Two of the earlier reads on October trends were less than positive with MCD and SONC citing sequentially softer trends.  Since then, most of the comments about trends in early calendar Q4 pointed to sequentially improved YOY trends.


It is important to remember that comparisons are getting easier on a sequential basis and that outside of PNRA and BWLD, these sequentially better numbers point only to less bad trends as the numbers are still down on a YOY basis. 


Those easier comparisons are meaningless, however, in that they are not enough to yield positive growth in Q4.  To that end, the street’s Q4 expectation for restaurant revenue growth to improve significantly on a sequential basis (included in the chart below based on Bloomberg estimates) appears aggressive.  Same-store sales growth is likely to remain negative, albeit less negative, and seeing that industry development is so muted this year, unit growth will not be enough to offset that decline for FSR and make up the rest for QSR.


MCD:  “As we move through October, consolidated comparable sales remain positive with Europe and APMEA contributing strong results. In the U.S., despite continued gains in market share and advancement in our industry-leading position, we're expecting flat to slightly negative October comps.”


In September, MCD’s U.S. comparables sales growth was up 3.2% and the company is lapping a +5.3% number from October 2008.  A flat result in October 2009 would point to a sequential slowdown in 2-year average trends.


SONC: “We have seen a little more challenging weather as this fiscal year has gotten off to a start.”

In fiscal 4Q09 (ended August), SONC’s partner drive-in same-store sales declined 5.3% and franchise drive-ins fell 4.4%.


BKC:  Management did not comment on fiscal 2Q10 trends, but it did talk about its recent October 19 national launch of its $1 double cheeseburger.  Specifically, management stated that in markets where the $1 double cheeseburger was already launched with media support in fiscal Q1 (25% of U.S. markets) that the product was helping traffic and gross dollars, but hurting gross profit margins.


In fiscal 1Q10, U.S. and Canada total system same-store sales declined 4.6%.


TAST: “In terms of recent sales trends, Pollo Tropical was a little under 1% positive in October, Taco Cabana was down about 3.5%, while Burger King was around 5% negative. Now it’s been about two weeks since the Burger King $1 Quarter Pound Double Cheeseburger was launched, and while it's still pretty early, we believe that the improvement in sales trends so far indicate that Burger King same store sales should be positive for the balance of the quarter.”


PNRA:  “By period, on a calendar basis, last night we announced 6.9% comps for the first 27 days of the 28-day October period, and we're targeting 4 1/4% to 5 3/4% comps for both November and December.”


“We also believe that our comps received some additional lift in October with easy compare to the year-ago period given the Lehman and stock market meltdowns and the corresponding impact on consumer behavior in late September and October of 2008.”


“To be specific, company comps were up 3.3% in Q3. In fact, in each period in Q3, company comps grew sequentially stronger. In July, company comps were up 2.6%; in August, comps were up 3%; and in September, comps were up 4.4%.”


PFCB:  “As measured by average weekly sales, we remain hopeful that the third quarter was the low watermark for this cycle. Bistro average weekly sales declined about 9% in the third quarter. Trends have improved in the fourth, but average weekly sales are still down about 6.5% quarter-to-date.


Pei Wei, on the other hand, finished the quarter with a strong September, which is carried over into October. Overall, we expect average weekly sales to fall 6% for the bistro, but increase roughly 1% at Pei Wei in the fourth quarter.”


TXRH:  “On the sales side, we experienced sequential improvement each month during the third quarter, and this trend has continued into October.”


“On the negative mix, we actually did see it get a little bit better. I mean, it's only been one month, but as we've gotten into October, our negative mix for the quarter –for the third quarter was down about 1.4%. And as we got into October, we saw it'd be negative by about 0.8 as opposed to 1.4. And really half of our negative mix has been coming from alcoholic beverages and about half of it continues to be from entrée trade down.”


In 3Q09, TXRH reported -4.6% comparable sales growth at company-owned restaurants and -3.6% at franchise units.


Trends from last year:

“October was down 4.3%, November was down 3.4% and in December was down 5.9%.”


BWLD:  “The excitement of football season is here and we’re experiencing same-store sales increases of nearly 6% in company-owned locations and just under 4% in franchised locations in the first four weeks of this quarter “

This improvement is relative to +0.8% company same-store sales and +1.9% franchised growth in 3Q09. 

Trends from last year:

Well the October of last year we had highlighted had been like in the 3% range for company stores, and our quarter last year ended at 4.5%.”



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