With this report, we update our Q2E same-store sales forecasts for both brands owned by Dine Brands (DIN; Buy).
After Tuesday’s market close, Papa John’s (PZZA; Buy) reported adjusted Q1 EPS of $0.31, surpassing our $0.24 estimate and sell-side consensus (according to Consensus Metrix) of $0.24. We attribute the earnings outperformance primarily to better-than-expected Domestic Company-Owned Restaurant Expenses/Domestic Company-Owned Restaurant Sales (33.4% actual vs. 35.5% projected).
Earlier today, McDonald’s (MCD; Buy) reported its Q1 EPS of $1.72, above our $1.71 forecast, but below the sell-side consensus of $1.75. But the real story is that U.S. same-store sales rose by an unexpectedly robust +4.5%, easily surpassing our above-consensus +3.2% projection. McDonald’s attributes the strong showing to “successful promotions, including the Bacon Event, the 2 for $5 Mix and Match deal, and Donut Sticks, as well as a net positive impact from our Experience of the Future deployment.” On this latter front, management noted on today’s conference call that this is the first time ever that it can make this statement. We look for this effect to continue in coming quarters.