Restaurant Industry

We reviewed the recently-published Franchise Disclosure Documents (FDDs) for McDonald’s, Wendy’s, and Burger King — the largest, 2nd-largest, and 3rd-largest quick-service burger concepts in the U.S. Among our observations:

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.7% in March 2024. This 55.7% figure is only -20 basis points below the all-time monthly record. It’s also up by +130 basis points on a year-over-year basis.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +1.2% in March — sequentially up by +20 basis points from February’s +1.0%. This marks the first sequential rise in grocery pricing since August 2022.

With this report, we update our data-driven Kalinowski Restaurant Industry Index for Q1 2024 to +1.3%. This is the lowest showing since Q4 2020’s -2.2% — and that quarter was hit in part by the pandemic. Looking at quarters not affected by the pandemic, we have to go back to Q4 2016’s weak +0.6% number to find a quarter as sluggish as Q1 2024 was. While some of this reflects adverse weather, particularly during January 2024, it could be a sign of challenging same-store sales in general for the rest of 2024, particularly if lower-income consumers remain more conservative in their restaurant spending than they were during 2023.

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q1 to +1.9%. This is the one-year figure, lapping the -1.1% number from Q1 2020, the +13.0% figure from Q1 2021, the +2.3% number from Q1 2022, and the +11.0% result from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Quick-Service Burger Index for Q1 2024 is at +29.3%. 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 Quick-Service Burger Index for Q1 to +1.9%. This is the one-year figure, lapping the -1.1% number from Q1 2020, the +13.0% figure from Q1 2021, the +2.3% number from Q1 2022, and the +11.0% result from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Quick-Service Burger Index for Q1 2024 is at +29.3%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and March.

We continue to hear that privately-held Chick-fil-A — the 3rd-largest U.S. restaurant concept — targets $10 million average unit volumes (AUVs) for its traditional (non-satellite, non-mall) restaurants. And, given the concept’s distinct advantages — such as great in-store technology — it is looking like that target might be met in the not-too-distant future.

Over the course of this week, we have previously published notes detailing menu-price increases at 25 Chipotle Mexican Grill restaurants in California, 20 Starbucks locations in California, 25 Taco Bells in California, and 25 Wendy’s in California. Those notes are available at:

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q1 to +0.1%. This is the one-year figure, lapping the -0.3% number from Q1 2020, the +17.2% figure from Q1 2021, the -3.1% number from Q1 2022, and the +4.2% result from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Quick-Service Pizza Index for Q1 2024 is at +18.0%. Our +0.1% figure is 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 Family Dining Index for Q1 to -1.0%. This is the one-year figure, lapping the -15.7% number from Q1 2020, the -1.2% figure from Q1 2021, the +19.5% number from Q1 2022, and the +8.6% figure from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Family Dining Index for Q1 2024 is at +6.9%. This is the lowest such number of any major U.S. restaurant industry segment. Our latest 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.

Black Box Intelligence has released its latest monthly Black Box Index – an index which aggregates same-store sales for 175+ domestic restaurant concepts. Black Box notes that its data represents over 50,000 restaurant units, $75 billion in annual sales, and 300+ clients.

With this report, we update our data-driven Kalinowski Fast-Casual Index for Q1 to +4.2%. This is the one-year figure, lapping the +1.6% figure from Q1 2020, +15.3% number from Q1 2021, the +7.7% figure from Q1 2022, and the +11.2% number from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Fast-Casual Index for Q1 2024 is at +40.3%. This +40.3% figure is the best of any major restaurant sector. Our latest fast-casual numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during January, February, and mid-March.

Earlier this month, we published notes examining whether or not lower gas prices correlated with better same-store sales for the family-dining segment, and for the quick-service burger sector. Those reports are available at:

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 +5.4% number from Q1 2020, the +8.4% figure from Q1 2021, the +2.3% number from Q1 2022, and the +5.2% figure from Q1 2023. Comparing to Q1 2019 levels — a five-year (pre-pandemic) basis — the Kalinowski Quick-Service Other Index for Q1 2024 is at +25.0%. 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.

Earlier this month, we published a note examining whether or not lower gas prices correlated with better same-store sales for the family-dining segment. That report is available at: » Family Dining: Do Lower Gas Prices Help Same-Store Sales? (kalinowskiequityresearch.com)

With this report, we update our data-driven Kalinowski Casual Dining Index for Q1 to -0.1%. This is the one-year figure, lapping the -13.3% number from Q1 2020, the +9.8% figure from Q1 2021, the +18.9% figure from Q1 2022, and the +8.3% number from Q1 2023. On a five-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q1 is at +22.4%. 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 Casual Dining Index for Q1 to -0.1%. This is the one-year figure, lapping the -13.3% number from Q1 2020, the +9.8% figure from Q1 2021, the +18.9% figure from Q1 2022, and the +8.3% number from Q1 2023. On a five-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q1 is at +22.4%. 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.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.7% in February 2024. This 55.7% figure is only -20 basis points below the all-time monthly record. It’s also up by +150 basis points on a year-over-year basis.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +1.0% in February (sequentially down by -20 basis points from January’s +1.2%). This +1.0% number compares with price for food-away-from-home (restaurants) that increased by +4.5% year-over-year in February (sequentially down by -60 basis points from January’s +5.1%). This marks the 12th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing.

Kalinowski Equity Research was founded in February 2018, and launched coverage April 11, 2018. How has the firm’s stockpicking fared in the nearly six years since that date?

At times in the past, we have guessed that – generally speaking – when gas prices go down, all else equal, family-dining sector same-store sales are helped. (Correspondingly, we have also guessed that when gas prices go up, all else equal, family-dining sector same-store sales are hampered.) Our supposition has been that when low-income and middle-income folks have a little more money in their wallets when they’re paying less for gas, and that some of that extra money finds it way into the registers at family-dining restaurants. To what degree, if any, does data back up this assertion?

Late last year, California’s Governor Gavin Newsom signed into law a revised version of Assembly Bill (AB) 1228. This act creates a so-called Fast Food Council that will have nine voting members on it. Our bottom line: as expected, the business-unfriendly members outnumber the business-friendly members. As such, expect the minimum wage for most quick-service and fast-casual employees in California to go up by +3.5% annually. This suggests that the minimum wage for these employees could get to at least $23.75 per hour as of January 1, 2029.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.9% in January 2024. This 55.9% figure ties the all-time monthly record, and is up by +90 basis points on a year-over-year basis.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +1.2% in January (sequentially down by -10 basis points from December’s +1.3%). This +1.2% number compares with price for food-away-from-home (restaurants) that increased by +5.1% year-over-year in January (sequentially down by -10 basis points from December’s +5.2%). This marks the 11th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing.

With this report, we update our data-driven Kalinowski Restaurant Industry Index for Q4 2023 to +3.7%. This is -130 basis points sequentially below the Q3 2023 figure of +5.0%. However, it’s nearly equal to the 35-quarter (Q1 2015-Q3 2023) median of +3.6%. With a lot of macro factors that greatly impacted 2020-23 same-store sales fading into the background (albeit not all of them), we may be back – finally! — to what might be considered “normal” same-store sales trends. We’ll see if 2024 plays out that way (or not).

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.9% in December 2023. This is only -10 basis points below the all-time monthly record.

With this report, we update our data-driven Kalinowski Quick-Service Pizza Index for Q4 to +0.6%. This is the one-year figure, lapping the +10.7% number from Q4 2020, the +3.3% figure from Q4 2021, and the +1.9% number from Q4 2022. Comparing to Q4 2019 levels — a four-year (pre-pandemic) basis — the Kalinowski Quick-Service Pizza Index for Q4 2023 is at +17.3%. So, not only does the quick-service pizza have the second-lowest one-year same-store sales figure for Q4 2023 (ahead of only fine fining), it also has the second-lowest four-year number for Q4 2023 (ahead of only the family dining segment). Our +0.6% figure is based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +1.3% in December (sequentially down by -40 basis points from November’s +1.7%). This +1.3% number compares with price for food-away-from-home (restaurants) that increased by +5.2% year-over-year in December (sequentially down by -10 basis points from November’s +5.3%). This marks the 10th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing, following no such months during all of 2022.

With this report, we update our data-driven Kalinowski Quick-Service Other Index for Q4 to +3.5%. This is the one-year figure, lapping the +1.2% number from Q4 2020, the +5.2% figure from Q4 2021, and the +6.3% number from Q4 2022. Comparing to Q4 2019 levels — a four-year (pre-pandemic) basis — the Kalinowski Quick-Service Other Index for Q4 2023 is at +17.1%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December.

With this report, we update our data-driven Kalinowski Fast-Casual Index for Q4 to +6.4%. This is the one-year figure, lapping the +3.3% figure from Q4 2020, +14.0% number from Q4 2021, and the +5.6% figure from Q4 2022. Comparing to Q4 2019 levels — a four-year (pre-pandemic) basis — the Kalinowski Fast-Casual Index for Q4 2023 is at +32.2%. This +32.2% figure is one of the best of any major restaurant sector. Our latest fast-casual numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December.

In the past, we’ve sometimes remarked to buysiders that it wouldn’t be a bad investment strategy — when choosing between large-cap restaurant stocks McDonald’s and Yum Brands — to simply pick the one with the more attractive (i.e., lower) valuation. In that frame of mind, we published a note examining this simply strategy back on January 8, 2023. With this note, we take an updated look at that approach as a possible simple investment strategy.

With this report, we update our data-driven Kalinowski Casual Dining Index for Q4 to +2.7%. This is the one-year figure, lapping the -18.9% number from Q4 2020, the +35.8% figure from Q4 2021, and the +6.3% figure from Q4 2022. On a four-year (pre-pandemic) basis, the Kalinowski Casual Dining Index for Q4 is at +17.4%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December.

With this report, we update our data-driven Kalinowski Family Dining Index for Q4 to +0.9%. This is the one-year figure, lapping the -28.3% number from Q4 2020, the +37.4% figure from Q4 2021, and the +4.0% number from Q4 2022. Comparing to Q4 2019 levels — a four-year (pre-pandemic) basis — the Kalinowski Family Dining Index for Q4 2023 is at +3.5%. This is the lowest such number of any major U.S. restaurant industry segment. Our latest numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and December.

This report looks at same-store sales trends for multiple concepts in the family dining sector, breaking them down into their components (traffic and average check). We do this in large part to see how much traffic is down for some of the largest concepts in family dining, with this report specifically looking at IHOP (the largest U.S. family dining concept, with about $3.2 billion in 2022 domestic system sales) and Denny’s (tied with Cracker Barrel for being the 2nd-largest U.S. family dining concept with about $2.6 billion in 2022 domestic system sales). For more info:

Looking back to the end of 2009, and through the end of 12/27/23, the value of $10,000 invested in the Kalinowski top picks would now be worth $108,203 (a CAGR of about +18.5%). The value of $10,000 invested in the S&P 500 over that time would now be worth $61,776 (a CAGR of about +13.9%).

We began publishing our Kalinowski Restaurant Industry Index – a same-store sales index with all components consisting of publicly-traded restaurant concepts, weighted by those concepts’ domestic system sales – back in mid-2018, starting with an index number for Q2 2023. As of this writing, through the end of Q3 2023, we have published 22 index numbers ahead of these components publicly reporting their same-store sales results. In that context, it’s a reasonable question to ask: how has our index performed over time, relative to the eventual, publicly-reported results for the components?

With this report, we update our data-driven Kalinowski Quick-Service Burger Index for Q4 to +4.5%. This is the one-year figure, lapping the +4.7% number from Q4 2020, the +6.1% figure from Q4 2021, and the +8.7% number from Q4 2022. Comparing to Q4 2019 levels — a four-year (pre-pandemic) basis — the Kalinowski Quick-Service Burger Index for Q4 2023 is at +26.2%. These numbers are based on our latest proprietary checks/data as regards same-store sales performance for this segment during October, November, and early-to-mid December.

A video at the following link shows KMPH-TV – a Fox affiliate in the Fresno, California market — reporting that “Delivery drivers with Pizza Hut say they will no longer have a job starting next year. Pizza Hut plans to lay off all of its delivery drivers in California, and start using third-party delivery services.”

This report looks at same-store sales trends for multiple concepts in the quick-service burger sector, breaking them down into their components (traffic and average check). We do this in large part to see how much traffic is down for some of the major concepts in the restaurant industry, with this report specifically looking at McDonald’s (the largest restaurant concept in the U.S.), Wendy’s (the 5th-largest restaurant concept in the U.S.), and Burger King (the 6th-largest restaurant concept in the U.S.).

This report examines historical same-store sales correlations between Starbucks China, Starbucks International, KFC China, Pizza Hut China, and Yum China. These correlations may be helpful in getting a sense of same-store sales trends for Starbucks China (on those occasions when Yum China reports its quarterly earnings before Starbucks does). These correlations may also be helpful in getting a sense for same-store sales trends for Yum China (on those occasions when Starbucks reports its quarterly earnings before Yum China does).

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 56.0% in November 2023. This sets a new all-time high monthly record market share for the domestic restaurant industry.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +1.7% in November (sequentially down by -40 basis points from October’s +2.1%). This +1.7% number compares with price for food-away-from-home (restaurants) that increased by +5.3% year-over-year in November (sequentially down by -10 basis points from October’s +5.4%). This marks the 9th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing, following no such months during all of 2022.

Recently, Domino’s, Pizza Hut, and Papa Johns all reported their Q3 2023 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2023 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

Black Box Intelligence has released its latest monthly Black Box Index – an index which aggregates same-store sales for 175+ domestic restaurant concepts. Black Box notes that its data represents over 50,000 restaurant units, $75 billion in annual sales, and 300+ clients.

McDonald’s, Wendy’s, and Burger King (owned by Restaurant Brands International [QSR; Not Rated]) each recently reported their Q3 2023 U.S. same-store sales. In this report, we discuss how these same-store sales results — and potential results for full-year 2023 — relate to these three concepts’ average unit volumes (AUVs). We further discuss what this means for the companies, and their stocks.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.5% in October 2023. This was only 10 basis points away from tying the all-time monthly record of 55.6%. We are somewhat surprised at this strength, as we believe that U.S. restaurant industry same-store sales in general have slowed down over the first half of Q4 2023. Nevertheless, the robust October percentage shows that, despite restaurant prices gaining steam at a more meaningful rate than grocery prices for more than a half-year now, consumers have – at least through the end of October – not meaningfully shifted food dollars back to grocery stores and supermarkets.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +2.1% in October (sequentially down by -30 basis points from September’s +2.4%). This +2.4% number compares with price for food-away-from-home (restaurants) that increased by +5.4% year-over-year in October (sequentially down by -60 basis points from September’s +6.0%). This marks the 8th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing, following no such months during all of 2022.

Black Box Intelligence has released its latest monthly Black Box Index – an index which aggregates same-store sales for 175+ domestic restaurant concepts. Black Box notes that its data represents over 50,000 restaurant units, $75 billion in annual sales, and 300+ clients.

Data out today from the U.S. Census shows that restaurants’ market share (with grocery stores/supermarkets making up the other component) was 55.3% in September 2023. This is the best-ever monthly market-share showing for the U.S. restaurant industry. The strong September percentage shows that, despite restaurant prices gaining steam at a more meaningful rate than grocery prices as of late, consumers have – at least through the end of September – not meaningfully shifted food dollars back to grocery stores and supermarkets.

The latest Consumer Price Index (CPI) data shows that prices for food-at-home (grocery stores and supermarkets) rose by +2.4% in September (sequentially down by -60 basis points from August’s +3.0%). This +2.4% number compares with price for food-away-from-home (restaurants) that increased by +6.0% year-over-year in September (sequentially down by -50 basis points from August’s +6.5%). This marks the 7th month in a row for which restaurant pricing is outpacing grocery/supermarket pricing, following no such months during all of 2022.