Wendy's Earnings, the History of Banking, Wealth Creation & More
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Wendy’s reported that while the consumer is under pressure (resulting in a soft 4Q23 for the industry), prospects are looking up. The brand’s barbell menu strategy is working well to address the traffic decline for low-income consumers (under $75k) with its Biggie Bag value platform while ensuring higher-income consumers are well served with premium Made to Crave offerings.
From its start with the European financial families, banking has been around for a long time. Sometimes it’s good to review the origin of a thing to better understand where we are today…
Are the super-rich creating wealth or are they simply riding the wave of money creation? The following chart reveals an incredibly tight correlation between money supply and the net worth held by the top 0.1% richest…??
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DoorDash, Inc. 4Q23 Total Orders +23% & Adjusted EBITDA Up 2X+
Over half of the new consumers in the U.S. today start their journey with DoorDash, and with 100 possible use cases per month for every consumer in terms of their consumption (whether that’s eating or buying in retail), DoorDash believes it has a huge opportunity to increase order frequency. The company is already well established with 37MM monthly active customers & 7MM+ Dashers providing delivery services. Finally, management provided an update on its progress in grocery.
RBI 4Q23: Sales +9.6%, Comps +5.8% & +3.9% Restaurant Growth
Restaurant Brands International reported further progress in getting Burger King back on track after investing $40MM in BK advertising and $16MM for facility upgrades during 4Q23. Popeyes (+5.8% comp growth), Firehouse (+3.8%) and Tim Hortons (+8.7%) added their strong performance to BK’s +4.6% comp increase during the quarter.
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Texas Roadhouse 4Q23: Comps +9.9% Including +5.1% Traffic & +4.8% Check
Texas Roadhouse reported that its restaurants are the busiest they’ve ever been and that consumer behavior did not change during 4Q nor during the first 50 days of 2024. Management expects to continue facing inflationary pressures in 2024 (reflecting ongoing cattle supply challenges), albeit at a lower rate relative to the last several years.
Denny's Corp. 4Q23: Domestic Comps +1.3%, Sequential Monthly Improvement
Denny’s reported that it does not have a lot of confidence in the general economy when looking into 2024 and this explains expectations for continued traffic pressure, especially from half of its customer base that earns less than $50k. However, on the plus side, recent Yelp data showed that there were 6,000 new restaurant openings in the breakfast category during 2023, revealing an enormous demand for a daypart that Denny’s is well positioned in as America’s Diner.
O'Reilly Automotive 4Q23: Sales +5%, Op. Income +5%
Due to the resiliency of its customers and the non-discretionary nature of its business, O’Reilly has confidence that its industry will perform well in 2024, even if the broader economy ends up facing challenges. In any case, O’Reilly’s full-year 2024 outlook is based upon an assumption of a reasonably stable economic environment.
RR’s Finance & Valuation report provides an overview of the current restaurant finance environment including origination volumes and lending terms as well as private franchisee and public company valuations.
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