BEST IDEAS LIST ADJUSTMENTS & UPDATES
SBUX – We have moved SBUX from SHORT bench to the Best Ideas SHORT list. The company is in the midst of a significant transition, and said transition is beginning to reflect in its operating results. Our central SHORT thesis from our January Black Book SHORT on SBUX still holds true, and we believe we could be as little as one quarter away from the company significantly scaling back on one of its key growth initiatives – FOOD. That, along with a slowing consumer environment and bold predictions made by management, could lead to the company falling well short of expectations.
RECENT NOTES
9/19/16 SBUX | THE TRANSITION IS REAL
9/13/16 CMG | THE LEGAL ISSUES AND THE IMPLICATIONS FOR A RECOVERY
9/08/16 GENERATIONAL DINING | A LOOK INTO THE CONSUMER’S MIND
9/07/16 PLAY | THE SLOWDOWN HAS COMMENCED
9/07/16 CMG | THIS IS WHY I PLAY
8/25/16 MCD | THE SLOWDOWN CAN NOT BE IGNORED
8/23/16 ZOES | THE COLLAPSE WAS FAST
SECTOR PERFORMANCE
Casual Dining and Quick Service stocks that we follow underperformed the XLY last week. The XLY was down 1.5%; top performers on a relative basis from casual dining were CAKE and CHUY, both posting performances of +4.1, while ARCO and PZZA led the quick service group this week up +9.9% and +4.4%, respectively.
CASUAL DINING RESTAURANTS
QUICK SERVICE RESTAURANTS
COMMODITIES
ARTICLES OF INTEREST
MCD | MCDONALD’S TESTS BREAKFAST HAPPY MEAL
The chain is looking to boost family appeal by testing a breakfast Happy Meal starting next week in its 73-unit Tulsa, Okla. Market.
MCD | MCDONALD’S EXEC MOVES TO DUNKIN’
On Thursday, Dunkin’ Brands Inc. named Dave Hoffman, former MCD’s executive, the president of Dunkin’ Donuts’ in the United States and Canada. Hoffman had been with the company for more than 20 years.
CMG | CHIPOTLE REFOCUSES FOOD MESSAGE ON SAFETY
As a way to convince consumers that their food is safe to eat, Chipotle Mexican Grill Inc. has launched a marketing effort, outlining the scope of its food-safety improvements.
DOL | LAWSUIT CHALLENGING DEPT. OF LABOR PICKS UP STEAM
Twenty-one states have banded together to challenge the U.S. Department of Labor’s new overtime rules. Grievances include the fact that the ruling will substantially increase labor costs for many states, local governments and private businesses, and will likely result in job elimination.
CMG | CHIPOTLE NAMES MANAGING DIRECTOR FOR EUROPE
The embattled chain has hired former Costa Coffee executive Jim Slater to the role of managing director of Europe
CMG | CHIPOTLE SETTLES ~100 FOODBORNE ILLNESS COMPLAINTS
Chipotle is actively working to move past their recent customer health scare, as they have settled at least 96 lawsuits filed by victims.
QSR | BURGER KING UNVEILS NEW “CHEETOS CHICKEN FRIES”
Burger King has combined two of its most attention-grabbing menu items, Chicken Fries and Mac ‘n Cheetos, to bring us Cheetos Chicken Fries. As of late, there has been a trend with restaurant chains working with food companies to develop menu items; BK hopes this new offering will be a hit among patrons.
Please call or e-mail with any questions.
Howard Penney
Managing Director
Shayne Laidlaw
Analyst
