Tag Archives: Winners

The Restaurant Stock Big Winners (And Losers)
September 1, 2018 12:00 pm|Comments (0)

Two Restaurant industry heavyweights shared their unique, investable insights on which stocks are poised to win and lose in the months and years ahead.

In this exclusive webcast, Hedgeye Restaurants analyst Howard Penney and Restaurants journalist Jonathan Maze, Executive Editor with Restaurant Business Magazine, discuss numerous big restaurant stock winners and losers along with the key sector trends that are rapidly changing the game in the restaurant industry.

Below is access to the entire 52-minute webcast plus the key takeaways transcribed from this webcast:

Howard Penney: Welcome Jonathan. I want to start with a simple question that probably doesn’t have an easy answer. Why isn’t restaurant traffic stronger? Consumer confidence is high, unemployment rate is low, wages are growing, so what’s your take on restaurant traffic these days?

Jonathan Maze: If you think about it, restaurants have spent the last 10-plus years building new locations, starting new concepts, and we’ve had a lot of money flow into the sector year after year. Lending is readily available for just about everybody. All of this has generated a feeding frenzy in the restaurants space.

But the thing is, when consumers have a lot of choices, they make them. That’s essentially what’s happened. We’ve had same-store traffic weakness for the last decade and consumers are simply using their wallets to make choices. And any company that doesn’t do their job well is struggling to generate same store traffic.

Penney: Retail sales are showing a surge in spending recently. So consumers are out there and spending but, to your point Jonathan, there are just too many stores and not enough good ones. You can see in the Black Box data, notably, a pick-up here in November of 2017 to the present in comparable sales. That’s partly due to pricing and to a certain degree the Trump tax cuts perhaps. But traffic, as you can see, is still not doing well.

Penney: The next topic from a macro perspective is wage inflation. This is going to be one of the more difficult issues the industry is going to face. There’s good news and bad news. You’ve got wage inflation which is putting money in the pockets of consumers, but it’s also putting pressure on the P&L of these restaurant companies and that’s forcing restaurants to raise price. This creates a bigger premium in the cost of going out relative to going to a supermarket.

So Jonathan, how does the industry deal with this and not only inflation but also the supply issue?

Maze: The industry has to get more efficient. The fundamental problem with the restaurant industry today is that it’s a very inefficient method of delivering food to consumers. If you compare it with convenience stores and grocers, their primary competitors for food dollars, restaurants spend a lot more on labor. Now, it’s obviously an industry that’s a lot more experiential, but restaurants need to improve their efficiency. Wage rates are going up in an industry that spends a third of its revenue on labor, so it’s becoming less profitable from a competitive standpoint.

Penney: I want to talk about delivery for a second, because it’s changing the industry. Darden Restaurants (DRI) and Texas Roadhouse (TXRH) are taking a wait-and-see approach to delivery. Now, I would argue they’re probably two of the best-run concepts today. Texas Roadhouse probably gets the gold star, with positive traffic in an industry that has negative traffic.

Now, you can argue that these best-in-the-business operators must see something in delivery that they don’t like. Now the obvious thing is they don’t want to pay 15-30% to the aggregator to get the food delivered. And on the other side of this are the companies going after delivery like Applebee’s.

Not that the market is correct, but the market is telling us something with GrubHub (GRUB) at $ 140 today and a $ 13 billion valuation that there is going to be a big shift to delivery. Furthermore, you have private and public companies talking about 20% of sales going to delivery.

I would argue there are two points to make here. One, if 20% of your sales go to delivery and you have to pay 15% fees, that’s a problem. And then the second thing is who’s responsible when there are issues? It’s really going to be tough when a company is putting their brand in the hands of a third party. There’s certainly going to be some risk. I don’t think the consumer is going to give the brand a pass for cold fries or a cold burger.

Penney: Let’s have some fun with some names. I’d like to go through McDonald’s (MCD) first. We have McDonald’s same-store sales on this slide. Now, you can see the pick-up in sales in 3Q of 2015. McDonald’s CEO Steve Easterbrook came in a few months before that in late 2014, early 2015. He simplified things in 2015. As you can see, the menu size went from 108 to 72. Now the menu size is going back up again. Promotions also went down from 2013 to 2015, and now the promotions are going back up.

I see promotions and menu size going up, causing a slowdown in drive-thru times. Now, 70% of business goes through the drive-thrus.

Jonathan, I’m making my bear case for McDonald’s right now, and you can choose to comment or not. But my thesis is that growth creates complexity and complexity is the silent killer of growth.

Are things like Technology able to save McDonald’s?

Maze: Finding ways to add technology to a restaurant to improve efficiency, that’s a good thing. Using the tools available to improve your business is a good thing. Fresh beef should be a good thing. Adding delivery should, in theory, add incremental sales because you’re adding more ordering offers. This could point to a McDonald’s that offers consumers a better experience and gives them better tasting food.

But it’s also asking their franchisees to do an awful lot. And that’s the issue of complexity that I think you’re talking about. The danger to me has not been these individual things but that they’re doing them all at the same time.

Penney: I agree with you. The technology kiosk that they’re putting in their stores, there’s an intended consequence of that and that is they want to reduce labor over time. So they want to shift the consumer’s behavior to ordering at a kiosk from ordering from a person. Now that will take time, years to happen. But they just can’t afford to pay the person taking orders $ 15 an hour. The CEO of McDonald’s will never say that publicly for obvious reasons.

Penney: Complexity is clearly a theme of mine, and I’m going to stick with that here talking about Starbucks (SBUX). On slide 19, you see the Starbucks American same-store sales and you see sales in 1Q 2016 posting 9% growth and 1% growth by 3Q 2018.

This is another complexity story as their ticket times have gone down. They’re serving food and trying to sell more to consumers. If you look at the menu trends, total menu items are up a lot. If you look at menu trends and correlate that with sales and promotions, when menu items go up, sales go down.

Now this is my Howard Schultz slide, where he came back when Starbucks was struggling after he left. The company cut capital spending because they were growing too fast. And then he left at the peak of capital spending again as sales were slowing. So now once again he’s left the ship drifting along with a CEO who doesn’t look like he’s ready to take the right steps to fix the sales trend.

What are your thoughts Jonathan?

Maze: I think they might need to slow down again. They’re adding units at a pretty rapid pace. They just overtook McDonald’s as the second most unit heavy restaurant chain in the U.S. And that unit count tends to get concentrated in very specific markets. It’s not spread out. That’s one of their issues.

Complexity is definitely a concern. Starbucks same-store sales are definitely slowing. So I agree with you that complexity is hurting their service times and it’s hurting their traffic.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.


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Trailblazers14 Startup Pitch Competition Recap: 14 Innovators, 4 Judges, 3 Winners
June 29, 2018 6:24 pm|Comments (0)

Coresight Research

Pavan Bahl, CEO, MouthMedia Network, Tami Fersko, EVP Finance, The James Group, Josh Wexler, Cofounder and CEO, RevCascade, Brendan Phelan, Cofounder and VP of Strategy, Radius8, Marc Estigarribia, Managing Director, MSQ Ventures, Balaji Ravindran, COO, Markable, Katy Gaul-Stigge, President and CEO, Goodwill of NYNJ, Meredith Darnall, SVP, Business Intelligence & Strategy, GGP, Deborah Weinswig, Founder and CEO, Coresight Research, Janice Wang, CEO, Alvanon

Earlier this week, I shared an overview of the inclusive design event that our Coresight Research team recently cohosted with Alvanon, a global apparel and product development consultancy that solves the challenges of sizing and fit inherent in the apparel industry. Our daylong conference concluded with the Trailblazers14 Startup Pitch Competition, in which 14 innovative, early-stage companies presented their solutions to a panel of four judges and an audience of more than 300 fashion industry leaders. Pitch events are a great way to cross-pollinate tomorrow’s innovations with today’s retail leaders, and this program far surpassed my expectations.

Our Trailblazers event, called One Size Does Not Fit All: Inclusive Design & the Modern Consumer, was one of the first conferences to focus solely on inclusive fashion across the entire retail value chain, from design to manufacturing to retail to the customer experience. The audience was full of innovators and forward-thinking influencers—change agents from across the industry.

We handpicked potential participants from our Coresight Labs retail startup database and nearly every startup we invited signed up to present: our plan was to feature 10 Trailblazers, but the number quickly grew to 14.

Our sponsors provided amazing prizes for the winning startup:

  • MSQ Ventures offered a four-week consulting project to help the winner determine how to effectively introduce its solution to the Chinese market and investment community.
  • MouthMedia Network offered to produce a 45-minute podcast for the winner, to be featured in the weekly Fashion Is Your Business
  • Goodwill NYNJ offered a one-week pop-up shop for the winner at its Union Square location in New York City.
  • Silicon Valley Bank provided a case of wine for a random drawing.

Each of the 14 competitors gave a three-minute pitch. I emceed the competition, and the presentations were evaluated by four distinguished judges: Meredith Darnall, SVP, Business Intelligence & Strategy, GGP; Marc Estigarribia, Head of Cross-Border Origination and Engagement, M&A, MSQ Ventures; Tami Fersko, EVP, Finance, The Jones Group; and Katy Gaul-Stigge, CEO and President, Goodwill of NYNJ.

Fourteen pitches and 15 minutes of deliberations later, our four judges announced a three-way tie for winner. Fortunately, some of our sponsors stepped up and tripled the prize pool, so each winner received the MouthMedia Network podcast and the Goodwill NYNJ pop-up shop.

The Winners

Markable is using AI to make all visual content shoppable in order to monetize visual fashion and improve engagement. Publishers can monetize their video content through contextual ads that show viewers where to buy the products that appear in videos. COO Balaji Ravindran presented the company’s solution to the panel of judges.

Video content with typical ads                                                                             Markable: Video content with contextual ads



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Exclusive: U.S. to reveal winners of drone program that has attracted top companies
May 8, 2018 6:01 pm|Comments (0)

(Reuters) – Major technology and aerospace companies including Amazon.com Inc (AMZN.O), Intel Corp (INTC.O), Qualcomm Inc (QCOM.O), Raytheon Co (RTN.N) and Airbus SE (AIR.PA) are vying to take part in a new slate of drone tests the United States is set to announce on Wednesday, people familiar with the matter told Reuters.

FILE PHOTO: Intel CEO Brian Krzanich talks about the new Yuneec Typhoon H drone, which he said was the first consumer drone equipped with Intel’s RealSense sense and avoid technology, during his keynote address at the Consumer Electronics Show in Las Vegas, U.S., January 5, 2016. REUTERS/Rick Wilking/File Photo

The wide interest in the U.S. initiative, launched by President Donald Trump last year, underscores the desire of a broad range of companies to have a say in how the fledgling industry is regulated and ultimately win authority to operate drones for everything from package delivery to crop inspection.

The pilot program will allow a much larger range of tests than are generally permitted by federal aviation regulators, including flying drones at night, over people and beyond an operator’s line of sight.

The U.S. Transportation Department is set to announce 10 winning state, local or tribal governments to host the experiments out of 149 applicants. Secretary Elaine Chao will make the winners public on Wednesday. The governments in turn have partnered with companies who will play a role in the tests.

FILE PHOTO: An Amazon Prime Air Flying Drone is displayed during the ‘Drones: Is the Sky the Limit?’ exhibition at the Intrepid Sea, Air & Space Museum in New York City, U.S., May 9, 2017. REUTERS/Brendan McDermid/File Photo

At least 200 companies applied as partners in the program, a U.S. official said.

Companies including Apple Inc (AAPL.O), Boeing Co (BA.N) and Ford Motor Co (F.N) have also expressed interest in the program, the sources said, though it was unclear whether they all had joined applications and what they would be testing.

Qualcomm confirmed it is on at least three applications, and Intel said it hopes to participate in the program. The other companies did not immediately answer requests for comment.

Changes to U.S. policy that result from the tests are not expected for some time. Package delivery, which can be particularly complex, might not take place until later on during the program.

Earl Lawrence, who directs the U.S. Federal Aviation Administration’s unmanned aircraft systems integration office, told a Senate panel on Tuesday that many of the other projects “could go forward under the FAA’s existing rules, including with waivers where appropriate.”

He said after “the 10 selections for the pilot program are announced, the FAA will be reaching out to other applicants, as well as interested state and local authorities, to provide additional information on how to operationalize their proposed projects.”

The FAA is also working on proposed regulations to ensure the safety of drones and their integration into U.S. airspace.

The initiative is significant for the United States, which has lagged other countries in drone operations for fear of air crashes. That had pushed companies like Amazon to experiment overseas.

In the United Kingdom, the world’s largest online retailer already sends some packages by drone. It completed its first such mission in late 2016, taking 13 minutes from click to delivery.

Reporting by Jeffrey Dastin in San Francisco and David Shepardson in Washington; Additional reporting by Stephen Nellis and Paul Lienert; editing by Chris Sanders and David Gregorio


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5 tech trends that have Turing Award winners worried
December 3, 2016 12:43 am|Comments (0)

Technology has considerable potential to make the world better, but those benefits are far from guaranteed. Plenty of downsides can pop up along the way, and some of them have Turing Award winners especially worried.

1. The internet echo chamber

“Technology by itself is not evil, but people can use it for bad things,” Barbara Liskov, an Institute Professor at MIT, told an audience of journalists Thursday at the Heidelberg Laureate Forum in Germany. “I do worry a lot about what’s going on.”

The ability to selectively filter out news and opinions that don’t agree with one’s own viewpoint is one of Liskov’s top concerns.

To read this article in full or to leave a comment, please click here

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5 tech trends that have Turing Award winners worried
November 28, 2016 2:50 pm|Comments (0)

Technology has considerable potential to make the world better, but those benefits are far from guaranteed. Plenty of downsides can pop up along the way, and some of them have Turing Award winners especially worried.

1. The internet echo chamber

“Technology by itself is not evil, but people can use it for bad things,” Barbara Liskov, an Institute Professor at MIT, told an audience of journalists Thursday at the Heidelberg Laureate Forum in Germany. “I do worry a lot about what’s going on.”

The ability to selectively filter out news and opinions that don’t agree with one’s own viewpoint is one of Liskov’s top concerns.

To read this article in full or to leave a comment, please click here

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Ig Nobel Informal Lectures Give Winners a Chance to Explain Themselves
October 21, 2015 9:00 am|Comments (0)

The Ig Nobel awards ceremony is a marvelous spectacle encrusted with tradition . But if you really want to know how the winners did their work and why, you need to go to the Ig informal lectures, held at MIT the Saturday after the awards.

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