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YOUNG ADULT PER CAPITA MEAL & SNACK OCCASIONS ARE DECLINING

Many restaurant operators expend considerable energy to satisfy the needs of the young adult market, and rightly so. Teenagers and young adults, 18-24 years of age, are the life blood of the QSR industry. Most restaurant operators find young adults a critical segment of the population because they are among the heaviest users of restaurants.

Recent date published by NPD shows this group has been scaling back on their restaurant use over the past few years, with the decline from 2007 to 2008 being quite striking. In 2005, consumers 18-24 years of age visited restaurants, on average, 265 times per year. In 2008, that number dropped to 240. From the peak this is a significant shift in restaurant trends. While restaurant use overall has slipped a bit, no other age group has scaled back to the extent young adults have.

While they are a relatively small group in terms of population, 18-24 year olds are responsible for a sizeable number of industry visits. For the year ending June ’08, young adults 18-24 accounted for nearly seven billion visits to commercial restaurants and spent $42 billion dollars, according to CREST. The vast majority of their spending is at Quick Service Restaurants, while full service restaurants receive a fair amount of their spending too.

Offsetting the decline in per capita usage has been growth in the number of 18-24 year old population. Growth in the 18-24 year olds peaks in 2008 and 2009 at 1.2% and by 2013 the numbers begin to decline. Over the next few years, as growth in this critical demographic slows, restaurant operators will be looking for market share gains from a smaller pie.

MCD – RAISING PRICES AROUND THE WORLD TO PROTECT MARGINS!

Speaking to the press in Japan, Eiko Harada Chairman and President of McDonald's Co. (Japan), said "rising food prices will force McDonald’s to raise prices for the second time this year. We'd like to implement it (the price hike) as soon as possible"

According to Mainichi Daily news, McDonald’s will rise by less than 5%, as the cost of purchasing meat, bread, potatoes and other ingredients is expected to increase by about 10 billion yen during fiscal 2008.

Chart Of The Day: Chinese Producer Price Inflation

Why is the Chinese stock market down -9.7% in the last 2 days of trading? This stagflation picture is certainly one of the reasons.

China had a surprisingly strong inflation report this morning. Their highest PPI report since 1996 in fact, at +10% year over year. See the chart by Andrew Barber below.
KM

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JCG: Promos Win Our Award for Least Creative

No news to anyone that J Crew's business has slowed, but do you think that just maybe they could be more creative than simply re-using last year's ads?

Singapore Slows Down, Big Time!

The Port of Singapore is one of the most relevant Global Trade ports in the world. In 2005, in terms of shipping tonnage, it surprised some economists when it was named the busiest port in the world. Singapore is also one of the four “Asian Tigers” – when it slows like we forecasted it to, you should pay attention. Commodities are deflating because global economic growth is slowing expeditiously.

Alongside a massive slowdown in their quarterly GDP growth rate, last night the government of Singapore issued a warning that their export growth could come in as bad as -4% year over year. Provided that local inflation remains elevated, this all but assures Singapore of reporting flat to negative real growth in the coming quarters.

Economic growth in Q2 slowed materially, to +2.1% versus the +6.9% seen in Q1 of 2008. The Singapore Dollar has been under fire in recent months – now the masses know what the locals knew. At 1.41 per US$, Singapore’s currency is trading at a 5 month low.

Export growth in Singapore has not been negative since 9/11/01. That slowdown was prefaced by a global terrorist alert – this one is purely based on the reality that what goes up, must eventually come down.

It is global this time, indeed.
KM

RL Online Promo Levels in Check?

This 70% off coupon for Ralph's summer merchandise raised a yellow flag with me. But turns out that this compares to a 65% discount at this time last year. 'Free Shipping' hurdles are 10% higher this year as well. Overall, not a bullish promotional level -- but in the same ballpark as last year. That's better than I can say for other brands who are seeing 2x the rate of markdown activity as last summer.

Hedgeye Statistics

The total percentage of successful long and short trading signals since the inception of Real-Time Alerts in August of 2008.

  • LONG SIGNALS 80.65%
  • SHORT SIGNALS 78.63%
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