Domino’s

Domino’s is very well situated as the largest US pizza chain (36% delivery share & 15% carryout share) with a 40% domestic share among the top 4 players. Brand positioning emphasizes: leading-edge, digital ordering convenience/speed and seamless payments; a 100% contactless delivery model; and its long running $5.99 and $7.99 price point deals which are centric to their everyday value positioning. The chain’s impressive 75% digital sale mix drives higher group checks including more high margin add-on sales enabled by its broad menu (specialty chicken, wings, stuffed cheesy bread, salads & desserts).

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Little Caesars

Little Caesars enjoys simple, effective brand positioning around HOT-N-READY speed & convenience, the lowest price points in the pizza segment and quality (as the only chain to make dough in-house). It’s HOT-N-READY access model means no waiting for an in-store pick-up of $5+ large cheese or pepperoni pizzas kept in inventory. Online orders for other products (Reserve-N-Ready) are available for pick-up from the store’s unique Pizza Portal. Access further benefits from a new DoorDash delivery service started at the beginning of 2020.

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RR Insights Journal

• While 2020 was perhaps the industry’s worse year ever, there were definitely winners and losers mixed-in the overall results.
• To this end, relative $1B+ chain outperformance reflected the clear benefit of scale – helping the national brands to pivot around tech, access and marketing in ways which the smaller players were not able to replicate.
• Executive summaries for Wendy’s, Domino’s, and Little Caesar’s.

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RR StockSense

• While relatively weak sector performance over the last 30 days is notable given loosening government restrictions, it may reflect the expiration of stimulus benefits which provided a tailwind over the previous 3 months.
• In any case, the tech sector’s performance (Olo, PAR Tech & Grubhub) was propelled by Olo’s post IPO strength.

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Wendys

Wendy’s “Quality is our Recipe” brand positioning stresses a commitment to fresh, never frozen, North American beef in the form of square, cooked-to-order burgers that are juicier, hotter and made with more melted cheese. The brand’s freshness positioning is also reinforced by the: use of smaller birds which make its chicken fillets more tender & juicy; daily produce prep; mayo on its burgers; and greenhouse grown tomatoes. Further, it’s premium positioning benefits from: high-end toppings (applewood smoked bacon, asiago cheese & high-end salad toppings); spicy flavor profiles; and bakery styled buns that “hold the whole thing”.

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Dashboard: May 2021

• 2Q quarter to date sales momentum on a 2-yr. stacked basis looks strong as the vast majority of restaurants are now open for dine-in and capacity constraints diminish across the country.
• Commodity Inflation Aggravated by Act of Terror.
• More sellers are coming to market, driven by improving sales & profit and by the prospect of a significant increase in the capital gains tax.

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1Q:21 Investor Call Analysis

• Results for 1Q21 were very positive as the industry slowly, but surely gets back to normal.
• Off-premise seems able to retain elevated sales levels even as the sit-down business returns.
• An acceleration in digital adoption is not only improving convenience, but also operator efficiency.
• Labor & food inflation continue to be a major concern.

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1Q:21 Same Store Sales

• 1Q21 comps were very strong with the $1B+ Chains reporting +10.8% growth on a weighted average basis (+8.5% on a 2-year stacked basis).
• What is notable is how well most of the industry performed since the 1Q20 lockdowns, with 3 QSR segments up double-digits on a 2-year stacked basis during 1Q21.
• While the sit-down chains are getting back to normal, they still have a good bit of lost ground to recover.

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TRAFFICAST: FORWARD LOOKING CONSUMER SURVEY

• While the previous eye-popping growth of RR’s Intent to Eat Out Index (our survey of 1,500 consumers’ plans to eat-out over the next month) maybe slowing, it looks like sales for June will still be strong on a y/y basis.
• So it appears that even as stimulus tapers, consumer demand remains robust as consumer confidence continues to rebound and jobless claims drop to a post-lockdown low.

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