March 6, 2025 • 17 mins
On this episode of Give an Ovation, Zack Oates welcomes Michael Halen, Senior Restaurant and Foodservice Analyst at Bloomberg Intelligence and host of Chopping It Up. Michael shares his insights on industry trends, value perception, and the impact of inflation on restaurant profitability. He discusses how brands like Texas Roadhouse and Wingstop are winning by delivering strong guest experiences. From operational excellence to marketing strategies, Michael breaks down what restaurants must focus on to stay competitive in 2025.
Zack and Michael discuss:
- The role of a restaurant analyst and industry forecasting
- Which brands are thriving vs. struggling post-pandemic
- Why value perception goes beyond just price
- How operational excellence drives guest experience
- The importance of consistency in restaurant success
Follow Michael Halen:
- LinkedIn: Mike Halen
- Twitter: @mikehalen
- Chopping It Up Podcast: Listen Here
Thanks, Michael! 🎉
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Welcome to another edition of Give an Ovation, the
restaurant guest experiencepodcast, where I talk to
industry experts to get theirstrategies and tactics you can
use to create a five-star guestexperience.
This podcast is sponsored byOvation, an operations and guest
recovery platform formulti-unit restaurants that
gives all the answers withoutannoying guests with all the
questions.
Learn more at OvationUpcom.
(00:22):
And today we have a gentlemanwho has been on the speaking
circuit.
He knows this industry.
In fact he is paid to know thisindustry Michael Halen, the
Senior Restaurant and FoodService Analyst for Bloomberg
Intelligence and the host ofBloomberg Intelligence's
restaurant podcast, Chopping itUp.
What's up, Mr Mike?
How are you?
I'm doing well, man.
How are you?
You know it's a beautiful day.
(00:44):
It took me 90 minutes to drive,20 minutes because of all the
snow here in Utah.
Finally, but for the skiers,come to Utah.
Slopes are open, snow'sdraining, so anyway, free
refills.
Speaker 2 (00:57):
The snow's fantastic man.
The snow out there is beautiful.
Speaker 1 (01:00):
I wish it wasn't snow .
I wish it was sunshine, but hey, what are you going to do?
Can't win them all.
I've seen you speak, andobviously we talk a lot about
the guest experience in thispodcast, but I'd love to dive in
a little bit more into yourresearch.
First of all, for those peoplewho don't understand, what does
the senior restaurant and foodservice analyst do?
(01:21):
What's your typical day like?
Speaker 2 (01:23):
Oh, man, a lot of reading, some playing around in
Excel researching 17 publiclytraded restaurant chains, from
McDonald's to Shake Shack, youname it.
The bigger the better.
And then I also cover Cisco andUS Foods, and so I'm constantly
reading their publiclyavailable documents, I'm tuning
into their earnings calls, goingto conferences and asking them
(01:43):
questions and trying to projecttheir earnings over the next
couple of years and makingrecommendations, but kind of not
about whether or not you shouldbuy their stocks.
So, yeah, man, I follow thisindustry as close as anybody.
I'm blessed because I love theindustry.
There's great people in it.
Who has had the most tumultuouslast few years?
(02:04):
Yeah, I think that awardprobably goes to Dine Brands.
Bloomin' Brands has had areally rough 2024, but they've
actually been able to expandtheir margins post-pandemic, I
would say.
Dine Brands.
A lot of Applebee's stores havebeen closed over the last four
years or so.
There was even more IHOPclosures than they had expected
(02:28):
last year and out of all thecompanies I cover, Dimebrands
seems to be struggling the mostresonating with customers.
They tried to bring people backinto the fold with aggressive
value last year and as the yearwent on it seemed to resonate
less and less.
So they're probably strugglingthe most.
What should I be?
Speaker 1 (02:48):
thinking about in terms of value McDonald's came
out with the $5 meals.
Is value still top of mind forpeople?
Is that still where we shouldbe looking at as restaurants it?
Speaker 2 (02:58):
is.
But I think you need to look atit as what you get for what you
pay.
It's not just the price, right?
How's the service?
How much food are you gettingfor that price?
All of that factors in man, andwe've seen some really
interesting stuff.
Wingstop and Texas Roadhousehave absolutely crushed it Texas
Roadhouse for quite some timeand a big reason in our opinion
(03:21):
is how much food they give youon the plate.
Both of those companies arespending a lot more money on
COGS than all the othercompanies I cover.
The companies I cover spendabout 29% on food costs and
those companies are 32% and 33%range.
Yeah, so people recognize it.
We have more discerningcustomers right now because
(03:42):
they're a little strapped forcash and they're recognizing
what they get for what they payat those two chains and they're
visiting more frequently.
Right, if you're dining outless, you don't want to take a
risk, man, you want to go andget that good experience.
You don't have money to burn.
Speaker 1 (03:58):
I tell people all the time that there's the
convenience factor, which isdoes my expectations exceed the
effort to have the experience?
And that's about all aboutconvenience.
So when I go to Texas Roadhouse, I know that I'm going to walk
out of there with leftovers.
I'm impressed, by the way,anyone who doesn't walk out of
there with leftovers.
But I know I'm going to walkout of there with leftovers and
I know that I'm going to get awhole other to-go container of
(04:19):
rolls.
By the way.
Here's a good hack, mike youtake those Texas Roadhouse rolls
, you bring them home, you getthe honey butter, you leave them
on the counter.
All right, you ready for this.
Next morning you wake up, cutthem in half and you do French
toast.
You dip them in eggs and youcook them on French toast and
cook them like French toast andthen you use the honey butter on
(04:42):
top of that French toast and itis an amazing breakfast.
Speaker 2 (04:46):
Texas Roadhouse French toast.
That's fantastic.
So if they ever expand intobreakfast which I don't see
anytime soon, that's that'll bea bestseller right there.
Speaker 1 (04:54):
Yeah, I mean, if you're doing eight million
dollars, not even doing lunch,then yeah, why?
I mean, the Texas Roadhouse isaround me, they don't do lunch.
I don't know if that's like auniversal thing or not.
Speaker 2 (05:04):
No, they don't.
Most of them don't.
I mean that's wild, they don'tneed to.
They don't because they don'tneed to.
Speaker 1 (05:09):
Well, thinking about this because you have your Texas
Roadhouse, where I think peopleknow that that's a brand that
people are looking at andthey're like it's growing, it's
doing good things.
Why, what is it about?
Speaker 2 (05:28):
There are operators through and through, and they
always have been.
They have that entrepreneurialculture where their GMs
basically buy into the businessfor a percentage of the
operating profits Right, andthey're all in man.
Right, and they do a great jobof connecting locally to the
community and they provide agreat like I said, a lot of food
(05:48):
, a great experience.
People love the line dancingand man, it's kind of
experiential in that reason too,which is obviously was super
hot prior to the pandemic and ismaking a nice comeback over the
last couple of years.
So, yeah, man, for all thosereasons, they just keep knocking
the cover off the ball, butit's really about running great
restaurants.
Speaker 1 (06:08):
Yeah, the operations piece of it, because that's kind
of the next level, because thefirst level is convenience but
the next level is consistency.
And I know right before we weretalking about what do you think
the most important aspect ofguest experience?
And you said the operations,which I think is really
interesting.
Speaker 2 (06:23):
Talk to me about that companies I cover all these
large publicly traded companiesand because they're seeing
success with chains that areimproving their operations.
It's funny my friend, fredLaFranc, has said love Fred,
fred is the man.
But he said I hate whencompanies say we got to get back
(06:44):
to basics, because why wouldyou ever stop doing the basics?
We're seeing that though.
We're seeing some managementteams come in really try to pare
the menu down right to make iteasier in the back of the house.
Make sure they're supportingtheir staff by scheduling enough
people right in the front andthe back of the house.
Right and focusing their menuand their advertising on their
(07:08):
core equities right, emphasizingon their core equities.
Right.
And also there's technology aswell, right, server handhelds,
tablets.
To say that you can kind of payand go all that kind of stuff
to make the employees liveseasier right, but they're making
their employees lives easier.
They're giving a betterexperience to the guests and
then they can ramp up themarketing and get people in the
(07:29):
door and they have goodexperience and then they come
back and then you generate a lotof cashflow and then you can
remodel your stores more oftenor spend more money on R&M and
it just kind of creates thisvirtuous cycle that Texas
Roadhouse has been in for a longtime.
Yes, for sure.
Speaker 1 (07:46):
And I think that's such a interesting concept
though, because this wholeconcept of back to the basics
it's like, well, yeah, but ifyou strip away all the
technology, what are you doing?
And what you're trying to do isprovide the same food the same
way to that customer and makesure they have a similar
experience every time, because,like you said, people want to
(08:08):
know what they're doing withtheir money, and so, if they're
eating out less, they want tomake sure that they know that
they're getting exactly whatthey're paying for, and which is
why that consistency is key.
We just can't emphasize thatenough, and obviously, being in
the feedback space, we see thatthat a lot of times, these
online reviews will pop up.
I've been here 11 times and itwas great, but things have just
(08:30):
gone downhill and nothing'sreally changed.
It just happened to be thatthat evening it was a bad shift,
someone had a bad evening,whatever it was, and we need to
remember that you're only asgood as your last experience.
Speaker 2 (08:45):
That's for sure, man.
And, like I said, people are alittle strapped for cash and
they don't want to have thosebad experiences right.
They want to make sure thatwhen they do eat out it's a
great occasion.
So, yeah, to your point,consistency is absolutely
paramount in this business.
Speaker 1 (09:02):
So what are some other trends that we should be
looking into?
What are some things that weshould be concerned about this
year?
Looking at, just payingattention to.
Speaker 2 (09:10):
Sure, I guess I'll start with the top line.
People that read my researchhave complained for the last
year and a half that I was kindof depressing, but in my defense
I was right about 2024.
So we're seeing a little bit ofbetter economic data here in
the fourth quarter.
Also, sales post-selection seemto improve a little bit, based
(09:32):
on Black Box intelligence datawhich we use.
And then you have asset pricesat all-time highs.
So people with a 401k, withhomes, people that own crypto,
are invested in the S&P 500, inthe stock market, nasdaq,
whatever it might be, arefeeling pretty good.
And since we're lapping thatreally weak result of 2024, a
(09:52):
restaurant recession, in myopinion the comparisons are
easier and so for that reason weshould do better.
I'm not a raging bull, becauselow-income consumers are still
kind of crimped by inflation.
It's cumulative and it's beenfour years of inflation, five
years of price hikes on the QSRside, which I don't think is
(10:13):
helping them right now.
Yeah, and that kind of leads usto probably our bigger concern,
and it's really the inflationside.
We could see three and a halfor more percent CPI in the
second half of the year, prettyfar away from the Fed's 2%
target.
I don't think we're going to goback to 5%, 6%, 7% and 8%
anytime soon, but in our opinion, inflation isn't going away.
(10:35):
I think it continues to crimprestaurant profits and in our
opinion, we're going to continueto see a wide divergence
between the winners and losers.
We've seen it so far Now in abig way, man, you look at places
like Chili's driving a 30% compin the fourth quarter with 20%
traffic right, and then you haveother chains that are negative
(10:57):
in the quarter.
So we expect to see that, andthat all follows from what I
said earlier about these morediscerning customers that really
, really want to have a goodexperience when they go out.
Speaker 1 (11:08):
So what do we do, as the boot of inflation is not
going to get off our throatanytime soon?
How do we respond to that?
As restaurants, there's only somuch you could charge for a
burrito.
Speaker 2 (11:18):
I think it's really about that experience piece
right.
I think it's number one makingsure your operations are nailed.
Whatever you need to do, pairthe menu, refocus your menu,
make sure you have enough laboron the floor, right, because you
need to drive traffic.
That's the best way to combatinflation is driving that top
(11:41):
line, driving operating leveragethrough your model right, and
maybe you can squeak out alittle bit of margin expansion
and operating profit dollarsdespite the inflation.
So that's it, man.
It's running great restaurants.
It's kind of nailing themarketing piece.
I mentioned Chili's and thiswas their playbook.
Man, 30% is insane.
(12:01):
They lapped a six and a halfpercent comp the year prior, so
it wasn't like they werenegative or something the year
before.
And they nailed the operations.
They actually cut back ondiscounting because they knew
they were giving their customersa much better experience with
much better food.
They focused their menu andthen they started turning on the
marketing and now they'rerunning.
(12:22):
Man, they're running, they havea great marketing team and
they're crushing it.
Speaker 1 (12:26):
I think Chili's can have another 30% growth year if
they get more of those chipsthat are like combined together,
those like super chips withfour or five, that get like
fried together and then when youdip it it's like if they just
had a bowl of those super chips.
I think that alone that alone,I think has a chance of going
(12:47):
30% comps.
Speaker 2 (12:48):
Well, listen, maybe they monitor TikTok really
closely for trends of theircustomers.
Man, Maybe you should get onthere and start asking for it.
You might get it.
Speaker 1 (12:56):
Yeah, well, I think that that's the thing is like
listening to your customers.
I think it's so important tounderstand what's going on, but
also following people like youto understand what are the big
players doing and how can welearn from them.
And not that, hey, mcdonald'sdid a $5 meal, like we need to
as well.
But I will tell you, when I goto McDonald's with I got four
(13:18):
kids and a wife, and when thesix of us go to McDonald's and
I'm walking out of there paying65 bucks, I'm thinking that's a
lot of money for McDonald's,yeah, man.
And all of a sudden, if I coulduse the $5 menu and I'm coming
in there more often because Iwant the Play Place what I've
been doing because when the $5meal wasn't there is we'd eat at
(13:40):
home and then we'd go toMcDonald's for ice cream and let
them play at the play place.
Right, but in order to getpeople there more often,
increase that traffic, get themcoming back, make sure it's
consistent.
I think all these things arethe core principles of running a
great restaurant and I thinkthat what you're sharing here
and the writing that you'redoing even though might not be
(14:02):
so optimistic, but it'srealistic right, yeah, man, I
got to keep it real.
Speaker 2 (14:07):
Mcdonald's is an interesting one, man.
The E coli definitely hurt.
Oh yeah, hurt their fourthquarter.
But they shared some good newson their fourth quarter earnings
call the other day.
Speaker 1 (14:19):
So the other day, wasn't it?
I heard it was like the superearly morning news on their
fourth quarter earnings.
Call the other day.
Speaker 2 (14:25):
So the other day wasn't it the?
I heard it was like the superearly morning, not day.
Yeah, the day after theSuperbowl they had me up real
early, man, but it's okay.
But at least they had good newsto share.
December traffic went positive,which was a positive surprise.
They expect the E coli impactto completely fade by the
beginning of the second quarter.
So once we see that happen,then you're going to see them
start to push harder onmarketing.
You're going to see snack wrapsand chicken strips return and
(14:49):
they're going to be marketingaround that.
You may see more famous meals,because those have done so well,
as well as the adult happymeals.
Speaker 1 (14:57):
Famous meals Like is there going to be a Mike meal?
Speaker 2 (15:06):
Are they going to do one for you?
No, no, not anytime soon.
But you know what?
I did a TV interview on the dayof earnings and they asked me
about Trump's impact onMcDonald's.
I'm like I don't think there'sbeen an impact.
But then I thought about it.
I was like maybe they shouldhave a Trump meal.
You know a Trump famous meal.
You might piss off half of thecountry, but it might also be a
successful promotion?
Speaker 1 (15:21):
I don't know if they want to touch it.
Speaker 2 (15:22):
77 million people would like it but you know, well
, that's awesome.
Speaker 1 (15:27):
Well, mike, I know you post a lot, you share a lot.
How do people find you?
Speaker 2 (15:31):
Oh yeah, so Mike Halen on LinkedIn, Twitter as
well.
We'd post a little bit there,but more so on Twitter.
Mhalen1atbloombergnet is myemail address If you're
interested in our research list.
I send out reminders about ourChopping it Up podcast and I
send out industry level researchonce or twice a month.
Those are your best bet.
Speaker 1 (15:52):
Awesome, and, oh yeah , I forgot.
Last question, though, mike.
Who is someone that we shouldbe following?
Who's someone that deserves anovation?
Oh, restaurant Chain, or anindividual.
Someone that we should befollowing, that's besides you.
Obviously, everyone needs tofollow Mike, but who's someone
else that we should be?
Speaker 2 (16:08):
following.
Well, we mentioned Fred LaFranc.
Everybody in the restaurantshould be following close
attention to Fred LaFranc, notjust to his ideas, but to his
fashion oh my God, yeah, he's afashion plate.
Ideas, but to his fashion.
Oh my God, yeah, he's a fashionplate.
His sport coats match theglasses.
Fred's the man.
Love that guy.
In my space I'm going to give ashout out and ovation to my guy
(16:30):
, greg Frankfurt.
I've had him on my podcast afew times.
We're in the same business.
I love chopping it up with himtalking about restaurant stocks
and the management teams andjust industry stuff.
So I'll give my guy Greg anovation.
Awesome, love it.
Speaker 1 (16:46):
Well, Mike, for chopping it up with me here on
Give an Ovation.
Today's ovation goes to you.
Thank you so much for joiningus on Give an Ovation.
Thanks for having me.
Thanks for joining us today.
If you like this episode, leaveus a review on Apple Podcasts
or your favorite place to listen.
We're all about feedback here.
Again, this episode wassponsored by Ovation, a
two-question, SMS-basedactionable guest feedback
(17:08):
platform built for multi-unitrestaurants.
If you'd like to learn how wecan help you measure and create
a better guest experience, visitus at OvationUpcom.
Welcome to another edition of Give an Ovation, the
restaurant guest experiencepodcast, where I talk to
industry experts to get theirstrategies and tactics you can
use to create a five-star guestexperience.
This podcast is sponsored byOvation, an operations and guest
recovery platform formulti-unit restaurants that
gives all the answers withoutannoying guests with all the
questions.
Learn more at OvationUpcom.
(00:22):
And today we have a gentlemanwho has been on the speaking
circuit.
He knows this industry.
In fact he is paid to know thisindustry Michael Halen, the
Senior Restaurant and FoodService Analyst for Bloomberg
Intelligence and the host ofBloomberg Intelligence's
restaurant podcast, Chopping itUp.
What's up, Mr Mike?
How are you?
I'm doing well, man.
How are you?
You know it's a beautiful day.
(00:44):
It took me 90 minutes to drive,20 minutes because of all the
snow here in Utah.
Finally, but for the skiers,come to Utah.
Slopes are open, snow'sdraining, so anyway, free
refills.
Speaker 2 (00:57):
The snow's fantastic man.
The snow out there is beautiful.
Speaker 1 (01:00):
I wish it wasn't snow .
I wish it was sunshine, but hey, what are you going to do?
Can't win them all.
I've seen you speak, andobviously we talk a lot about
the guest experience in thispodcast, but I'd love to dive in
a little bit more into yourresearch.
First of all, for those peoplewho don't understand, what does
the senior restaurant and foodservice analyst do?
(01:21):
What's your typical day like?
Speaker 2 (01:23):
Oh, man, a lot of reading, some playing around in
Excel researching 17 publiclytraded restaurant chains, from
McDonald's to Shake Shack, youname it.
The bigger the better.
And then I also cover Cisco andUS Foods, and so I'm constantly
reading their publiclyavailable documents, I'm tuning
into their earnings calls, goingto conferences and asking them
(01:43):
questions and trying to projecttheir earnings over the next
couple of years and makingrecommendations, but kind of not
about whether or not you shouldbuy their stocks.
So, yeah, man, I follow thisindustry as close as anybody.
I'm blessed because I love theindustry.
There's great people in it.
Who has had the most tumultuouslast few years?
(02:04):
Yeah, I think that awardprobably goes to Dine Brands.
Bloomin' Brands has had areally rough 2024, but they've
actually been able to expandtheir margins post-pandemic, I
would say.
Dine Brands.
A lot of Applebee's stores havebeen closed over the last four
years or so.
There was even more IHOPclosures than they had expected
(02:28):
last year and out of all thecompanies I cover, Dimebrands
seems to be struggling the mostresonating with customers.
They tried to bring people backinto the fold with aggressive
value last year and as the yearwent on it seemed to resonate
less and less.
So they're probably strugglingthe most.
What should I be?
Speaker 1 (02:48):
thinking about in terms of value McDonald's came
out with the $5 meals.
Is value still top of mind forpeople?
Is that still where we shouldbe looking at as restaurants it?
Speaker 2 (02:58):
is.
But I think you need to look atit as what you get for what you
pay.
It's not just the price, right?
How's the service?
How much food are you gettingfor that price?
All of that factors in man, andwe've seen some really
interesting stuff.
Wingstop and Texas Roadhousehave absolutely crushed it Texas
Roadhouse for quite some timeand a big reason in our opinion
(03:21):
is how much food they give youon the plate.
Both of those companies arespending a lot more money on
COGS than all the othercompanies I cover.
The companies I cover spendabout 29% on food costs and
those companies are 32% and 33%range.
Yeah, so people recognize it.
We have more discerningcustomers right now because
(03:42):
they're a little strapped forcash and they're recognizing
what they get for what they payat those two chains and they're
visiting more frequently.
Right, if you're dining outless, you don't want to take a
risk, man, you want to go andget that good experience.
You don't have money to burn.
Speaker 1 (03:58):
I tell people all the time that there's the
convenience factor, which isdoes my expectations exceed the
effort to have the experience?
And that's about all aboutconvenience.
So when I go to Texas Roadhouse, I know that I'm going to walk
out of there with leftovers.
I'm impressed, by the way,anyone who doesn't walk out of
there with leftovers.
But I know I'm going to walkout of there with leftovers and
I know that I'm going to get awhole other to-go container of
(04:19):
rolls.
By the way.
Here's a good hack, mike youtake those Texas Roadhouse rolls
, you bring them home, you getthe honey butter, you leave them
on the counter.
All right, you ready for this.
Next morning you wake up, cutthem in half and you do French
toast.
You dip them in eggs and youcook them on French toast and
cook them like French toast andthen you use the honey butter on
(04:42):
top of that French toast and itis an amazing breakfast.
Speaker 2 (04:46):
Texas Roadhouse French toast.
That's fantastic.
So if they ever expand intobreakfast which I don't see
anytime soon, that's that'll bea bestseller right there.
Speaker 1 (04:54):
Yeah, I mean, if you're doing eight million
dollars, not even doing lunch,then yeah, why?
I mean, the Texas Roadhouse isaround me, they don't do lunch.
I don't know if that's like auniversal thing or not.
Speaker 2 (05:04):
No, they don't.
Most of them don't.
I mean that's wild, they don'tneed to.
They don't because they don'tneed to.
Speaker 1 (05:09):
Well, thinking about this because you have your Texas
Roadhouse, where I think peopleknow that that's a brand that
people are looking at andthey're like it's growing, it's
doing good things.
Why, what is it about?
Speaker 2 (05:28):
There are operators through and through, and they
always have been.
They have that entrepreneurialculture where their GMs
basically buy into the businessfor a percentage of the
operating profits Right, andthey're all in man.
Right, and they do a great jobof connecting locally to the
community and they provide agreat like I said, a lot of food
(05:48):
, a great experience.
People love the line dancingand man, it's kind of
experiential in that reason too,which is obviously was super
hot prior to the pandemic and ismaking a nice comeback over the
last couple of years.
So, yeah, man, for all thosereasons, they just keep knocking
the cover off the ball, butit's really about running great
restaurants.
Speaker 1 (06:08):
Yeah, the operations piece of it, because that's kind
of the next level, because thefirst level is convenience but
the next level is consistency.
And I know right before we weretalking about what do you think
the most important aspect ofguest experience?
And you said the operations,which I think is really
interesting.
Speaker 2 (06:23):
Talk to me about that companies I cover all these
large publicly traded companiesand because they're seeing
success with chains that areimproving their operations.
It's funny my friend, fredLaFranc, has said love Fred,
fred is the man.
But he said I hate whencompanies say we got to get back
(06:44):
to basics, because why wouldyou ever stop doing the basics?
We're seeing that though.
We're seeing some managementteams come in really try to pare
the menu down right to make iteasier in the back of the house.
Make sure they're supportingtheir staff by scheduling enough
people right in the front andthe back of the house.
Right and focusing their menuand their advertising on their
(07:08):
core equities right, emphasizingon their core equities.
Right.
And also there's technology aswell, right, server handhelds,
tablets.
To say that you can kind of payand go all that kind of stuff
to make the employees liveseasier right, but they're making
their employees lives easier.
They're giving a betterexperience to the guests and
then they can ramp up themarketing and get people in the
(07:29):
door and they have goodexperience and then they come
back and then you generate a lotof cashflow and then you can
remodel your stores more oftenor spend more money on R&M and
it just kind of creates thisvirtuous cycle that Texas
Roadhouse has been in for a longtime.
Yes, for sure.
Speaker 1 (07:46):
And I think that's such a interesting concept
though, because this wholeconcept of back to the basics
it's like, well, yeah, but ifyou strip away all the
technology, what are you doing?
And what you're trying to do isprovide the same food the same
way to that customer and makesure they have a similar
experience every time, because,like you said, people want to
(08:08):
know what they're doing withtheir money, and so, if they're
eating out less, they want tomake sure that they know that
they're getting exactly whatthey're paying for, and which is
why that consistency is key.
We just can't emphasize thatenough, and obviously, being in
the feedback space, we see thatthat a lot of times, these
online reviews will pop up.
I've been here 11 times and itwas great, but things have just
(08:30):
gone downhill and nothing'sreally changed.
It just happened to be thatthat evening it was a bad shift,
someone had a bad evening,whatever it was, and we need to
remember that you're only asgood as your last experience.
Speaker 2 (08:45):
That's for sure, man.
And, like I said, people are alittle strapped for cash and
they don't want to have thosebad experiences right.
They want to make sure thatwhen they do eat out it's a
great occasion.
So, yeah, to your point,consistency is absolutely
paramount in this business.
Speaker 1 (09:02):
So what are some other trends that we should be
looking into?
What are some things that weshould be concerned about this
year?
Looking at, just payingattention to.
Speaker 2 (09:10):
Sure, I guess I'll start with the top line.
People that read my researchhave complained for the last
year and a half that I was kindof depressing, but in my defense
I was right about 2024.
So we're seeing a little bit ofbetter economic data here in
the fourth quarter.
Also, sales post-selection seemto improve a little bit, based
(09:32):
on Black Box intelligence datawhich we use.
And then you have asset pricesat all-time highs.
So people with a 401k, withhomes, people that own crypto,
are invested in the S&P 500, inthe stock market, nasdaq,
whatever it might be, arefeeling pretty good.
And since we're lapping thatreally weak result of 2024, a
(09:52):
restaurant recession, in myopinion the comparisons are
easier and so for that reason weshould do better.
I'm not a raging bull, becauselow-income consumers are still
kind of crimped by inflation.
It's cumulative and it's beenfour years of inflation, five
years of price hikes on the QSRside, which I don't think is
(10:13):
helping them right now.
Yeah, and that kind of leads usto probably our bigger concern,
and it's really the inflationside.
We could see three and a halfor more percent CPI in the
second half of the year, prettyfar away from the Fed's 2%
target.
I don't think we're going to goback to 5%, 6%, 7% and 8%
anytime soon, but in our opinion, inflation isn't going away.
(10:35):
I think it continues to crimprestaurant profits and in our
opinion, we're going to continueto see a wide divergence
between the winners and losers.
We've seen it so far Now in abig way, man, you look at places
like Chili's driving a 30% compin the fourth quarter with 20%
traffic right, and then you haveother chains that are negative
(10:57):
in the quarter.
So we expect to see that, andthat all follows from what I
said earlier about these morediscerning customers that really
, really want to have a goodexperience when they go out.
Speaker 1 (11:08):
So what do we do, as the boot of inflation is not
going to get off our throatanytime soon?
How do we respond to that?
As restaurants, there's only somuch you could charge for a
burrito.
Speaker 2 (11:18):
I think it's really about that experience piece
right.
I think it's number one makingsure your operations are nailed.
Whatever you need to do, pairthe menu, refocus your menu,
make sure you have enough laboron the floor, right, because you
need to drive traffic.
That's the best way to combatinflation is driving that top
(11:41):
line, driving operating leveragethrough your model right, and
maybe you can squeak out alittle bit of margin expansion
and operating profit dollarsdespite the inflation.
So that's it, man.
It's running great restaurants.
It's kind of nailing themarketing piece.
I mentioned Chili's and thiswas their playbook.
Man, 30% is insane.
(12:01):
They lapped a six and a halfpercent comp the year prior, so
it wasn't like they werenegative or something the year
before.
And they nailed the operations.
They actually cut back ondiscounting because they knew
they were giving their customersa much better experience with
much better food.
They focused their menu andthen they started turning on the
marketing and now they'rerunning.
(12:22):
Man, they're running, they havea great marketing team and
they're crushing it.
Speaker 1 (12:26):
I think Chili's can have another 30% growth year if
they get more of those chipsthat are like combined together,
those like super chips withfour or five, that get like
fried together and then when youdip it it's like if they just
had a bowl of those super chips.
I think that alone that alone,I think has a chance of going
(12:47):
30% comps.
Speaker 2 (12:48):
Well, listen, maybe they monitor TikTok really
closely for trends of theircustomers.
Man, Maybe you should get onthere and start asking for it.
You might get it.
Speaker 1 (12:56):
Yeah, well, I think that that's the thing is like
listening to your customers.
I think it's so important tounderstand what's going on, but
also following people like youto understand what are the big
players doing and how can welearn from them.
And not that, hey, mcdonald'sdid a $5 meal, like we need to
as well.
But I will tell you, when I goto McDonald's with I got four
(13:18):
kids and a wife, and when thesix of us go to McDonald's and
I'm walking out of there paying65 bucks, I'm thinking that's a
lot of money for McDonald's,yeah, man.
And all of a sudden, if I coulduse the $5 menu and I'm coming
in there more often because Iwant the Play Place what I've
been doing because when the $5meal wasn't there is we'd eat at
(13:40):
home and then we'd go toMcDonald's for ice cream and let
them play at the play place.
Right, but in order to getpeople there more often,
increase that traffic, get themcoming back, make sure it's
consistent.
I think all these things arethe core principles of running a
great restaurant and I thinkthat what you're sharing here
and the writing that you'redoing even though might not be
(14:02):
so optimistic, but it'srealistic right, yeah, man, I
got to keep it real.
Speaker 2 (14:07):
Mcdonald's is an interesting one, man.
The E coli definitely hurt.
Oh yeah, hurt their fourthquarter.
But they shared some good newson their fourth quarter earnings
call the other day.
Speaker 1 (14:19):
So the other day, wasn't it?
I heard it was like the superearly morning news on their
fourth quarter earnings.
Call the other day.
Speaker 2 (14:25):
So the other day wasn't it the?
I heard it was like the superearly morning, not day.
Yeah, the day after theSuperbowl they had me up real
early, man, but it's okay.
But at least they had good newsto share.
December traffic went positive,which was a positive surprise.
They expect the E coli impactto completely fade by the
beginning of the second quarter.
So once we see that happen,then you're going to see them
start to push harder onmarketing.
You're going to see snack wrapsand chicken strips return and
(14:49):
they're going to be marketingaround that.
You may see more famous meals,because those have done so well,
as well as the adult happymeals.
Speaker 1 (14:57):
Famous meals Like is there going to be a Mike meal?
Speaker 2 (15:06):
Are they going to do one for you?
No, no, not anytime soon.
But you know what?
I did a TV interview on the dayof earnings and they asked me
about Trump's impact onMcDonald's.
I'm like I don't think there'sbeen an impact.
But then I thought about it.
I was like maybe they shouldhave a Trump meal.
You know a Trump famous meal.
You might piss off half of thecountry, but it might also be a
successful promotion?
Speaker 1 (15:21):
I don't know if they want to touch it.
Speaker 2 (15:22):
77 million people would like it but you know, well
, that's awesome.
Speaker 1 (15:27):
Well, mike, I know you post a lot, you share a lot.
How do people find you?
Speaker 2 (15:31):
Oh yeah, so Mike Halen on LinkedIn, Twitter as
well.
We'd post a little bit there,but more so on Twitter.
Mhalen1atbloombergnet is myemail address If you're
interested in our research list.
I send out reminders about ourChopping it Up podcast and I
send out industry level researchonce or twice a month.
Those are your best bet.
Speaker 1 (15:52):
Awesome, and, oh yeah , I forgot.
Last question, though, mike.
Who is someone that we shouldbe following?
Who's someone that deserves anovation?
Oh, restaurant Chain, or anindividual.
Someone that we should befollowing, that's besides you.
Obviously, everyone needs tofollow Mike, but who's someone
else that we should be?
Speaker 2 (16:08):
following.
Well, we mentioned Fred LaFranc.
Everybody in the restaurantshould be following close
attention to Fred LaFranc, notjust to his ideas, but to his
fashion oh my God, yeah, he's afashion plate.
Ideas, but to his fashion.
Oh my God, yeah, he's a fashionplate.
His sport coats match theglasses.
Fred's the man.
Love that guy.
In my space I'm going to give ashout out and ovation to my guy
(16:30):
, greg Frankfurt.
I've had him on my podcast afew times.
We're in the same business.
I love chopping it up with himtalking about restaurant stocks
and the management teams andjust industry stuff.
So I'll give my guy Greg anovation.
Awesome, love it.
Speaker 1 (16:46):
Well, Mike, for chopping it up with me here on
Give an Ovation.
Today's ovation goes to you.
Thank you so much for joiningus on Give an Ovation.
Thanks for having me.
Thanks for joining us today.
If you like this episode, leaveus a review on Apple Podcasts
or your favorite place to listen.
We're all about feedback here.
Again, this episode wassponsored by Ovation, a
two-question, SMS-basedactionable guest feedback
(17:08):
platform built for multi-unitrestaurants.
If you'd like to learn how wecan help you measure and create
a better guest experience, visitus at OvationUpcom.
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Therapy Gecko
An unlicensed lizard psychologist travels the universe talking to strangers about absolutely nothing. TO CALL THE GECKO: follow me on https://www.twitch.tv/lyleforever to get a notification for when I am taking calls. I am usually live Mondays, Wednesdays, and Fridays but lately a lot of other times too. I am a gecko.