- This increased margin pressure is most likely the driving force behind the company's decision to continue to increase its menu prices. Although the company maintains that its average check of $8.70 continues to offer great value in an environment that caters to the entire family, its declining traffic trends would indicate otherwise. CRBL, however, continues to increase its prices further (average check up 3.8% in June), leading to a 5% decline in traffic.
- CBRL is obviously not alone in terms of weakened traffic trends as the casual dining sector overall has experienced negative traffic every month since February 2006, but CBRL's customers may be more sensitive to rising menu prices as 87% of the company's restaurants are located along interstate highways making the increase in gas prices more relevant to them.
- SONC recently highlighted that its overly aggressive price increases caused a fall off in traffic, forcing the company to be more conservative with its pricing strategies going forward. We have not heard any such acknowledgement out of CBRL yet and in the meantime, traffic trends continue to fall. During CBRL's recent 3Q08 conference call, management defended its pricing strategy, saying, Our thinking on pricing continues to be geared toward providing a great value to our guest, while covering the dollar cost inflation pressures. We believe this strategy is working for us and although guest traffic declined 3.3% in the quarter, our traffic continues to run ahead of the industry as measured by the Knapp-Track index. I would just add that Knapp-Track is running negative as well.
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This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”read more
7 Tweets Summing Up What You Need to Know About Today's GDP Report
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GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist
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Inside the Atlanta Fed's Flawed GDP Tracker
"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.read more
People's Bank of China Spins China’s Bad-Loan Data
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UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'
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Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)
"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.read more
An Update on Defense Spending by Lt. Gen Emo Gardner
"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.read more