Casual

Chili’s +1.7

  • Fiscal 2Q20 comps increased +1.7% for the system (7th consecutive positive quarter) & +2% comps for company stores included +1.4% price, +0.5% mix & +0.1% traffic (with traffic outperforming the industry by +3%).
  • Off-premise was once again the primary sales driver (+31% y/y to 17% mix).
  • January comps (starting off fiscal 3Q) were up +4% (+8.5% on a 2-year stacked basis) as the brand returned to messaging around value with new news about steak (3 for $10) & its Patron Margarita. %

Olive Garden +1.5%

  • Fiscal 2Q20 comps increased +1.5% (-1.2% traffic/+2% price/+0.7% mix), outperforming the industry benchmark in comps & traffic by +120 bps & +110 bps, respectively. The check benefit from its $5 take-home offer was not negated by the Never Ending Pasta Bowl deal, but was pressured by the investment in lunch made earlier in the fiscal year (new weekday lunch menu with 21 options under $10). Catering contributed +80 bps to pricing during the quarter.
  • Off-premise sales grew +17% during the quarter (to 17% mix), driven by strong preference for the $5 take-home offer. Digital sales grew +33% & represented 38% of total to-go sales.
  • Some of OG’s customers are focused on price value alone, looking for an entry level price point & this requires the brand to maintain a consistent value offer in order to maintain this demo.

Burgers

McDonald’s +5.1%

  •  4Q19 comps increased +5.1% (growth was balanced across all dayparts) and +5% for the full-year 2019 (the best annual performance in 13 years).
  • Specific 4Q growth drivers included EOTF, fresh beef quarter pounders & fries.
  • Mix growth is driven by: delivery with 2x the average check of a regular order; Dynamic Yield AI at the drive-thru which helps drive add-on orders; larger orders generated by its self-order kiosks; and promotional items like donut sticks and $1$2$3 value which also drive add-on sales.
  • In 2020, McDonald’s will continue to push its Quarter Pounder with Cheese business (which has been a standout performer over the last couple of years). Plans also call for a commitment to upgrade & aggressively promote its chicken platform (during breakfast & rest-of-day) which may require new equipment. Corporate also sees opportunities around beverages & desserts.

Pizza

Pizza Hut -4%

  • 4Q19 comps declined -4%, prompting the re-assignment of KFC’s president (Kevin Hochman) to PH’s interim president position.
  • Over the last 3 years, the brand has improved: food quality; service speed; its loyalty program; & its digital order platform.
  • However, the chain is challenged to provide a more consistent customer experience across delivery & carry-out. Also, the brand struggles to find a value proposition that works with consumers & is profitable for franchisees.
  • Lastly, the chain is challenged to remodel & relocate its asset base (particularly as it relates to its dine-in assets).
  • Corporate expects near-term “choppiness” around the financial stress of its largest franchisee.

Chicken

KFC +1%

• 2,800 stores offer delivery (Grubhub) & 3,800 stores offer click-and-collect.
• Launch of KFC.com in 10/19 is helping to improve operational ease for team members & customers.
• 54% of the system incorporates the American Showman image at year-end 2019.

Coffee

Starbucks +6%

  • Fiscal 1Q20 comps increased +6% (+3% traffic/+3% check), of which 5% was driven by beverage (specifically its cold platform [cold coffee/cold foam] which drove growth across all dayparts & regions). Beverage results also reflect a higher penetration of Nitro equipment across the system.
  • Results were also attributed to labor efficiencies that facilitate better customer engagement (driving record customer connection scores & higher peak throughputs) & strengthening digital relationships.
  • Starbucks Rewards membership grew 16% y/y to 18.9MM (driving +2% of comp growth) as its multi-tier redemptions are driving higher frequency (particularly for the occasional customer).
  • Going forward sales should benefit from: alternative milk category options for customers; continued innovation in the cold category; & food-attach (plans call for a breakfast sandwich with a plant-based patty) which drives beverage sales.

Dunkin’ +2.8%

  • 4Q19 comps increased +2.8% (the highest quarterly results in 6 years) with a ticket increase that more than offset a traffic decline. Results were driven by espresso, cold brew, the successful launch of its Beyond Sausage Sandwich & strategic pricing increases which were partially offset by national value discounting (Go2s).
  • Espresso (10% mix) represented the primary growth driver during the quarter, with 40% y/y growth. New equipment in 2018 facilitated: holiday innovation around Signature Lattes (Peppermint Mocha) which drove higher tickets with 70% food attachment; and its $2 espresso PM break from 2 to 6PM.
  • 13.6MM DD Perks members (up +38% y/y) drove 13% of sales (up +1.4% y/y) with 1/3 of all perk sales driven by its mobile order platform (mobile orders mixed at 5% & increased +25% y/y during the quarter).

Mexican

Chipotle +13.4%

  • 4Q19 comps increased +13.4% (+8% traffic/+3.4% mix/+2% price). Mix was driven by a carne asada upcharge & digital orders which have a higher average check.
  • Digital sales grew +78% y/y to 19.6% mix. Full-year 2019 digital sales reached $1B, up +90% y/y. The majority of its digital order business is driven by order-ahead & pick-up which has better margins than delivery.
  • National “For Real” TV campaign (showcasing real ingredients, fresh food & culinary skills) has been highly effective at driving awareness, trust & favor.

Taco Bell +4%

  • 4Q19 comps increased +4% with results driven by: the intro of its all-new Toasted Cheddar Chalupa (10% mix); the re-intro of its $5 nachos box; the Xbox gaming promo box; & Rolled Chicken Tacos.
  • Kiosk rollout was completed in 2019, helping to drive check.
  • Corporate also reported a growing utilization of Grubhub delivery which is available in 5,100+ stores.
  • Service speed improved by 20 seconds during 4Q, translating into +9MM additional cars through the drive-thru. In turn, this is driving higher guest satisfaction scores.

Source: Quarterly Concept Updates