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THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Unemployment

Private payrolls gained by 233k versus expectations of 225k in February.  The unemployment rate stayed at 8.3% but, on the positive side, the labor force participation rate ticked up by 20 basis points to 63.9%.  This was the first uptick since August 2010.  During February, employment in leisure and hospitality increased by 44,000 with nearly all of the increase in food services and drinking places (+41,000).  Since a  recent low in February 2010, food services has added 531,000 jobs.

THE HBM: SBUX, GMCR, SONC, MCD, BWLD - lfpr shift

SUBSECTOR PERFORMANCE

THE HBM: SBUX, GMCR, SONC, MCD, BWLD - subsectors

 

QUICK SERVICE

SBUX: Starbucks’ announcement after the close yesterday, that it is to release a new brewer named Verismo by Starbucks, has been met favorably by investors; the stock is up 3.4% premarket.

SBUX: Starbucks was reiterated “Buy” at Deutsche Bank.  The PT was raised to $59 from $53.

GMCR: Starbucks’ announcement after the close yesterday, that it is to release a new brewer named Verismo by Starbucks, has been met unfavorably by investors in GMCR; the stock is down -14.4% premarket.  Green Mountain has responded by saying that its Keurig brewer uses low pressure to brew non-espresso coffee and tea, meaning Starbucks may not become a direct competitor to its core business.

SONC: Sonic reported 2QFY12 same-store sales at +3.4% (3.5% at franchise drive-ins versus 3.1% for company).

MCD: Despite the returns that McDonald’s generated for shareholders in 2011, Jim Skinner, the CEO of MCD, saw his compensation decline by 10% to $8.8m.

MCD: McDonald’s was reiterated “Conviction-List Buy” at Goldman Sachs.

 

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

DNKN: Dunkin’ Brands gained 3.5% on accelerating volume. 

SONC: Sonic declined -7% on accelerating volume yesterday.  The stock cratered on the sales preannouncement.

CASUAL DINING

BWLD: Buffalo Wild Wings is launching its “More March” multi-platform ad campaign in time for one of the busiest months of the year.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

EAT: Brinker gained +3.4% on accelerating volume yesterday.

THE HBM: SBUX, GMCR, SONC, MCD, BWLD - stocks

Howard Penney

Managing Director

Rory Green

Analyst