BKC – Not Too Unlike its Competitors

BKC announced yesterday that it is adding menu items to its BK Value Menu. New items will include the Cheesy Bacon BK Wrapper and the Spicy Chicken BK Wrapper, which will be available for a suggested retail price of $1.39. Both items will also be offered as a Value Meal, which will include two wraps and will be priced at $3.99 for the Cheesy Bacon and $4.59 for the Spicy Chicken. BKC’s President of Global Strategy, Marketing and Innovation Russ Klein stated, “Unlike our competitors, Burger King Corp. is helping cash-strapped customers by adding to our BK(TM) Value Menu, not cutting back.” I found this statement kind of amusing because it seems like all of BKC’s QSR competitors have been adding more value items to their menus. And, they (BKC included) are doing so regardless of the impact on margins. Just last week, BKC reported that its 4Q08 U.S. and Canada restaurant margins (net of the reimaging program) declined 230 bps despite a 5.5% same-store sales lift.
  • NPD data point to a significant increase in the number of visits driven by deals within the QSR segment, particularly the hamburger segment (which includes BKC, MCD, WEN, etc), and based on recent menu introductions, we will continue to see the QSR segment chase less profitable traffic growth.
  • Other recently announced QSR promotions and added menu items at lower price points:

    Nation’s Restaurant News reported yesterday that 400 Wendy’s units in Florida will give away coupons for more than a million free Double Stack hamburgers on Labor Day. For reference, the Double Stack typically sells for $0.99 on the company’s value menu and is made with two hamburger patties, cheese, onions and pickles. At $0.99, this menu item is already cutting into margins, and now the company is giving them away for free!
  • Earlier this week, Jack in the Box introduced its Pita Snacks, a new product platform of snack-sized, wrap-style sandwiches, which will be offered at $1.99.

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

A 'Toxic Cocktail' Brewing for A Best Idea Short

The first quarter earnings pre-announcement today is not the end of the story for Mednax (MD). Rising labor costs and slowing volume is a toxic cocktail...

read more

Energy Stocks: Time to Buy? Here's What You Need to Know

If you're heavily-invested in Energy stocks it's been a heck of a year. Energy is the worst-performing sector in the S&P 500 year-to-date and value investors are now hunting for bargains in the oil patch. Before you buy, here's what you need to know.

read more

McCullough: ‘My 1-Minute Summary of My Institutional Meetings in NYC Yesterday’

What are even some of the smartest investors in the world missing right now?

read more

Cartoon of the Day: Political Portfolio Positioning

Leave your politics out of your portfolio.

read more

Jim Rickards Answers the Hedgeye 21

Bestselling author Jim Rickards says if he could be any animal he’d be a T-Rex. He also loves bonds and hates equities. Check out all of his answers to the Hedgeye 21.

read more

Amazon's New 'Big Idea': Ignore It At Your Own Peril

"We all see another ‘big idea’ out of Amazon (or the press making one up) just about every day," writes Retail Sector Head Brian McGough. "But whatever you do, DON’T ignore this one!"

read more