- The last I checked Outback’s average check was over $20. How is this good news for profitability?
• Companies already reported Q2 EPS
• An accounting quirk shifted $11m of May’s slot revenue into June. The Strip would’ve declined by 5% excluding this shift.
• Strip gaming revenue for the major casinos (over $72m in annual revs) actually fell by 7%.
• Strip slot volume (coin in, drop, handle etc.) actually fell by 9%. Casinos either tightened their machines considerably (consumers will figure that out) or they played lucky
We view slot volume as the relevant metric to be gleaned out of the monthly reports. The trend there is not good as depicted in the chart; negative since October 2007. Slot revenue only ticked higher in June on the higher hold percentage.
If anything, trends are bad and likely worsening. You wouldn’t know it by the stock action.
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For context, here's a longer term chart overlaying these two economic factors. There are no medals being handed out here to the Italians.
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.
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