Restaurant Anthology - Part 2

For more details regarding any of the following highlights, please refer to this week's relevant postings, which are sorted by date.
  • Institutions appear to be net buyers of SBUX and net sellers of MCD. As I keep saying, Starbucks is now making the right capital allocation decisions (evidenced by the company's announcement to partner with SSP for expansion in key European travel channels - posted June 12) while MCD's results will eventually reflect the stress that is emerging in its franchise system from the unprofitable Dollar menu and broadened beverage platform - posted June 13 (SBUX, MCD).
  • MCD's Europe results have been helped by the strength of the Euro in the last 7 quarters. The spread between reported operating income growth and currency-neutral growth has accelerated recently and the F/X comparisons will become more difficult going forward - posted June 12 (MCD). MCD posted another month of strong comparable sales trends in May, up 7.7% globally. This number was benefited by about 2% from a calendar shift, which will reverse in June. Although the U.S. top-line number looked strong, Dollar menu sales have been driving traffic in the U.S. at the expense of margins (company restaurant margins have been down in the last 5 quarters) - posted June 9 (MCD).
  • After coming across a story on the Dow Jones news wire that said the Xuzhou Construction Machinery Group is going to exit its JV with Caterpillar, I realized I don't know how secure YUM's relationships with its partners in China are because they are essentially state-owned enterprises. Despite having a majority ownership position, YUM historically has not consolidated any entity in China, instead accounting for the unconsolidated affiliate using the equity method of accounting - posted June 11 (YUM).

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