• 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.
• Preliminary 4Q:20 $1B+ Chains same store sales results were down -1.0% which is roughly in line with 3Q:20 results and reflects that October’s strength was mostly off-set by FSR weakness in November & December.
• 2021 sales have been improving due to: +14.4% January increase in disposable income ($600 stimulus checks); and easing dining restrictions. Going forward results should further benefit from another $1,400/person stimulus payment.
• Commodity costs escalated in February with several reaching LTM or multi-year highs.
Building Momentum should Benefit from More Value; More Value is Just What the Doctor Ordered; Recent GDP Expansion is Poised to Increase; Ramping Labor Costs, but Deflationary Food Prices; Improving FSR Valuations; FSR Rebound Drives RR Index’s Outperformance; Cap Rates Fell Sharply Because of Lower QSR Supply
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Olive Garden was First to Report for the 4Q20 Season; More Value is Necessary…; 4Q Rebound Still in Progress with a Government Backstop; Commodity & Labor Continue to Ramp-Up; Progress on Unit-Level Valuation Rebound; RR Index Ends Year in the Black; Cap Rates Tick Higher with Rates
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Not Bad Given All Things Considered; Challenge is to Maintain 3Q20 Momentum; Value Represented by Gift Card Bonuses & Free Delivery; 4Q Rebound Continues to Build Momentum; Commodity Prices Accelerate; FSR Valuation Outlook Recovers From Lows; RR Index Surges in Broad Based Rally; and Cap Rate Spreads Normalize after October Surge.
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