Restaurant Winners and Losers of Q2
The famous Andreessen Horowitz slogan “Software is Eating the World” is bleeding into the foodservice business. During a period in which almost every part of the country has no-to-limited dining-in options, restaurants are reliant on take out and technologies that allow them to serve more customers more efficiently.
The coffee giant’s third quarter—which ended on June 28, 2020—was rough. Same-store sales decreased 40 percent globally and revenue declined 38 percent from last year. Starbucks had a net loss of almost $700 million.
Kevin Johnson, the company’s CEO, pointed to a decrease in customers going to and from school, work, etc. Mobile ordering made up 22 percent of total transactions.
McDonald’s missed expectations for the second quarter, with net income less than one-third of the amount it was for last year ($483.8 million versus $1.52 billion). Just about every store around the world has reopened, with many offering reducing dining room capacity. Interestingly, average ticket increased (as did average ticket at Starbucks).
Darden Restaurants (DRI)
The owner of popular full-service dining brands like Olive Garden, Yard House, and The Capital Grille reported a loss of $479.7 million for its fiscal fourth quarter, which ended on May 31, 2020. The dine-in industry has of course faced a steep uphill battle, and looks to recover in the coming months.
CEO Gene Lee stated “As our industry continues to rebuild, there is significant opportunity to increase market share… and Darden is well positioned to take advantage of the opportunity.”
Chipotle Mexican Grill beat expectations and despite have store closures, revenue only decreased by 4.8 percent. July comparable sales increased 6.4 percents.
The real story is in its digital capabilities; digital sales increased by over 200 percent during the second quarter and the company formed new partnerships with Grubhub and Uber to expand its delivery services. Chipotle also opened its 100th Chipotlane on July 15, 2020. Its app is pretty nifty, if you haven’t tried it yet.
The pizza delivery chain beat EPS and revenue expectations, increasing second-quarter net income from $92.4 million last year to $118.7 million this year. Stay-at-home orders undoubtedly helped Domino’s, which gets about 65 percent of orders from its delivery business.
Pandemic-related costs totaled $11 million, which seems like peanuts compared with PepsiCo, which recorded $385 million in costs.
Yum! Brands (YUM)
The parent company to KFC, Pizza Hut, Taco Bell, and The Habit Burger Grill was certainly affected by the pandemic, but digital sales increased by over $1 billion year over year to $3.5 billion and the number of restaurants offering delivery jumped from 30,000 last year at this time to 34,000 currently.
Same-store sales were down (attributed to temporary lockdowns) 15 percent company wide, but approximately 95 percent of company stores worldwide are now open.