowing YoY: The industry is showing positive growth, albeit slower than during the pandemic recovery period. In 2024, restaurants add an average of 10,700 jobs monthly, down from 26,000 in 2023. The industry has 87,000 jobs (0.7%) above its pre-pandemic peak in February 2020.
Segment differences: Full-service restaurants still have 240,000 jobs (4%) below pre-pandemic levels. Cafeterias and buffets remain 31% below pre-pandemic employment. Quick-service, fast-casual, and snack/beverage segments have surpassed pre-pandemic levels.
State-by-state variation: Fourteen states and D.C. still have fewer restaurant jobs than in July 2019. Thirty-six states have surpassed their pre-pandemic employment levels. North Dakota has the most significant deficit (-8 %), while South Dakota leads in growth (+17%).
Context: Eating and drinking places represent about 80% of the total restaurant and food service workforce of 15.5 million.
FAST Casual SHORTS
This was a tough quarter to be SHORT the fat casual names, but they are now showing up on KM's signals as SHORTS!
