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Wednesday
May152019

May 2019 Insights

 

Key Points from RR's 2019 Menu Report 

 

  • We calculated the correlation between the changing value mix of total promotions to comp sale performance from 1Q17 to 1Q19.
  • Next, we calculated comp correlations with changes to the premium promotional mix and new product promotional mix.
  • Surprisingly, increases in the QSR value promotional mix was negatively correlated (-63%) to quarterly comps. This means that a QSR value focus has been detrimental to past sales, suggesting deal fatigue. Not surprisingly, increases in the FSR value promotional mix helped drive comp growth (positive correlation of almost +18%). 
  • Rather, QSR sales have benefited from premium promotions & new product news. This is the inverse for FSR where value is all that matters after years of steady price increases.

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Monday
Apr152019

April 2019 Insights

Key Points from RR's 2019 Menu Report 

 

  • After years of menu optimization in an effort to simplify operations in order to speed-up service and improve food quality, the industry has finally found a point of equilibrium (i.e. menu sizes are just big enough to keep things interesting). 

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Friday
Mar152019

March 2019

Restaurant Share Continues to Ramp-Up

 

  • Grocery stores continue to lose retail share to restaurants as consumers become increasingly comfortable with cost competitive full-serve options. 
  • However it is notable that despite the trends, grocery stores continue to pass-along more moderate price increases on an absolute basis.
  • All this suggests that consumers prefer to eat-out if they can afford it.  

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Friday
Feb152019

February 2019

RR's Franchise Finance Report Highlights 

 

  • The growth rate for the franchise financing needs of $1B+ chains continues to decline as refranchising programs wind-down.
  • However, the M&A market continues to generate healthy financing demand as operators pursue consolidation to offset unit-level cost pressures. 

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Wednesday
Jan162019

January 2019

Keeping An Eye on Grubhub 

 

  • 3rd party delivery is clearly gaining share in the restaurant industry, with Grubhub generating $3.7B of gross sales during the YTD period through 3Q18.
  • The surprising stat below is that Grubhub's average ticket is north of $32 (including fees which boost actual food costs by close to +20%).
  • How does delivery of low ticket coffee and QSR burger orders fit into this model?
  • In any case, it is notable that with Grubhub's operating margin of just over 12% there is probably not much room for restaurants to negotiate lower fees. Also, this suggests that there is probably not much appetite from Grubhub to pursue a lower ticket business which is especially unprofitable for its drivers who work for tips. 

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