Dashboard: Apr 2021

Preliminary 1Q:21 average comp growth of +9.7% for the $1B+ Chains (+7.5% 2-year stacked) is a testament to the industry’s tremendous resilience in the face of impossible circumstances. While easing restrictions and strong economy should help keep the sales momentum going, ramping commodity inflation and labor challenges represent significant headwinds.

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Marketing Spend

While U.S. media spend declined -12.9% in 2020 for all industries according to Kantar, the $1B+ chain restaurant industry declined a more modest -5.4% which reflects a -4.5% decline in total systemwide sales and a slight 0.1% decline in aggregate net marketing spend as a % of sales.

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RR Insights Journal

Insights Journal: Marketing Spend Analysis; Retail Sales Pop in March; Chick-fil-A Continues to Amaze; Executive Summaries for Jack & Chili’s.

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Jack in the Box

Jack’s traditional burger/chicken menu is known for variety, innovation and a taco distinction (addressing cravings throughout the day & munchies at night) with 4 strong dayparts, including late-night which benefits from 24/7 drive-thru access. Although this is a regional system with almost 70% of its stores located in California & Texas, the brand enjoys leading QSR hamburger share in 8 of its 10 major markets.

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Chili’s

Chili’s positioning as the 3rd largest casual player by sales: digital, tech-forward; strong everyday value with good value for the money; great place to hang-out with family & friends; and a great bar atmosphere. Young families represent Chili’s primary target and corporate reports: the highest value scores across the category; plans to continue to incent through direct & digital as opposed to LTOs; and that its value mix increased post-lockdown.

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Dashboard: Mar 2021

• Strong April comp prospects reflect that RR’s Intent to Eat Out Index increased +17.4% y/y in March and an overlap over last year’s lockdown period will provide a favorable y/y comparison, especially for FSR.
• A +40% jump in the March BLS Foodstuffs index and sharply higher lumber prices could impact both COGS & development costs.

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RR StockSense 4Q:20

• Stock prices in the restaurant/grocery space have come-off their 52-week highs as investors pause to better assess long-term fundamentals in the new world.
• All-the-same, stock recoveries from their 52-week lows are substantial.

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4Q20 Investor Call Analysis

● The industry continued an uneven recovery as healthy consumer demand for dine-in occasions was interrupted by vacillating government dine-in restrictions which tightened at year-end.
● Fortunately, restrictions began to ease again at the start of 2021 and, despite some uncooperative weather, 1Q dine-in comps seem to be back on track for recovery.
● QSR had a great year as any chain with a drive-thru made-out ok.

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