After today’s (Wednesday’s) market close, The Cheesecake Factory reported adjusted Q2 EPS of $0.52, falling well short of our $0.77 forecast and sell-side consensus (according to Consensus Metrix) of $0.78. This EPS miss came despite the adjusted Q2 tax rate of 5.1% being more favorable than our 11.5% projection and consensus of 11.8%.
After today’s (Tuesday’s) market close, Chipotle Mexican Grill reported Q2 adjusted EPS of $9.30. This came in above our $8.90 forecast and ahead of sell-side consensus (according to Consensus Metrix) of $9.04.
Earlier today, McDonald’s reported adjusted Q2 EPS of $2.55, in between our $2.60 estimate and sell-side consensus (according to Consensus Metrix) of $2.47. Excluding one-time items, the Q2 adjusted tax rate was 18.7%, more favorable than our 21.0% projection and consensus of 20.8%. We calculate that Q2 EPS was helped by the more favorable-than-expected tax rate by about +6 cents, relative to consensus.
Earlier today, Domino’s reported Q2 EPS of $2.82, short of our $3.00 forecast and sell-side consensus (according to Consensus Metrix) of $2.90. However, the Q2 tax rate of 23.2% was more onerous than our 19.0% projection and consensus of 19.2%. If the tax rate had been equal to consensus, by our calculations Q2 EPS would have been +16 cents higher – placing it +8 cents above consensus, and only -2 cents below our forecast.
Today we publish part 2 of 2 of the July 2022 edition of our proprietary McDonald’s Franchisee Survey. This report focuses on franchisees’ thoughts as regards their relationship with corporate. This is in the context of The Wall Street Journal reporting on June 23rd that “McDonald’s Corp. is planning to make some of the biggest changes in decades to the franchising system that underpins its U.S. operations, as it seeks to reinvigorate its base of restaurant owners. Executives this week notified the burger chain’s franchisees that they will have to go through a more stringent review every 20 years to keep their restaurants…. McDonald’s will consider new factors, like performance history, as it asks owners to apply to keep their locations. The company will consider new factors, such as customer complaints, to determine which McDonald’s franchisees can add new locations. In a shift that could affect some of the chain’s longest-tenured restaurant operators, McDonald’s is also requiring that some next-generation heirs put up more cash to keep operating their locations — and to designate a single family member as the operator…. McDonald’s anticipates it will begin to implement the franchising changes next January.” For more info:
McDonald’s plans to release its Q2 earnings before the market open on Tuesday, July 26th. Ahead of that, we publish part one of our two-part, proprietary McDonald’s Franchisee Survey today.