Restaurant Industry Insights

What the Latest Public Restaurant Companies’ Quarterly Earnings Calls Reveal

Recently, public restaurants’ earnings calls demonstrated their spring performance. They revealed good news, such as an increase in same-store sales, and some bad news, such as tightening margins. Let’s explore the varying restaurant strategies and outcomes and see if they can offer a glimpse into the overall industry as summer ends.

Some of the Top Performers

CAVA’s first earnings report demonstrated continuing interest as same-store sales increased by over 18% in Q2. The company ended the second quarter with 279 restaurants, over 43% more year-over-year. Its trajectory is set for up to 70 net new units by year’s end. Keep in mind that CAVA entered the public ring in June 2023, when investors experienced an immediate 91% gain as stock, priced at $22 per share, opened at $42.

Wingstop saw same-store sales increase by 16.8%, a close second to CAVA. The increase was mostly due to transaction growth. Wingstop’s average unit volumes come in at $1.7 million, up from $1.5 million a year ago. Digital sales reached over 65% of all sales. Founded in 1994, it has 1,794 units in the U.S.

Potbelly reported a 12.9% same-store sales increase. About 38% of their total sales came through digital channels, with the Potbelly Digital Kitchen rollout expected in 100 restaurants by the end of 2023. This new technology arrived in response to their growing digital channels, including their mobile app and third-party delivery. It’s designed to improve the efficiency of online and in-store orders.

Yum Brands, the parent company of KFC, Taco Bell, Pizza Hut, and The Habit Burger Grill, saw same-store sales up 9%, almost 2% higher than expected. KFC took the lead, with same-store sales up 13%. Digital sales make up over 45% of their global system sales.

First Watch saw a same-store sales growth of 7.8% amid nine restaurant openings. The brand expects up to 51 more units by year’s end. While there are currently more than 490 First Watch restaurants, the “big picture” plan comprises 2,200 domestic locations. Traffic, however, showed a -1.2% decline.

B.J.’s Restaurants’ same-store sales increased by 4.7%. That translates to its highest margin level in more than three years. 

On August 21, 2023, the brand opened a new restaurant in Chandler, Arizona. In fiscal 2023, they’ve opened three restaurants, with scheduled openings set for Grand Rapids, Michigan, and Rochester, New York, in the coming weeks.

B.J.’s always starts with a soft opening before going for the big grand opening. Founded in 1978, the brand comprises over 200 restaurants in 30 states. 

The Challenged Brands

Noodles & Company saw a 5.5% drop in same-store sales and a net loss of $1.3 million, translating to three cents per share. During the conference call, Dave Boennighausen, CEO, told investors that the company believes their historical price increases, which peaked at 13% year-over-year in late Q1, led to reduced value in the consumers’ eyes. Switching gears, it brought back its 7 for $7 menu and decreased prices by 3%.

Papa Johns’ same-store sales dropped 1%. The pizza chain noted a challenging operational environment and low-performing franchisee stores. Again, their slowdown was contributed to rising prices in an attempt to preserve margins, particularly at their franchise operations. According to Rob Lynch, CEO, it represents the worst month of same-store sales since August 2019, when he joined the company.

The Restaurant Industry as Summer Ends

It’s clear that pricing played a considerable role in overall sales. As many of you can attest, it’s a fine line between raising prices to preserve margins and pricing yourself out of the market. 

And that’s where F&B Insights comes in. F&B Insights gives you 24/7 access to your local, competitors’ menus and nationwide brands. You’ll receive notifications should neighborhood eateries change their prices or menu items. 

This knowledge gives you the ability to stay abreast of the market, knowing when you’ve overpriced to the point of potentially affecting demand. It also informs you when you may be leaving money on the table. To see if this technology is right for you, consider taking advantage of the 15-day free trial.

FAQS

Are there publicly traded restaurants?

Yes. Many restaurant chains trade publicly on the New York Stock Exchange or the Nasdaq Stock Market. For example, Texas Roadhouse stock trades on the Nasdaq under the symbol TXRH. At the end of the day on August 22, their stock closed at 104.75.

Does Chick-fil-A have public stock?

No. Chick-fil-A is a private company that’s family owned and does not offer stock options.

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