Restaurant Industry

McDonald’s, Wendy’s, and Burger King (owned by Restaurant Brands International [QSR; Not Rated]) each recently reported their Q3 2022 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2022 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

Earlier today (Thursday, November 17th), we learned that the BlackBox Index of same-store sales for October 2022 — importantly, these data points are on a one-year basis — was up by +5.2%, with traffic off by -3.6%.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 55.2% in October 2022. This is a year-over-year improvement of +140 basis points from the October 2021 number of 53.8%. In addition, the 55.2% figure sets a new all-time monthly high, surpassing the 55.1% number from September 2022.

Recently, Domino’s, Pizza Hut (owned by Yum Brands [YUM; Neutral, $122.60]), and Papa Johns all reported their Q3 2022 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2022 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

The latest Consumer Price Index (CPI) data shows that prices for food-away-from-home (restaurants) rose by +8.6% year-over-year in October (sequentially up by +10 basis points from September’s +8.5%). This +8.6% number compares with prices for food-at-home (groceries and supermarkets) that increased by +12.4% year-over-year in October (sequentially down by -60 basis points from September’s +13.0%). The food-at-home figure of +13.0% is now -110 basis points below the 40+ year high number, having shown sequential deceleration for two months in a row.

Back on September 5th, California’s governor signed into law a bill known as the “Fast Recovery Act,” a more accurate name for which would be the Fascist Act. We cannot recall such a large portion of any single industry being so blatantly targeted as this act targets the restaurant industry.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 55.1% in September 2022. This is a year-over-year improvement of +110 basis points from the September 2021 number of 54.0%. In addition, the 55.1% figure sets a new all-time monthly high, surpassing the 55.0% number from April 2022.

The latest Consumer Price Index (CPI) data shows that prices for food-away-from-home (restaurants) rose by +8.5% year-over-year in September (sequentially up by +50 basis points from August’s +8.0%). This +8.5% number compares with prices for food-at-home (groceries and supermarkets) that increased by +13.0% year-over-year in September (sequentially down by -50 basis points from August’s +13.5%). The food-at-home figure of +13.0% is only -50 basis points below the 40+ year high number.

With this report, we update our data-driven Kalinowski Restaurant Industry Index for Q3 to +4.2%. This is above the 30-quarter (Q1 2015-Q2 2022) median of +2.6%, suggesting sales trends remain healthy – at least through the end of Q3 – despite multiple large macroeconomic challenges.

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q3 to +5.1%. This is the one-year figure, lapping the +6.3% number from Q3 2021, and the +4.3% number from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Burger Index for Q3 is at +16.5%.These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September.

With this report, we update our data-driven Kalinowski Casual Dining Index for Q3 to +2.4%. This is the one-year figure, lapping the +36.1% number from Q3 2021 and the -18.7% figure from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q3 is at +13.4%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September. Keep in mind, individual performance can vary wildly on a concept-by-concept basis.

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q3 to -0.6%. This is the one-year figure, lapping the +1.4% number from Q3 2021, and the +15.2% figure from Q3 2020. Our -0.6% figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and September.

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q3 to +3.4%. This is the one-year figure, lapping the +3.0% number from Q3 2021, and the +7.5% figure from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Other Index for Q3 is at +14.5%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and early-to-mid September.

With this report, we update our data-driven Kalinowski Fine Dining Index for Q3 to +4.1%. This is the one-year figure, lapping the +67.5% number from Q3 2021, and the -30.8% figure from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Fine Dining Index for Q3 2022 is at +20.7%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and early-to-mid September.

With this report, we update our data-driven Kalinowski Fast-Casual Index for Q3 to +5.5%. This is the one-year figure, lapping the +14.1% number from Q3 2021 and the +5.2% figure from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Fast-Casual Index for Q3 is at +26.6%. The fast-casual segment’s three-year sales numbers are the best for any major segment of the U.S. restaurant industry. Our latest numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and early-to-mid September.

With this report, we update our data-driven Kalinowski Family Dining Index for Q3 to +3.1%. This is the one-year figure, lapping the +40.3% number from Q3 2021, and the -28.2% figure from Q3 2020. On a three-year (pre-pandemic) basis, the Kalinowski Family Dining Index for Q3 is at +3.8%. This would mark the first time this year in which any quarter is positive on a three-year basis for family dining. Our latest numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during July, August, and early-to-mid September.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 54.8% in August 2022. This is a year-over-year improvement of +80 basis points from the August 2021 number of 54.0%. In addition, the 54.8% figure is only -20 basis points below the all-time monthly high of 55.0% (from April 2022).

The latest Consumer Price Index (CPI) data shows that prices for food-away-from-home (restaurants) rose by +8.0% year-over-year in August (sequentially up by +40 basis points from July’s +7.6%). This +8.0% number compares with prices for food-at-home (groceries and supermarkets) that increased by +13.5% year-over-year in August (sequentially up by +40 basis points from July’s +13.1%). The food-at-home figure of +13.5% is easily a 40+ year high.

Sometimes, relative bargains can be unearthed when looking at a group of stocks, and comparing their current prices with these stocks’ 52-week highs. We looked at 34 restaurant stocks’ closing prices as of this past Friday (September 2nd). Some observations:

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 54.9% in July 2022. This is a year-over-year improvement of +60 basis points from the July 2021 number of 54.3%. In addition, the 54.9% figure is a mere -10 basis points below the all-time monthly high of 55.0% (first set in April 2022).

The latest Consumer Price Index (CPI) data show that prices for food-away-from-home (restaurants) rose by +7.6% year-over-year in July (sequentially down by -10 basis points from June’s +7.7%). This +7.6% number compares with prices for food-at-home (groceries and supermarkets) that increased by +13.1% year-over-year in July (sequentially up by +90 basis points from June’s +12.2%). The food-at-home figure of +13.1% is easily a 40+ year high.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 55.0% in June 2022. This is a year-over-year improvement of +100 basis points from the June 2021 number of 54.0%. In addition, the 55.0% figure ties the all-time monthly high of 55.0% (first set in April 2022).

The latest Consumer Price Index (CPI) data shows that prices for food-away-from-home (restaurants) rose by +7.7% year-over-year in June. This compares with prices for food-at-home (groceries and supermarkets) that increased by +12.2% year-over-year in June. Both of these percentages marked 40+ year highs.

With this report, we update our data-driven Kalinowski Restaurant Industry Index for Q2 to +3.6%. The second quarter of 2022 started off softly, particularly in quick-service, in part due to lapping government-provided $500 billion stimulus from March/April 2021. Trends improved during May, but in June the trend was mixed. Both casual dining and family dining may have come close to generating negative same-store sales during June. On the other hand, quick-service may have benefitted from some trade-down from full-service during June. Also, fast-casual and fine dining appear to remain strong, assisted in part by the relatively higher incomes of their guest base.

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q2 to +2.3%. This is the one-year figure, lapping the +21.6% number from Q2 2021, and the -7.3% number from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Burger Index for Q2 is at +15.3%.These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and June.

With this report, we update our data-driven Kalinowski Family Dining Index for Q2 to +5.7%. This is the one-year figure, lapping the +99.1% number from Q2 2021, and the -54.0% figure from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Family Dining Index for Q2 is at -3.1%. Family Dining is the only major segment of the restaurant industry for which pre-pandemic sales levels have not fully returned. Our latest numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early-to-mid June.

With this report, we update our data-driven Kalinowski Fast-Casual Index for Q2 to +8.5%. This is the one-year figure, lapping the +30.3% number from Q2 2021 and the -7.7% figure from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Fast-Casual Index for Q1 is at +30.4%. The fast-casual segment’s three-year sales numbers are the best for any major segment of the U.S. restaurant industry. Our latest numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early-to-mid June.

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q2 to -2.7%. This is the one-year figure, lapping the +4.1% number from Q2 2021, and the +15.3% figure from Q2 2020. Our -2.7% figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early-to-mid June.

With this report, we update our data-driven Kalinowski Fine Dining Index for Q2 to +11.2%. This is the one-year figure, lapping the +216.3% number from Q2 2021, and the -64.3% figure from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Fine Dining Index for Q2 2022 is at +25.1%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early-to-mid June.

With this report, we update our data-driven Kalinowski Casual Dining Index for Q2 to +3.9%. This is the one-year figure, lapping the +99.9% number from Q2 2021 and the -42.4% figure from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q2 is at +19.7%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early-to-mid June. Keep in mind, individual performance can vary wildly on a concept-by-concept basis.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 54.9% in May 2022. This is a year-over-year improvement of +180 basis points from the May 2021 number of 53.1%. In addition, the 54.9% figure is only -10 basis points less than the all-time monthly high of 55.0% (set in April 2022). But…

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q2 to +2.9%. This is the one-year figure, lapping the +14.4% number from Q2 2021, and the +1.6% figure from Q2 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Other Index for Q2 is at +19.6%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during April, May, and early June.

Due to the pandemic and various reactions to it, U.S. same-store sales for virtually all restaurant companies experienced much more volatility than usual over 2020 and 2021. But, now that we are more than two years past the month (March 2020) in which pandemic-related issues began affecting same-store sales, we would anticipate that U.S. same-store sales for most restaurant concepts will look much more normalized going forward (including meaningfully less volatility than was generated over 2020-21). What could this imply about future same-store sales trends? In this note, we examine what that could mean for several leading full-service concepts.

Due to the pandemic and various reactions to it, U.S. same-store sales for virtually all restaurant companies experienced much more volatility than usual over 2020 and 2021. But, now that we are more than two years past the month (March 2020) in which pandemic-related issues began affecting same-store sales, we would anticipate that U.S. same-store sales for most restaurant concepts will look much more normalized going forward (including meaningfully less volatility than was generated over 2020-21). What could this imply about future same-store sales trends? In this note, we examine what that could mean for several leading quick-service and fast-casual concepts.

Recently, Domino’s, Pizza Hut (owned by Yum Brands [YUM; Neutral, $121.47]), and Papa Johns all reported their Q1 2022 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2022 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

Recently, McDonald’s, Wendy’s, and Burger King (owned by Restaurant Brands International [QSR; Not Rated]) all reported their Q1 2022 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2022 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

Yesterday, we published a report examining 12 full-service restaurant stocks, in the context of their five-year highs and five-year lows. That report is available at:

We looked at 12 full-service restaurant stocks, and examined: (1) how far below they have fallen their five-year highs, and (2) how far they’d have to fall to equal their five-year lows. Our thinking is that the stocks that are most below the five-year highs, and simultaneously would have less to fall to get back to their five-year lows, might be best-positioned for meaningful outperformance should the general stock market recover.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 54.9% in April 2022. This is a year-over-year improvement of +260 basis points from the April 2021 number of 52.3%. Even more impressively, as best as we can tell, this 54.9% market share figure for April 2022 is an all-time monthly high for the U.S. restaurant industry.

Earlier today (Wednesday, May 11th), we learned that the BlackBox Index of same-store sales for April 2022 — importantly, these data points are on a one-year basis — was up by +5.3%, with traffic off by -2.7%.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores making up the other component) was 51.6% in March 2022. This was -10 basis points sequentially lower than February 2022’s 51.7% figure. But it was also modestly higher than restaurants’ full-year 2021 market share of 50.4%.

Earlier today (Wednesday, April 13th), we learned that the BlackBox Index of same-store sales for March 2022 — importantly, these data points are on a one-year basis — was up by +7.2%, with traffic off by -1.7%.

With this report, we update our data-driven Kalinowski Restaurant Industry Index for Q1 to +7.1%. On a three-year (pre-pandemic) basis, this is approximately +14.6%. The first quarter of 2022 had many dips and undulations in terms of same-store sales trends. January 2022 was hampered by labor availability issues that were widespread across the industry. February 2022 fared meaningfully better, as Covid (Omicron) cases rapidly declined in the U.S., and (in a related matter) as labor-availability challenges lessened. However, March 2022 saw trends weaken again, in part due to lapping the massive $500 billion stimulus from one year ago.

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q1 to +2.1%. This is the one-year figure, lapping the +12.9% number from Q1 2021, and the -1.2% number from Q1 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Burger Index for Q1 is at +13.8%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and March.

With this report, we update our data-driven Kalinowski Casual Dining Index for Q1 to +17.6%. This is the one-year figure, lapping the +9.1% number from Q1 2021 and the -13.1% figure from Q1 2020. On a three-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q1 is at +11.5%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and early-to-mid March. Keep in mind, individual performance can vary wildly on a concept-by-concept basis.

With this report, we update our data-driven Kalinowski Fine Dining Index for Q1 to +40.2%. This is the one-year figure, lapping the -0.8% number from Q1 2021, and the -13.3% figure from Q1 2020. On a three-year (pre-pandemic) basis, the Kalinowski Fine Dining Index for Q1 2022 is at +4.6%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and early-to-mid March.

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q1 to -0.2%. This is the one-year figure, lapping the +16.6% number from Q1 2021, and the -0.9% figure from Q1 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Pizza Index for Q4 is at +15.3%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and early-to-mid March.

One-year same-store sales trends have slowed down for U.S. chain restaurants. We believe that on an industry level, same-store sales turned negative in early-to-mid March 2022. What’s causing this? And when might trends get better?

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q1 to +1.7%. This is the one-year figure, lapping the +8.5% number from Q1 2021, and the +4.8% figure from Q1 2020. On a three-year (pre-pandemic) basis, the Kalinowski Quick-Service Other Index for Q4 is at +15.6%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and early-to-mid March.

Restaurant Brands International (QSR; Not Rated) — parent company of Tim Hortons, Burger King, and Popeyes Louisiana Kitchen — announced its intention to acquire Firehouse Subs this past November 15th. That $1.0 billion acquisition’s close was announced one month later, on December 15th.