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

MACRO

Consumer

Initial jobless claims fell 37k to 391k for the week ended September 24 versus the prior week’s revised 428k number.

THE HBM: DPZ, SYY, WEN, MCD, CMG, COSI, PNRA, DPZ, BWLD, RT, DIN - initial claims 929

Could be a precursor to the USA earnings season? - Yesterday, Domino’s Pizza U.K. & Ireland Plc, declined the most in six weeks in London after reporting 3Q11 SSS that were slightly disappointing.

A NPD survey is very alarming for restaurant visits.  The number of annual restaurant visits by a typical Millennial has plummeted from 245 visits five years ago to 192 this year; that's one less visit every week.

In July, restaurant performance slipped to its lowest level in nearly a year as owners — seeing softening sales — downgraded plans for capital spending and offered up their worst overall performance expectations in 20 months.

SUB-SECTOR PERFORMANCE

SYY - rated new "Underperform" at Credit Suisse: price target is $23.00.

THE HBM: DPZ, SYY, WEN, MCD, CMG, COSI, PNRA, DPZ, BWLD, RT, DIN - subsector fbr

 

QUICK SERVICE

WEN has settled a lawsuit filed this summer against its largest franchise group (WendPartners).   As part of the agreement, WendPartners franchisees will add bun toasters to its stores.

MCD is now offering a breakfast hot dog and coffee for 10RMB in Shanghai, Beijing, Shenzhen and Guangzhou. 

CMG is suffering from rising food costs, according to an article on Forbes.com.  The author states that traffic may suffer as the company is forced to take price.  The author’s target for the stock is $276.

COSI outperformed yesterday on accelerating volume.

PNRA and DPZ underperformed on strong volume studies.


FULL SERVICE

The casual dining sector was hammered yesterday on the back of Darden’s earnings.  Prices were down and volume was higher versus the thirty-day average. 

BWLD was the outlier, trading flat on strong volume.  Our weekly commodity monitor discusses the positive trend in chicken wing prices which is bearish for BWLD.

RT and DIN were the two stocks that did not see accelerating volume on the downside

THE HBM: DPZ, SYY, WEN, MCD, CMG, COSI, PNRA, DPZ, BWLD, RT, DIN - stocks 929

Howard Penney

Managing Director

            

Rory Green

Analyst