We will be hosting an expert call titled "An Insider's Look into Pricing and the Restaurant Industry" on Wednesday, February 20th at 1:00pm EST. The call, featuring Leslie Kerr of Intellaprice, will offer expert analysis on current industry trends as well as an opportunity to explore pricing power as we move through Q1 2013.  



  • The aim of this call is for us and our clients to develop a better understanding of companies' view of pricing as a strategy to absorb inflation in operating expenses over the next couple of years. 


The call will be held Wednesday, February 20th at 1:00pm EST. Please dial in 5-10 minutes prior to the 1:00pm EST start time using the number provided below. A link to the presentation will be distributed before the call, if you have any further questions email .

  • Toll Free Number:
  • Direct Dial Number:
  • Conference Code: 946362#



  • How brands define pricing power
  • Methods companies typically use to measure traffic sensitivity to pricing
  • Macroeconomic factors that are worth monitoring to ascertain pricing power of the industry or a given company
  • Personnel within a restaurant company that are typically charged with making pricing decisions
  • The pitfalls of using test markets to measure pricing power
  • Any standard calculations that our expert or companies use in measuring pricing power



  • President & founder of Intellaprice, a pricing advisory firm for the restaurant industry
  • Built the pricing function for Dunkin' Donuts, formerly Allied Domecq Retailing US
  • While at Allied Domecq, she also held roles in strategy, finance, and brand management for Baskin-Robbins
  • Previously held roles in operations at PepsiCo Restaurant Services Group and in finance for Disney Consumer Products
  • Worked with Customer Relationship Management at Berkeley Enterprise Partners
  • Gained pricing and research experience at Coopers and Lybrand's Compensation Consulting practice
  • Earned her bachelor's degree in marketing and entrepreneurial management from the University of Pennsylvania's Wharton School
  • Earned her MBA at Duke University's Fuqua School of Business


Howard Penney

Managing Director


Rory Green

Senior Analyst


The Macau Metro Monitor, February 19, 2013




According to Taiwan's minister of Transportation and Communications, Yeh Kuang-shih, Taiwan’s first casino resort could be completed by the end of 2017.  Yeh said the government has since been working on law amendments and other regulations in order to go ahead with the establishment of a casino resort in Matsu, the China Post newspaper reports.  He added that if the amendments pass without delay and the construction process runs smoothly, Taiwan’s first casino resort will be ready in 2017.



Sands China Ltd properties welcomed a record number of visitors during the first week of the Lunar New Year, with 1.7 million visits from February 10 to 16 to its four Macau properties.  The Venetian Macao set its all-time record for visitation on the fourth day of the New Year, with almost 140,000 visits, according to Sands China. “Sands China’s over 9,000 hotel rooms were at or near full capacity almost the entire week,” Gunther Hatt, executive vice president of operations at Venetian Macau.



Visitor arrivals in package tours increased by 8.8% YoY to 887,282 in December 2012.  Visitors from Mainland China (650,389) increased by 10.6%, with 255,780 coming from Guangdong Province; those from Taiwan (62,856) and the Republic of Korea (50,640) increased by 25.4% and 66.6% respectively.  On the contrary, visitors from Hong Kong (31,839) decreased by 25.4%.  For 2012, visitors in package tours reached 9,122,332 (32.5% of total visitor arrivals), up by 21.0% YoY.


There were 100 hotels and guesthouses operating at the end of December 2012, providing 26,069 rooms, an increase of 3,713 (+16.6% YoY), of which guest rooms of 5-star hotels accounted for 63.8%.  In December 2012, the hotels and guesthouses received 898,857 guests, up by 9.6% YoY; the average length of stay decreased by 0.09 night to 1.4 nights.



Hong Kong-listed Success Universe Group Ltd announced that its indirect, non-wholly owned subsidiary Golden Sun Profits Ltd had received a notice from Maruhan Corp.  The notice is in respect to the exercise of the Maruhan’s option to require Golden Sun
to purchase its entire 10.2% equity interest in World
Fortune Ltd, and the entire amount of the shareholder’s loans provided by Maruhan to World Fortune.

World Fortune is principally engaged in the holding of 49% equity interest in Pier 16 - 
Property Development Ltd, which owns and operates casino hotel Ponte 16. The remaining 51% is controlled by SJM Holdings Ltd. Maruhan is a leading company in the pachinko industry in Japan.

The maximum and minimum option purchase prices are about HK$325 million (US$41.9 million) and HK$195 million, 
but the price has not been determined at this stage, Success Universe said in a stock filing.  After the deal is completed, Success Universe will have full control of World Fortune.  No reason for Maruhan’s decision was disclosed. The company bought its indirect stake in Ponte 16 in 2007.



According to China Business News, China may introduce more policies to curb property prices before or after the National People’s Congress annual session next month, as several cities tightened credits of housing provident fund loans.  Home sales in China’s 10 biggest cities almost quadrupled to 8.5 million square meters (91.5 million square feet) in the first five weeks from last year, property data and consulting firm China Real Estate Information Corp. said in an e-mailed statement today.

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Market Relationships

This note was originally published at 8am on February 05, 2013 for Hedgeye subscribers.

“Zeus ordained that only in sorrow and in suffering do we find wisdom’s way . . . by suffering we shall gain understanding.”

-AESCHYLUS, Agamemnon


A week ago I had memorable birthday and while I’m not quite forty, I’m getting pretty darn close.  As usual, my friends and family delivered in helping me celebrate.  Keith and his wife Laura invited me out to their house for a fine birthday dinner.  I also received a few books, including one called, “How to Be an Adult in Relationships: The Five Key Lessons to Mindful Loving.”


I think the person that sent me this book meant it as a gag gift, although I’m sure, as with most jest, there was some truth imbedded in the gift. Setting aside an analysis of my relationship history, I think we can all agree on the fact that relationships, and fruitful ones, are really the key to success and happiness in life.  As stock market operators, we all have a relationship with a gentleman called Mr. Market.


The quote at the start of this note is actually very applicable to the stock market.  The best lessons learned from investing typically come from the mistakes.  Further, as my colleague and Hedgeye restaurant Sector Head tweeted last night:


“$YUM is the annual reminder of how humbling this job actually is . . .”


In this instance, Howard Penney was referring to the results from Yum Brands, a company he had been favorably disposed to going into the quarter, which provided disappointing guidance based on worse than expected results in China.  Howard gets many more calls right than he gets wrong (see our 300%+ gain in Starbucks as evidence), but his point on $YUM is a good one – just when we are least expecting it the market humbles us. 


Speaking of humbling markets, the European sovereign debt market is once again becoming relevant.  In the Chart of the Day today, we look at the Spanish 10-year over the last three weeks.  On January 14th, the Spanish 10-year was yielding 4.95% and today is yielding 5.44%.  In the last three weeks, Spanish yields have spiked 10%. 


If I were an investor in Spanish and European sovereign debt generally, I’d probably be demanding a higher yield for the inherent acceleration in risk over the last few weeks.  First, Spanish Prime Minister Mariano Rajoy has been under attack for purportedly taking secret payments over a more than ten year period, with the evidence seemingly well documented.  Secondly, ahead of the EU Summit this week, French President Francois Hollande stated:


“A monetary zone must have an exchange rate policy or else it ends up subjected to an exchange rate that does not match the true state of its economy.”


The translation from French is simply this: Hollande does not believe the market should determine the price of the Euro.


The economic data out of Europe this morning will likely only serve to bolster Hollande’s arguments.  The Eurozone PMI Services numbers were reported this number and on aggregate January came in at 48.6 versus 47.8.  There were a number of positive surprises with the U.K. coming in at 51.5 and Germany at 55.7.  Unfortunately, for Hollande and his government’s policies France was a disaster at 43.6.  The other disaster in European economic data was December retail sales down -3.4% year-over-year. 


On one hand, Hollande is correct that with both Japan and the United States actively devaluing their currencies, Europe will be at a disadvantage in terms of exports if they don’t follow suit.  Unfortunately, like most wars, this ongoing currency is destined to end poorly.  The reality remains that no country in the history of the world has devalued its way to prosperity, though the Japanese have certainly tried.


On that last point, this morning the Japanese are once again upping the devaluation ante.  Bank of Japan Governor Shirakawa announced late yesterday that he would be leaving office on March 19th, a full three weeks earlier than planned.  At the same, two deputy governors will be leaving office.  It seems Prime Minister Abe realizes that political life in Japan is short, and that he needs new leadership at the Bank of Japan to aid in implementing his inflationary policies as soon as possible.  And so, the currency wars continue.


The question related to Japan is just how aggressive will the government get in terms of devaluing.  As my colleague Darius Dale wrote yesterday:


“The Japanese yen, which is down roughly -16% since we initially outlined our bearish bias back on 9/27, continues to get Taro Aso’d.


The latest developmental jawboning on this front has come in the form of Finance Minster Aso’s recent remarks that the Japanese government is taking a page out of its own historical playbook by pursuing strong anti-deflation policies:


“There is no one in the government, the bureaucracy or the BOJ who has experience in anti-deflation policy. We can only learn from history.”


-Taro Aso, 2/3/13


The history lesson Mr. Aso is referring to is Depression-era Japanese Finance Minster Korekiyo Takahashi’s mandating of the BOJ to directly monetize Japanese sovereign debt (as opposed to open-market operations), which began in 1932 and continued for the next 14 years.


During this era, the ratio of JGB issuance financed directly by the BOJ peaked at 89.6% in 1933 and remained elevated throughout the program. This monetization strategy assisted in doubling JGB issuance and boosting Japanese public expenditures by a whopping +34% in 1932 alone.”


The short answer is that Japan can get a lot more aggressive and this won’t be positive for the Yen, despite the recent sharp correction.  If you’d like to set up a time for us to do a briefing with you or your firm on the risks associated with Japan, please email  Japan is a risk that you should keep front and center because in this day and age, all global markets are related.


Our immediate-term Risk Ranges for Gold, Oil (Brent), US Dollar, EUR/USD, USD/YEN, 10yr UST Yield, and the SP500 are now $1649-1686, $114.55-116.88, $79.02-79.83, $1.34-1.36, 90.77-93.22, 1.91-2.10%, and 1489-1513, respectively.


Best of luck out there today,


Daryl G. Jones

Director of Research


Market Relationships - Chart of the Day


Market Relationships - Virtual Portfolio

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