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Grillin's gonna getcha
February 5, 2008
On Friday, January 25, UBS's David Palmer, a well-regarded restaurant analyst, blew through more than three dozen slides during a morning conference call that detailed the double whammy on casual-dining -- a consumer pullback and rising costs. (The call, I'm afraid, is no longer archived.)
Palmer quickly sketched a familiar, if depressing, scenario, and one that has soured investors on restaurant stocks and lately made private equity scarce.
Yet he presented some rather interesting data that haven't received much publicity. Palmer, it should be noted, doesn't buy into the argument that consumers are eating more pizza, hamburgers and salads from quick-service restaurants, i.e., "trading down" to cheaper meals.
He contends casual-dining's biggest headache isn't the result of value menus (though to be sure they sting like crazy). Instead trouble is erupting from an another spot, namely, the backyard grill. Using data from the NPD Group and Yankelovich Monitor, Palmer builds his case from by first showing that restaurant usage has peaked (now only population growth fuels restaurant visits) and that Americans are preparing more meals at home, specifically dinner.
Enter the ubiquitous gas grill. Grilled dinners at home have jumped 23 percent since 2003, he said. The result: Casual-dining guest counts have turned negative during "grilling season" (April-Oct.) for the last three years. Same-store sales are barely positive in the same period. Today, Palmer added, family weekday visits are down 12 percent among casual-dining chains.
In other words, families aren't stepping up visits to fast feeders; they're eating more meals at home -- at the expense of restaurants everywhere.
Copycats: What you can do, apparently, customers can too.
Posted by David Farkas on February 5, 2008 | Comments (0)