Quick-Service Pizza Market Share Opportunities for DPZ & PZZA

By Mark Kalinowski Published on July 6, 2020 at 12:00 AM

Is it possible the Street is underestimating sales and market-share opportunities in 2021 for the larger publicly-traded quick-service pizza concepts? We believe that Domino’s (DPZ; Buy, $374.09) and Papa John’s (PZZA; Buy, $83.66) both remain well-positioned for the future for multiple reasons, but this particular factor may be underappreciated. Incidentally, it’s possible for Pizza Hut (owned by Yum Brands [YUM; Neutral, $86.55]) to benefit from the same issue, although Pizza Hut will over the short-to-medium term likely have to deal with net unit closures, limiting to some meaningful degree its opportunity to take market share from other pizza outlets’ closures.

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DIN Applebee’s Rainbow of Market-Share Opportunities

By Mark Kalinowski Published on March 4, 2019 at 12:00 AM

With the Applebee’s concept owned and (nearly 100%) franchised by Dine Brands enjoying its best same-store sales year in 2018 (up by +5.0%) in about 25 years, there are multiple reasons why the recent target range for full-year 2019 of +2% to +4% unveiled by parent company Dine Brands (DIN; Buy) surprised to the upside. These reasons include efforts by the concept to get back to its roots (winning back guests by making Applebee’s more true to what brand Applebee’s is supposed to be all about in the minds of its guests) and lapping two years of bad same-store sales (down by -5.0% in 2016 and down by -5.3% in 2017). This report will focus on another, in our view underappreciated, aspect of why Applebee’s resurgence continues to be better than the Street anticipates: Applebee’s ability to take market share from smaller, privately-held bar-and-grill rivals. We would not be surprised to see many of these rivals continue to struggle over 2019-21, all else equal being an opportunity for Applebee’s to gain market share within the bar-and-grill segment. We maintain our Buy rating on DIN, and note the following:

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YUM Analyst Meeting Highlights… and Our Thoughts

By Mark Kalinowski Published on December 5, 2018 at 12:00 AM

Earlier today, Yum Brands (YUM; Buy) hosted an Analyst Meeting in New York City. The theme was “A World of Opportunities,” which highlights the global opportunities for the company’s KFC, Pizza Hut, and Taco Bell brands. Management says it wants all three brands to be distinctive, relevant, and easy brands. Going forward, management also indicates that collaboration amongst the brands will increase in importance, with management saying “our ability to collaborate will set us apart from our competitors.” This will be a positive if it can come to fruition, but for those on the Street — and we have been amongst them — who believe value can be unlocked by separating out one or more of Yum’s brands, management seems more dead set against that path than ever. Management states that there’s “simply no other restaurant company or retailer in the world like us,” and that “we’ve done from a mindset of being equity operators to being brand builders.” Management adds that “the four growth drivers drive same-store sales, they drive new unit growth, they drive system sales.” Those four growth drivers are: (1) distinctive, relevant, and easy brands, (2) unrivaled culture and talent, (3) bold restaurant development, and (4) unmatched franchise operating capability. We reiterate our Buy rating on YUM and note the following:

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