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Chili's fiscal 4Q19: Key Points

  • Fiscal 4Q19 system comps increased +1.3% and the +1.5% company store comp included +3.9% pricing, -1.9% mix & -0.5% traffic. Results reflected a y/y decrease in promotional direct loyalty marketing (-60 bps) to go with a +3.3% menu price increase which was unusually high because of timing issues during the quarter. Annual pricing should continue to run +1.5% to 2%.
  • While brand management has been focused on keeping operations simple by foregoing any LTOs or new initiatives, going forward plans will seek to layer in innovation & marketing support for the 3 for $10 platform in order to better target value-oriented guests who tend to frequent casual more so than higher-end customers.

Carrols (BK) 2Q19: Key Points

  • 2Q19 comps (excluding recently acquired restaurants) increased +0.1% (+0.9% pricing/-0.5% mix/-0.3% traffic). Results reflected a difficult y/y comparison with a +5% 2Q18 comp increase that benefitted from an increased amount of discounting at that time. In any case, BK has been seeking to increase its value positioning which resulted in a +200 bps 2Q19 sequential increase in Carrol’s discounting mix over 1Q19.
  • Softer sales were reported in their southeast markets (1/3 of total) along with underperformance in the breakfast & lunch day parts.

Jack in the Box fiscal 3Q19: Key Points

  • Fiscal 3Q19 system comps increased +2.7% & a +2.8% company store comp included +2.3% pricing and +0.5% mix with flat traffic. Improvement in traffic & sales trends reflects a greater emphasis on bundled value deals with guests responding well to the breadth of promotions (including new product innovation & guest favorites). Also, sales benefitted from operational execution & marketing which well supported its 3 bundle deal promotions during the quarter.
  • New value strategy: Primary fiscal 3Q promotion was $4.99 combo featuring Jack's new spicy chicken strips. Most markets also featured a $4.99 triple bonus Jack combo including signature curly product. Jack also brought back a guest favorite, its 2 for $4 breakfast croissants. The average check for its value combos was significantly higher than other orders due to upsell add-ons (helping margins). Jack also plans to add permanent everyday value menu items to help offset its recent past increase to its taco pricing. The brand has learned from its past practice of bundling & discounting core items which led to trade-down. 

Papa John's 2Q19: Key Points

  • 2Q19 comps declined -5.7%, representing the 3rd quarter of sequential improvement in comp sales. Consumer sentiment challenges that the brand has faced over the past 12 months are now in the early stages of stabilizing & turning around. The full turnaround is expected to take 18 month.
  • Corporate contributed an incremental $2.5MM to the marketing fund during 2Q & $40MM of Starboard’s strategic investment (made in 2/19) will be evenly re-invested in marketing during 2H19 & 2020.  Also, the system will incorporate a 25 bps increase in its National Marketing Fund contribution rate to 5% of restaurant sales in 2020. This will provide 6 quarters of increased marketing dollars to support the intro of its new brand ambassador, Shaquille O'Neal.
  • While the brand’s value messaging has been around the $6 medium price point during 1H19, the system has been testing a multi-tier price point value construct in 25% of the stores (combining premium specialty pizzas alongside accessible price points for pizzas of 3 different sizes). The goal is to use very low price points to drive traffic & upsell opportunities.



Wendy's 2Q19: Key Points

  • 2Q19 comps increased +1.4% with pricing in-line with food away from home inflation partially offset by traffic declines. Flat mix reflected softness in its salad business & the lapping of a strong 2Q18 performance of its Southwest Avocado salad. IA reimaging comp tailwind was +50 bps for the system.
  • 2019 comp guidance of +1.5% to +2.5% is based upon confidence in ability to drive “one more visit, one more dollar” with: value (4 for $4 & $5 Biggie bags); Made to Crave; a return of spicy chicken nuggets; & faster service speeds.