Casual Dining – November Trends

Malcolm Knapp reported last Friday that casual dining same-store sales declined 4.6% in November with traffic down 4.4%.  These were surprisingly strong numbers with comparable sales growth improving nearly 180 bps sequentially from October on a 2-year average basis and traffic getting better by more than 150 bps (helps to explain the group’s 6.2% move over the last two days and moving higher again today). 


Making these results even stronger is the fact that November was the first month in 2009 when both average check and traffic 2-year average trends improved on sequential basis.  On a 1-year basis, traffic has gradually gotten less bad in 2009 with November coming in -4.4% versus -10.5% in December 2008.  At the same time, average check has weakened and even turned negative in May and has remained negative through November.  Seven consecutive months of average check declines is significant as the industry had not reported one month of negative average check growth prior to May 2009 going back through 2000.  Lower average checks are a sign of increased industry discounting.


Malcolm Knapp pointed out that although traffic growth continued to outperform same-store sales growth by 0.2% in November, it was the first month since April when not all of the weeks of the month followed this trend and it was also the lowest level of outperformance over that same timeframe.  To that end, Malcolm Knapp stated, “The level of discounting fell in November as wholesale food costs increased 1.29% for the month vs. the prior month, October.”  His statement only increases my conviction that restaurant operators cannot afford to continue to discount to the same extend they have in 2009 as food costs move higher in 2010.  That being said, I thought this lower level of discounting would translate into bigger traffic losses.  This was not the case in November.  As I already said, both average check and traffic ticked up in November on a 2-year average basis.  We will have to wait and see if the November trends are sustainable.  For reference, DRI said last week that industry trends continued to get better in December but would not clarify whether the improvement was on a 2-year basis or a 1-year basis (the latter would be less impressive).

Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more