Key Research Highlights

Dunkin (Contact RR for More Info)

The Dunkin' way (get in, get out & get on your way) is consistent with its famous "America runs on Dunkin'" tagline and the chain's high-frequency, low-touch, affordable-ticket business model is well suited to a modern lifestyle. A mid-level positioning above c-store & QSR, but below Starbucks appeals to the brand's core blue collar customers "who help make America run". Positioning benefits from a strategy to: grow & protect the core (#1 seller of hot flavored coffee, iced brewed coffee, donuts, bagels and #2 seller of muffins & iced espresso); leverage cold beverages, espresso-based drinks & trendy non-dairy/foam additives into a greater reach with a younger/female demo & new afternoon occasions; and drive trial/traffic with innovation/seasonal offers. While Dunkin' enjoys very strong brand equity, it is currently vulnerable in a price sensitive market to competitive QSR coffee discounting and low-priced C-store coffee which has prompted even Starbucks to talk about value at a time when consumers enjoy more options from fast-growing emerging coffee chains. In conclusion, Dunkin' must continue to refine its value and relevancy in a hyper-competitive coffee segment sufficient to stem a steady market share loss of domestic system sales among the $1B+ chains.

Jersey Mike's (Contact RR for More Info)

Jersey Mike's is the second largest sub-sandwich chain that enjoys a solid East Coast style authentic "Sub Above" brand positioning which is based upon: freshly sliced cold subs made with private labeled meats & cheeses that are piled high on in-store baked bread; freshly grilled hot sub cheesesteaks; and signature Mike's Way sandwich topping option which features a drizzled zing of "The Juice". Brand positioning further benefits from an energized customer experience, substantial cause marketing/charitable donations & community involvement campaigns and an impressive digital mix. Strong fundamentals are evidenced by healthy comps, a double-digit check outperformance and rapid unit development. In conclusion, while Jersey Mike's is well situated for the future, management would do well to focus on affordability and peak lunch daypart throughput (a nice problem to have).

Jimmy John's (Contact RR for More Info)

Jimmy John's is the 3rd largest sub sandwich chain by domestic system sales, distinguished by its "freaky fast" brand equity which reflects that JJ (which makes sandwiches in under 30 seconds) is the only national sub chain offering in-house delivery. However, increasing operational challenges to the industry's delivery model post-covid diminishes this core equity at a time when the growth of DSP third party delivery has leveled the field for all its competitors. Fortunately, the chain is also distinguished by a quality product, fast service and solid value positioning which is working well for the time being. In conclusion, while Jimmy John's is a solid player in the popular sub-sandwich category, the chain may do well to reconsider how to efficiently do "freaky fast" in the new world of ubiquitous delivery.

Little Caesars (Contact RR for More Info)

Little Caesars, the 3rd largest player in the $1B+ pizza chain segment, enjoys strong positioning in the fast growing pizza carryout segment because of its unique attributes which include: low price points; a HOT-N-READY access model which means no waiting for an in-store pick-up of certain menu items kept in inventory; a Reserve-N-Ready system which allows customers to customize & pay for app/website orders before retrieving them from the store's Pizza Portal with a QR code which opens a door; and a DoorDash delivery option for customers who value convenience over price. Little Caesars' success is reflected by healthy sales growth and all-time best unit economics as the chain continues to successfully navigate the very competitive, price sensitive pizza segment as a low-cost provider that is supported by effective marketing and convenient access choices.

Pizza Hut (Contact RR for More Info)

While Pizza Hut enjoys substantial scale and strong brand equity as the 2nd largest national player in the $1B+ chain pizza segment by domestic system sales, it remains a story of 2 very different systems within a single brand umbrella. It is difficult to provide a fair analysis of the entire brand as the older sit-down Red Roof restaurants typically located in rural markets represent such a stark contrast with the system's more modern Delco delivery units. To illustrate this point, our own due diligence took us to a highway just outside of Charlotte NC which features an older outdated Red Roof not far past a modern, smaller footprint store located closer to the city that offers both sit-down, take-out & delivery. The modern store provides a very impressive experience in terms of food quality, service and ambiance. However, we cannot escape the fact that this location is part of an entire system that is weighed down by the inclusion of outdated stores that were designed for a different generation. Perhaps Pizza Hut should consider spinning-off its Red Roof division?

November Promotional Dashboard (Contact RR for More Info)

Notable points from November's data: promotional price points continued to decline across the industry, but especially for FSR; and FSR ramped-up new product news (especially Red Lobster) while QSR's new product intros declined -15.5%.

Commodity Dashboard (Contact RR for More Info)

The monthly commodity dashboard for October reveals an uptick in prices.

Dashboard Capital Markets

November was a month of extremes that included a +34% increase for Bitcoin (which is closing-in on $100k), +53% for BROS shares (Dutch Bros) and a +36% return for EAT (Brinker). Hopefully, all our clients were fully long during the month...

3Q24 Financial Benchmarking

3Q24 financial results reveal that we are not in a consumer recession, with pervasive top-line and EBITDA profit growth.

Restaurant Research/NoBull Disclosure:

The views expressed herein are subject to change without notice and in no case can be considered as an offer or solicitation with regard to the purchase or sales of any securities. RR disclaims all liability for any misstatements or omissions that occur in the publication of this report. In making this report available, no client, advisory, fiduciary or professional relationship is implied or established. This report is intended to provide an overview of the restaurant industry, but cannot be used as a substitute for independent investigations and sound business judgment. Sponsors are not responsible for Restaurant Research's data and opinions. Copyright 2024.

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The content we provide here isn't financial advice and cannot be taken as such. Please speak to your financial advisor before making any investment decision. Also, note that every investment comes with its own risks and drawbacks. Lastly, we would like to remind you that past results cannot guarantee future returns.