February 28, 2025 • 30 mins
In a recent Restaurant Report podcast episode, Bloomberg Intelligence analyst Michael Halen shared insights on restaurant industry trends, highlighting AI integration at companies like Chipotle, management changes at major chains, and Chili's remarkable 31.4% same-store sales growth under Kevin Hochman's leadership. Halen discussed Shake Shack's new kitchen innovation lab aimed at improving drive-thru efficiency, the healthy eating category's continued growth driven by Gen Z preferences, and predicted increased deal-making activity for 2025 as restaurant operations focus on fundamentals first, followed by effective marketing strategies.
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~This episode is sponsored by: Gusto → https://gusto.pxf.io/PBN
#1 rated HR platform for payroll, benefits, and more
With Gusto’s easy-to-use platform, you can empower your people and push your business forward.
RestaurantInnovation #FoodServiceTrends #RestaurantTech
Get Your Podcast Now! Are you a hospitality or restaurant industry leader looking to amplify your voice and establish yourself as a thought leader? Look no further than SavorFM, the premier podcast platform designed exclusively for hospitality visionaries like you. Take the next step in your industry leadership journey – visit https://www.savor.fm/
Capital & Advisory: Are you a fast-casual restaurant startup or a technology innovator in the food service industry? Don't miss out on the opportunity to tap into decades of expertise. Reach out to Savor Capital & Advisory now to explore how their seasoned professionals can propel your business forward. Discover if you're eligible to leverage our unparalleled knowledge in food service branding and technology and take your venture to new heights.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
All right, We're back here on another episode of the
Restaurant Report, and today is going to be a fun
one because I've got Michael Halen with my great friends
over here at Bloomberg coming in as one of the
top analysts in the industry. Michael, how are you.
Speaker 2 (00:12):
I'm doing well. How are you, Paul?
Speaker 1 (00:14):
It's been good. I think a lot's happening in the
space right now, more so Newswise, which we're going to
be covering some stuff on Starbucks. We're going to hit
shakeshack today, talk about the healthy category and also take
a look at where money is going in the space.
So everybody stick around, we'll be right back. All right,
(00:42):
I'm back here with Michael coming in from Bloemberg Intelligence.
Is it intelligence or do you guys have a different
category with all the analysts we talked to some of
the other guys and it's Bloomberg Intelligence.
Speaker 2 (00:52):
Yeah, that's what we call the department.
Speaker 3 (00:54):
But that's our research department, Compasses, equities, corporates, you name.
Speaker 2 (01:00):
It's all into that umbrella.
Speaker 1 (01:01):
So when you look at Michael, you're covering the space
right now. Talk to me, first of all, what is
your beat? Are you covering all publicly traded where they're
going in terms of trends, cycles, how their revenues are doing.
Give me kind of the one to one.
Speaker 3 (01:17):
Yeah, we cover seventeen of the largest publicly traded restaurant companies,
US Foods and Cisco, and we're analyzing those companies individually,
trying to project out earnings over the next couple of years,
and writing research on how we think their business is
going to go moving forward. And then you know, we
also do a good bit of industry level research, so
(01:39):
we talk a lot about trends and sales and margins
and all that kind of stuff.
Speaker 1 (01:45):
Well, we got to talk about AI because this is
something that we're seeing a lot of integration into major brands,
including the supply chain as well, and the potential future
here for the restaurant industry. When you're on the street
right now, is is this a big deal in the
restaurant industry yet or is it still kind of arms
(02:06):
length of people trying to discover what's going on.
Speaker 3 (02:09):
You know, I don't think it's a big deal just
yet because I don't think we've seen all the benefits.
We've seen some benefits, I believe, you know, there's been
a lot of work on big data, which is I
guess was AI before it was called AI, right, And
there was a lot of initiatives in terms of.
Speaker 2 (02:27):
Theoretical versus actual.
Speaker 3 (02:28):
Food programs as well as labor programs and sales projecting algorithms, right,
and those are being improved by AI machine learning right now.
And so that's the benefit i'd say we're seeing right
now moving forward, though we expect much bigger benefits. You know,
one that's probably really close to benefiting a company at
(02:52):
Chipotle's HR program, right, because that's going to free up
the managers to do a lot less interviewing, It's gonna
it's going to free up a lot more of their
time to touch the guests and make sure that the
restaurants are running smoothly and and and focus on their
day to day, which they personally they'd rather be focused on, right.
(03:13):
And so that that's one that that should help Chipotle
pretty soon. And then you know, we have stuff that's
you know, still quite expensive and more down the line,
but has you know definitely are are very interesting, right.
And so sticking with Chipotle because they're on the bleeding edge,
you know, they have the second make line, the automated
(03:34):
second make line that's underneath the counter for to go orders,
and uh, they're testing that and in quite a quite
a few stores. You know, they tried the automated chip fryers.
Those those didn't seem to work out as well. But
the autocado the machine that cuts course appeals avocados for
(03:55):
the guacamole, seems to be working pretty well. That's also
being tested in a lot of stores. You know, places
like Jack in the Box. They have these AI fryars
and these automated drink machines that they're working on. But
right now, all that technology is pretty expensive, right and
so you know, as that technology costs decline and as
(04:15):
minimum wages continue to rise, eventually they'll be an ROI
on those things and they'll be more ubiquitous in the
restaurant industry, but not so much right now.
Speaker 1 (04:23):
Well, okay, so you mentioned Chippotle. We got to go
there for a second because obviously briannkel he jumps over
to Starbucks. We'll talk about that in a second. But
boat Rice got about right taking over the lead there
looks like it's going to be a you know, a
permanent position. What do you think about the management team
right now, are you consistent with most of what the
industry is saying is that this is a good cycle
(04:45):
for Chipotle's team to kind of lead through this next phase.
Speaker 2 (04:50):
Yeah, I think so.
Speaker 3 (04:51):
You know, we we thought Scott boat right was the
right man for the job. We were happy to see
that he got the full time tag. They they dropped
the interim tag on them, and you know, we we
think that was the right move. They also, you know,
last year they kind of quietly gave senior management team
members pretty big raises and extended their contracts. And you know,
(05:14):
I think part of that was fear that Brian Nicchol
could try to poach them poach yeah, right, And so yeah,
Brian Nichol seems to be a popular guy.
Speaker 2 (05:23):
A lot of people want to go work with him.
Speaker 3 (05:25):
So so yeah, by keeping that senior management team uh intact,
I think was one hundred percent the right move. When
you have a company that's going, you know, doing so
well and outperforming for so long, you don't want to
upset the apple cart, right, and so yeah.
Speaker 2 (05:42):
We think we think it was it was the right
to keeping.
Speaker 1 (05:44):
A guy the ship on the rails. Well, the good
thing there if you look at Chipotle, they've continued to
experiment with new stuff, and I think that, to your point,
is what they've done with some of their AI automation
with HR. We just saw that story last week we
report on it. But the interesting thing to me is
that usually showcases that the brand has an appetite for
(06:07):
some things like that that can be very you know,
forward thinking. So good stuff for Chipotle. I think in general,
they're probably one of the leaders out there in the market.
Let's jump over to Starbucks for a second. I'll bring
up the story Starbucks laid off eleven hundred corporate workers. Now,
of course, this is Brian Nickel, the CEO, and this
is six point nine percent of the non retail staff.
(06:30):
That's a significant number there. So first of all, why
did he do it? And does this change anything on
the Starbucks forefront? What's your opinion?
Speaker 3 (06:43):
No, this is pretty unexpected from where I sit. You know,
when when Brian Nichol took the job, he took over
for a management team that struggled mightily, tried a lot
of different tactics, didn't have a lot of discipline, you know,
And one of the things that we right off the
bat was that he was going to bring in accountability,
a culture of accountability and transparency, right and if for
(07:07):
people that weren't pulling their weight, you know, they should
be worried. And he started with the senior management team. There,
there was some changes right away at the top of
the organization, and now it's making it, you know, down
a little bit further into the other members of the
corporate staff. But listen, this is a team that's been
underperforming for quite some time, right, and so you know,
(07:30):
these big organizations, it's easy for employees to get lost, right.
And you know, you were joking around before we started this,
but you know, you know, maybe they were influenced by
the Dosee team try to run the operations a little
bit more industry, right, And you know, I think I think,
you know, he he wants change, He wants his people
(07:52):
in there, like any good CEO does, especially with one
like him, with his track record, he'll be able to
attract employees, uh easily.
Speaker 2 (08:00):
So yeah, no surprise from where we said.
Speaker 1 (08:03):
Well, listen, we've seen the industry blue and brands let
go seventeen percent of their support center workforce just last week.
Denny's also said earlier in the month that it had
undertaken some corporate layoffs. Then we saw Dine Brands terminated
about nine percent of its corporate workforce. So this seems
to be a consistent theme that's going throughout the industry.
(08:26):
Do you think we're going to see more throughout twenty
twenty five?
Speaker 3 (08:31):
Well, I would say what the common thread between those
four companies has been seam source of sales underperformed. It's
pretty vast underperformance last year, right, And so you know
when you have chains that were putting up negative seam
source sales, you know the revenue bas is shrinking. You know,
this is not uncommon, right, And so I don't think so.
(08:53):
I think I've heard. I think we've heard most of
the announcements this year, because if you're going to do this,
you want to do it earlier in the year so
you get that benefit, you know, sooner, right in terms
of lower SG and A. So I think we've heard
most of the announcements for this year. I don't think
that the companies that are performing really well are looking
(09:13):
to cut headcount at the moment, right. It's the companies
that had a really rough twenty twenty four that are
looking to do this.
Speaker 1 (09:20):
Yeah, I want to bring up a story. You mentioned
same store sales, and of course when you bring up
that terminology, you cannot go without mentioning this right here,
which is Chili's thirty one point four percent same store
sales increase in Q two. What in the world was
going on here at Chili's that would cause this kind
(09:40):
of thing? Have you seen anything in terms of your
research that has indicated this kind of growth for Chili's.
Speaker 3 (09:47):
Well, we didn't protect thirty percent. I'll tell you that
nobody has, I mean the most. And I didn't know
we were going to talk about this. Did you just notice
my head?
Speaker 2 (09:57):
I just sell that, so I say, I got to
bring it up. So yeah, I mean it's been incredible.
Speaker 3 (10:03):
I mean forever it's been the Dominoes turnaround, right like
our pizza stinks, We're sorry, will make it better. And
you know they did like a ten percent, and now
Chile's now is compon thirty percent over a six and
a half last year, which.
Speaker 2 (10:15):
Is crazy, something I've never seen.
Speaker 3 (10:18):
I don't know if it's ever happened for a mature,
established brand of this size that's been around this long.
Absolutely incredible. Kevin Hawkman and his team has done a
phenomenal job. And it's a similar playbook. Uh you know
that Brian Nicols is looking to execute in Starbucks. Right,
It's like nail the operations, right. They right off the bat,
(10:41):
they simplified the menu, right. They actually took discounts away,
you know, because because constant discounting is basically just telling
your your customers that the fluid rights on the menu, yep, right,
And so they removed the discounts, which you know was
a bold move to do last year in the midst
of a you know, restaurant.
Speaker 1 (11:00):
Recession, casual dining sector.
Speaker 3 (11:03):
Yeah, yeah, one hund so and and shrinking the menu
and bringing backbusters and putting more labor into the stores,
getting that experience, right, nailing that experience, and then from
there really pressing the gas on the marketing side. And
their their marketing team is the best in the business.
(11:26):
I mean, they're absolutely crushing it on social media, through TikTok,
through their TV advertising. They have ads ads, you know,
taking shots at QSR and and and the high prices
that qs are.
Speaker 2 (11:40):
They're doing really well right on TikTok.
Speaker 3 (11:43):
You know, they're changing the menu based based on some
of the things that they're their customers are doing on
TikTok and they're paying attention.
Speaker 2 (11:51):
It's very reactive.
Speaker 1 (11:53):
Yeah, very reactive. Brand, somewhat nimble, seems to be somewhat nimble.
Do you think this is all leadership driven or do
you feel like maybe there is a new wave of
talent starting to make their way into these brands right
now and we're starting to see the results of this.
Speaker 2 (12:10):
Well. Good leaders bring good talent with them.
Speaker 3 (12:12):
Kevin Hockman brought in George Felix and Jesse Johnson and
many of the people he had worked with in the
past at Young Brands and.
Speaker 2 (12:24):
Taco Bell as well.
Speaker 3 (12:25):
So no, he's brought some great talent in there with him,
and this is a brand that people used to love
exactly right, And I think that's what you know. I
got a chance to sit down with Kevin a couple
of weeks ago, and he said he was like, this
was a great brand once apon of time, you know,
and I just saw that there was a lot of
potential here. And I told him I loved your brand
(12:45):
twenty years ago, and then about ten years ago, my
son loved your brand when he was little and he'd
always want to go there. And I was like, oh, man,
I don't know to chilies, you know, but it's changed
over the last three years. They've leaned pretty hard into
the stuff that's made Chilies great, you know, the differentiation,
the different menu than the other casual dining competitors, really
(13:07):
leaning more into that Southwestern cuisine. And yeah, man, it's
been an incredible, incredible result.
Speaker 2 (13:16):
Yeah.
Speaker 1 (13:16):
I think they also because this is something that my
wife brought up not too long I said, Honey, we
got to go to a Chili's. It was after I
saw these numbers. I haven't been to one in at
least three years, and I went in for the first
time in a long time. And first of all, the
one thing I noticed, more so than anything, was their
customer service had really elevated, and the greet was better,
(13:40):
the service speed was better, the check back was better.
They made sure all the entrees were right, and they
then they asked if we liked them, and I was like, Okay,
this is a different kind of experience at a casual
dining restaurant, so I kind of see maybe this has
started to seep down into their operations. Which is cool
to see a brand like Chili's which is obviously. I mean,
(14:02):
this is kind of these kind of numbers and performance
pretty amazing.
Speaker 3 (14:05):
There's just a lot of low hanging through right like
that the operations twenty years ago, this was Chili's right
and now they're exactly getting back getting back to that,
which is great to see.
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you there. We got to hit on Shakeshack. They're opening
up their kitchen innovation lab. This is coming up in
(15:57):
Atlanta this year, so it's going to test whip meant layout.
So I'm kind of interested to see if they've got
maybe a new layout planned. But also they're going to
improve on processes and optimizations. I don't know where shakeshack
would really I mean, because their speed is pretty good
inside the restaurant itself. But it's good to see an
(16:21):
innovation lab starting, you know, in a major brand like Shakeshak.
Anything that you think this will do in terms of
improving what Shakeshak is bringing to market.
Speaker 3 (16:31):
You're bringing up all of the companies we're most excited
about this shift. So this has been this has been fun, Paul.
So there is some low hanging fruit here as well.
And so when Shakeshak was created, it was created by
the Union Square Hospitality Group, and it really has a
fine dining type set up in the sure not how
(16:54):
you should be running a fast, casual, quick service burger joint.
And so there needs to be work done on the
kitchen layout. And what what new CEO Rob Lynch has
talked about is he wants a line that you know,
starts on one end of the restaurant and ends at
at the at the drive through window, right. And so
they want to they want to improve their speed of
(17:17):
service in the in the kitchen, uh, And then that's
going to tie in pretty closely to the drive through, right.
Rob Lynch is a big believer in the drive through.
But wait times have been you know, pretty poor, and
it makes sense, right when you're making food to orders
drive through is going to be slow, right, and so
they're going to have to make some some changes to their.
Speaker 2 (17:37):
Drive through processes.
Speaker 3 (17:38):
But he's a big believer on it, and so although
it hasn't been very incremental just yet, you know, he
believes that that this is going to be a huge
driver for this company. And you know, these are the
two areas that that innovation kitchen is going to focus on.
Speaker 2 (17:53):
First, well, if.
Speaker 1 (17:54):
They get into a scenario where they can reduce some
of the build out costs, because that that will open
up maybe some real estate opportunities for them, which I
think we'll expand maybe give some venue to expand the
brand itself. And if you look at where they are
right now in terms of their growth and what they
could bring to the market. Back to your point is
(18:16):
drive through seems to be one of the growing sectors
for Shakescheck and it's a very good competitive edge for
them if they can actually speed it up. So that
will be a big one for Lynch if he pulls
it off. I'm going to look at this one in
a few months and see if it's actually had some
kind of impact on drifting. We get new shake checks
(18:37):
down here, in Florida where am we finally got one
out very close to our studio here and with your
drive through not too long ago, and exactly the same
problem is that made to order you know, spends that
drive through time up to around seven to nine minutes,
and that is just unfortunately too long for most consumers.
Speaker 3 (18:56):
Yeah, yeah, yeah, And it's you know, listen, the dining
room and the drive through the they work good together
in terms of easing pressure on one versus the other, right,
and maybe the opposite for Shakeshack.
Speaker 2 (19:06):
So whereas us are you know, people use the dining
room only when the drive through line is too long.
Well maybe at Shakeshack it's the opposite.
Speaker 3 (19:12):
If the dining room's too busy, I'll use the drive
through lean right, But they can use pressure on the
other channel, which is nice to have.
Speaker 1 (19:21):
They've done a good job, I think with the design
of their restaurants too. In general, most of the news stores,
you know, they all kind of have unique footprints. I'm
intrigued to see what Lynch comes up with because of
his background and how he can you know, increase throughput,
because I like this whole idea around the line really
(19:43):
maximizing what drive through speed could be. But with that
that's probably going to open up and they mentioned it
in the article, is going to open up a lot
of opportunity in terms of a kitchen equipment, which could
really get intriguing if they implement some of this new
advanced you know tech that seems to be coming in
from the kitchen industr in terms of you know, back
of house stuff, so a lot of low hanging back
(20:05):
to your point, a lot of low hanging fruit. Let's
get into the healthy eating category, all right, So this
has been a category that has been winning for years,
you know, I'd say easily the last decade protein bar
courses talking about this. But I'm more intrigued with your
opinion on, first of all, how and if healthy can
(20:29):
truly maintain its current market position or do you feel
like we're going to start to see a little bit
of a shift, because if you look at shakesheck covet
to a certain extent, I would say a little bit
more healthy, but still very you know, very decadent in
the sense that you really get really great food there.
Do you think healthy as maybe run its course or
(20:52):
do you feel like it's still got an opportunity.
Speaker 3 (20:54):
Here now it still has an opportunity because gen Z
loves it.
Speaker 2 (20:59):
Right.
Speaker 3 (20:59):
Gen Z is is you know, it's a small, uh
demographic cohort, but they are the trendsetters right now. And
chains that are attracting large numbers of gen Z seem
to be outperformed. They are outperforming so and they a
lot of them want you know.
Speaker 2 (21:16):
Healthier food.
Speaker 3 (21:17):
Right, it's going to continue to do better on the coasts.
I think Middle America is going to take longer, I think,
to adopt some of these healthier eating habits, but not
we We think this is here to stay.
Speaker 1 (21:29):
You mentioned u gen Z and the healthy eater and
eat healthier eating habits, and then I look at you know,
some of the categories that are big, you know, really
big market share for a lot of these casual dining
which has been you know, the liquor business and the
beverage business. Now you're talking or we hear more and
(21:50):
more of gen Z is going to where uh you know,
the mocktail concept. Do you think that's going to split
up or start to adjust product mix and some of
those day parts for some of these casual dining chains.
Since we're seeing some of that healthiness, maybe seep into
other brands.
Speaker 3 (22:10):
Uh yeah, Texas Roadhouse just announced a mocktail program, right,
so this is this is here and and and I
don't think the the push you know, the lower alcohol
consumption is just gen Z, right, because a lot of
go across Yeah, a lot of gen Z members are
are you too young to drink?
Speaker 2 (22:30):
Anyway?
Speaker 3 (22:31):
But you know, when I was at you know, you
know these restaurant conferences.
Speaker 2 (22:36):
People really like to get after it.
Speaker 3 (22:37):
And I wasn't drinking at the last ICR conference, and
there was a lot of people that I know that
I'm friendly with or friends with that were not drinking.
They were all partaking in dry January. So this is
you know, very much a headwind for full service dining
establishments casual dining, right, And so the mocktail program is smart.
(23:00):
You can offset some of that loss with some fancy,
expensive non alcoholic drinks.
Speaker 2 (23:06):
Yeah, there you go.
Speaker 1 (23:06):
Well, I think, you know, if it's hitting the right
vein in terms of how some consumers are kind of
going in on this. Typically you see those kind of
things or you know, the calorie counters in the beginning
always you know, kind of resolution based. But it's starting
to last and it seems though the people we've talked to,
the strategies are working in terms of creating a lot
(23:28):
more unique menu offerings, doing like energy infused stuff in
some of the categories. Now we're starting to see some
more savory elements, so it's getting very creative, which I
think could blend into a new opportunity there. Back to
your point on healthy eating that will be interesting to watch.
I want to talk about funding because this is a
(23:51):
story that surprised me that came across Nation's Restaurant News
and Just Salad, which for those of you listening in,
this is a I would say a medium sized chain,
not a massive chain, but they drew in about two
hundred million in funding on a round that was multi
lad here. But the bigger question to me, Michael, is
(24:12):
when you look at where the market is right now
on these medium sized regional chains and or maybe some
of these chains like a Chipotle, or not a Chipotle,
but like a Chili's or some of the other emerging
casual dining concepts that could be going out after cash,
do you think this is something that is kind of
(24:33):
a one offer. Do you feel like there's more money
opening up to the market right now.
Speaker 3 (24:38):
We think there's more money opening up backup restaurant finance.
In November, a lot of the bankers that we know
had become more bullish about twenty twenty five versus twenty
twenty four. There's a lot of pent up demand for deals.
Twenty twenty four. Obviously, we're in that restaurant recession. It
was a tough year for valuations and deals, and you know.
Speaker 2 (25:00):
Buyers and sellers had to get really creative.
Speaker 3 (25:02):
But things that seem to be opening up, and you know,
seam store sales have improved. I know they've been kind
of bumpy, especially here in February with some of the weather,
but they have improved since before the election. And then
I think we have some really you know, I know,
we have some easy uh saame sort of sales comps
to lap and so you know, top lines should be
(25:24):
getting better here. We have asset prices near all time highs,
which should boosts you know, middle and upper income consumer spending,
and so, you know, I think there's a brighter outlook
right now, and we'd expect a lot more deals to
get done this year than last year.
Speaker 2 (25:37):
For sure.
Speaker 1 (25:38):
What are you looking at for twenty twenty five that
you guys, when you're researching all these brands and you
see these opportunities that seem to be starting to bud
for some of these chains, do you think we're going
to see some more breakouts like what we saw with
Chili's in twenty twenty five for some other brands.
Speaker 3 (25:58):
Well, you know, we wrote in our year ahead out
look was that, you know, we're really where we're seeing
a lot of movement and success is with like just
nailing the operations and then marketing right. And so that
what we've seen Chili's do and and continue to do,
and actually now the same store sales are accelerating. There's
(26:19):
some companies that have management changes that we think can
use a similar playbook to boost their same source sales.
Speaker 2 (26:27):
And we've talked about all but one.
Speaker 3 (26:30):
We talked about Starbucks, we talked about Shake Shack, we
talked about and then it was uh.
Speaker 2 (26:37):
Cracker Barrel. Cracker Barrel is the other one.
Speaker 3 (26:39):
We think Cracker Barrel has a pretty they have a
new ceou. We think she's doing a phenomenal job. We
think she has a great plan for boosting you know,
same source of sales and traffic going forward. And uh,
that's another company we think has a pretty good opportunity.
Speaker 1 (26:54):
Do you think that demographic has shifted for Cracker Barrel
some or or is it just there maybe their approach
toward their own business itself of just remodeling it to
where it's going to get better in terms of performance. Yeah.
Speaker 3 (27:08):
So the food, you know, the food innovation, you know,
is going to be a big one this year to
help draw in.
Speaker 2 (27:18):
You know, draw in customers.
Speaker 3 (27:20):
But it's really it's the same thing starting with the operations, right,
It's like getting nailing the service, getting the experience right,
you know, and then it's menu innovation. So now when
we bring in a customer, they're not going to have
a bad experience and they're going to want to come back, right,
And so they've nailed those. Now they're going to market
more aggressively.
Speaker 2 (27:39):
Right.
Speaker 3 (27:39):
They're doing some stuff on TikTok as well. They're doing
more advertising during NASCAR and Bravo, which has a huge
overlap between CDR customers and Bravo watchers.
Speaker 1 (27:52):
Right.
Speaker 3 (27:52):
And so now they're they're you know, advertising around more
relevant modern food. It's you know, their typical Southern like
classics with a twist, right, and and and then the
remodels will be next year. The remodels are are a
big part of drawing in the gen Z customers. Right,
(28:12):
They're gonna have a brighter, brighter tones in terms of paint,
They're gonna have more lighting in the stores, and they
think that will help attract the younger generations.
Speaker 1 (28:23):
Yeah, that's what I'm a little bit more excited about
is to see a new design theme kind of brought
forward to because we are seeing quite a few brands
that that have done some fairly successful remakes over the
last few years in terms of just what they've done
from a design standpoint. So Cracker Barrel, of course, has
been a long standing brand that kind of lives in
(28:46):
that theme, you know, of very southern roots, and I
get it. So it'll be interesting considered.
Speaker 2 (28:53):
It was interesting. Sorry, yeah, it was interesting.
Speaker 3 (28:56):
It's a it's an old country store theme, so they
thought and for the longest time they were right that
they didn't have to do a full remodel of the
stores because it's in an old country store, right, And
it was a great you know, point of emphasis for
investors going back ten years ago. It is like this
company spends way less on cap X and then they
can use that cash to buy back shares and pay
(29:17):
a dividend.
Speaker 2 (29:18):
Right, And but it caught up to them, right.
Speaker 3 (29:20):
The younger generations want.
Speaker 2 (29:24):
You know, they're more discerning and then they almost what
they want.
Speaker 1 (29:27):
Yeah, yeah, so always do for sure. Michael has been
good catching up with you. I love to do the
rundown on where some of these are. Each quarter we
try to look at what's happening in the performance. Obviously
we're ending up here in Q one and getting ready
to in March. Uh So this will be a good
one because we'll get a chance to see some new
earnings come in hopefully soon and see how some of
(29:49):
these brands are doing. So we'll definitely get you back
on the show. But thanks for coming in today. I
appreciate it.
Speaker 2 (29:54):
Sure think you.
Speaker 1 (29:55):
Bet are you guys? If you're not, you know, subscribe
to the channel. Make sure do that. Of course you
can catch Michael Haling over on Bloomberg and learn a
little bit more about what their analysis is. But all
you have to do is jump over to sav Fm.
You'll find us over there and all of our podcasts.
Also check out the YouTube channel, which is approaching two
hundred thousand subscribers.
Speaker 2 (30:16):
That's right.
Speaker 1 (30:16):
It's because of you guys, so make sure and comment
down below. Give us a like or two if you
are watching the video version of this. If you're in
the audio version, just give us a start and we'll
catch you next time right here on the restaurant Report
All right, We're back here on another episode of the
Restaurant Report, and today is going to be a fun
one because I've got Michael Halen with my great friends
over here at Bloomberg coming in as one of the
top analysts in the industry. Michael, how are you.
Speaker 2 (00:12):
I'm doing well. How are you, Paul?
Speaker 1 (00:14):
It's been good. I think a lot's happening in the
space right now, more so Newswise, which we're going to
be covering some stuff on Starbucks. We're going to hit
shakeshack today, talk about the healthy category and also take
a look at where money is going in the space.
So everybody stick around, we'll be right back. All right,
(00:42):
I'm back here with Michael coming in from Bloemberg Intelligence.
Is it intelligence or do you guys have a different
category with all the analysts we talked to some of
the other guys and it's Bloomberg Intelligence.
Speaker 2 (00:52):
Yeah, that's what we call the department.
Speaker 3 (00:54):
But that's our research department, Compasses, equities, corporates, you name.
Speaker 2 (01:00):
It's all into that umbrella.
Speaker 1 (01:01):
So when you look at Michael, you're covering the space
right now. Talk to me, first of all, what is
your beat? Are you covering all publicly traded where they're
going in terms of trends, cycles, how their revenues are doing.
Give me kind of the one to one.
Speaker 3 (01:17):
Yeah, we cover seventeen of the largest publicly traded restaurant companies,
US Foods and Cisco, and we're analyzing those companies individually,
trying to project out earnings over the next couple of years,
and writing research on how we think their business is
going to go moving forward. And then you know, we
also do a good bit of industry level research, so
(01:39):
we talk a lot about trends and sales and margins
and all that kind of stuff.
Speaker 1 (01:45):
Well, we got to talk about AI because this is
something that we're seeing a lot of integration into major brands,
including the supply chain as well, and the potential future
here for the restaurant industry. When you're on the street
right now, is is this a big deal in the
restaurant industry yet or is it still kind of arms
(02:06):
length of people trying to discover what's going on.
Speaker 3 (02:09):
You know, I don't think it's a big deal just
yet because I don't think we've seen all the benefits.
We've seen some benefits, I believe, you know, there's been
a lot of work on big data, which is I
guess was AI before it was called AI, right, And
there was a lot of initiatives in terms of.
Speaker 2 (02:27):
Theoretical versus actual.
Speaker 3 (02:28):
Food programs as well as labor programs and sales projecting algorithms, right,
and those are being improved by AI machine learning right now.
And so that's the benefit i'd say we're seeing right
now moving forward, though we expect much bigger benefits. You know,
one that's probably really close to benefiting a company at
(02:52):
Chipotle's HR program, right, because that's going to free up
the managers to do a lot less interviewing, It's gonna
it's going to free up a lot more of their
time to touch the guests and make sure that the
restaurants are running smoothly and and and focus on their
day to day, which they personally they'd rather be focused on, right.
(03:13):
And so that that's one that that should help Chipotle
pretty soon. And then you know, we have stuff that's
you know, still quite expensive and more down the line,
but has you know definitely are are very interesting, right.
And so sticking with Chipotle because they're on the bleeding edge,
you know, they have the second make line, the automated
(03:34):
second make line that's underneath the counter for to go orders,
and uh, they're testing that and in quite a quite
a few stores. You know, they tried the automated chip fryers.
Those those didn't seem to work out as well. But
the autocado the machine that cuts course appeals avocados for
(03:55):
the guacamole, seems to be working pretty well. That's also
being tested in a lot of stores. You know, places
like Jack in the Box. They have these AI fryars
and these automated drink machines that they're working on. But
right now, all that technology is pretty expensive, right and
so you know, as that technology costs decline and as
(04:15):
minimum wages continue to rise, eventually they'll be an ROI
on those things and they'll be more ubiquitous in the
restaurant industry, but not so much right now.
Speaker 1 (04:23):
Well, okay, so you mentioned Chippotle. We got to go
there for a second because obviously briannkel he jumps over
to Starbucks. We'll talk about that in a second. But
boat Rice got about right taking over the lead there
looks like it's going to be a you know, a
permanent position. What do you think about the management team
right now, are you consistent with most of what the
industry is saying is that this is a good cycle
(04:45):
for Chipotle's team to kind of lead through this next phase.
Speaker 2 (04:50):
Yeah, I think so.
Speaker 3 (04:51):
You know, we we thought Scott boat right was the
right man for the job. We were happy to see
that he got the full time tag. They they dropped
the interim tag on them, and you know, we we
think that was the right move. They also, you know,
last year they kind of quietly gave senior management team
members pretty big raises and extended their contracts. And you know,
(05:14):
I think part of that was fear that Brian Nicchol
could try to poach them poach yeah, right, And so yeah,
Brian Nichol seems to be a popular guy.
Speaker 2 (05:23):
A lot of people want to go work with him.
Speaker 3 (05:25):
So so yeah, by keeping that senior management team uh intact,
I think was one hundred percent the right move. When
you have a company that's going, you know, doing so
well and outperforming for so long, you don't want to
upset the apple cart, right, and so yeah.
Speaker 2 (05:42):
We think we think it was it was the right
to keeping.
Speaker 1 (05:44):
A guy the ship on the rails. Well, the good
thing there if you look at Chipotle, they've continued to
experiment with new stuff, and I think that, to your point,
is what they've done with some of their AI automation
with HR. We just saw that story last week we
report on it. But the interesting thing to me is
that usually showcases that the brand has an appetite for
(06:07):
some things like that that can be very you know,
forward thinking. So good stuff for Chipotle. I think in general,
they're probably one of the leaders out there in the market.
Let's jump over to Starbucks for a second. I'll bring
up the story Starbucks laid off eleven hundred corporate workers. Now,
of course, this is Brian Nickel, the CEO, and this
is six point nine percent of the non retail staff.
(06:30):
That's a significant number there. So first of all, why
did he do it? And does this change anything on
the Starbucks forefront? What's your opinion?
Speaker 3 (06:43):
No, this is pretty unexpected from where I sit. You know,
when when Brian Nichol took the job, he took over
for a management team that struggled mightily, tried a lot
of different tactics, didn't have a lot of discipline, you know,
And one of the things that we right off the
bat was that he was going to bring in accountability,
a culture of accountability and transparency, right and if for
(07:07):
people that weren't pulling their weight, you know, they should
be worried. And he started with the senior management team. There,
there was some changes right away at the top of
the organization, and now it's making it, you know, down
a little bit further into the other members of the
corporate staff. But listen, this is a team that's been
underperforming for quite some time, right, and so you know,
(07:30):
these big organizations, it's easy for employees to get lost, right.
And you know, you were joking around before we started this,
but you know, you know, maybe they were influenced by
the Dosee team try to run the operations a little
bit more industry, right, And you know, I think I think,
you know, he he wants change, He wants his people
(07:52):
in there, like any good CEO does, especially with one
like him, with his track record, he'll be able to
attract employees, uh easily.
Speaker 2 (08:00):
So yeah, no surprise from where we said.
Speaker 1 (08:03):
Well, listen, we've seen the industry blue and brands let
go seventeen percent of their support center workforce just last week.
Denny's also said earlier in the month that it had
undertaken some corporate layoffs. Then we saw Dine Brands terminated
about nine percent of its corporate workforce. So this seems
to be a consistent theme that's going throughout the industry.
(08:26):
Do you think we're going to see more throughout twenty
twenty five?
Speaker 3 (08:31):
Well, I would say what the common thread between those
four companies has been seam source of sales underperformed. It's
pretty vast underperformance last year, right, And so you know
when you have chains that were putting up negative seam
source sales, you know the revenue bas is shrinking. You know,
this is not uncommon, right, And so I don't think so.
(08:53):
I think I've heard. I think we've heard most of
the announcements this year, because if you're going to do this,
you want to do it earlier in the year so
you get that benefit, you know, sooner, right in terms
of lower SG and A. So I think we've heard
most of the announcements for this year. I don't think
that the companies that are performing really well are looking
(09:13):
to cut headcount at the moment, right. It's the companies
that had a really rough twenty twenty four that are
looking to do this.
Speaker 1 (09:20):
Yeah, I want to bring up a story. You mentioned
same store sales, and of course when you bring up
that terminology, you cannot go without mentioning this right here,
which is Chili's thirty one point four percent same store
sales increase in Q two. What in the world was
going on here at Chili's that would cause this kind
(09:40):
of thing? Have you seen anything in terms of your
research that has indicated this kind of growth for Chili's.
Speaker 3 (09:47):
Well, we didn't protect thirty percent. I'll tell you that
nobody has, I mean the most. And I didn't know
we were going to talk about this. Did you just notice
my head?
Speaker 2 (09:57):
I just sell that, so I say, I got to
bring it up. So yeah, I mean it's been incredible.
Speaker 3 (10:03):
I mean forever it's been the Dominoes turnaround, right like
our pizza stinks, We're sorry, will make it better. And
you know they did like a ten percent, and now
Chile's now is compon thirty percent over a six and
a half last year, which.
Speaker 2 (10:15):
Is crazy, something I've never seen.
Speaker 3 (10:18):
I don't know if it's ever happened for a mature,
established brand of this size that's been around this long.
Absolutely incredible. Kevin Hawkman and his team has done a
phenomenal job. And it's a similar playbook. Uh you know
that Brian Nicols is looking to execute in Starbucks. Right,
It's like nail the operations, right. They right off the bat,
(10:41):
they simplified the menu, right. They actually took discounts away,
you know, because because constant discounting is basically just telling
your your customers that the fluid rights on the menu, yep, right,
And so they removed the discounts, which you know was
a bold move to do last year in the midst
of a you know, restaurant.
Speaker 1 (11:00):
Recession, casual dining sector.
Speaker 3 (11:03):
Yeah, yeah, one hund so and and shrinking the menu
and bringing backbusters and putting more labor into the stores,
getting that experience, right, nailing that experience, and then from
there really pressing the gas on the marketing side. And
their their marketing team is the best in the business.
(11:26):
I mean, they're absolutely crushing it on social media, through TikTok,
through their TV advertising. They have ads ads, you know,
taking shots at QSR and and and the high prices
that qs are.
Speaker 2 (11:40):
They're doing really well right on TikTok.
Speaker 3 (11:43):
You know, they're changing the menu based based on some
of the things that they're their customers are doing on
TikTok and they're paying attention.
Speaker 2 (11:51):
It's very reactive.
Speaker 1 (11:53):
Yeah, very reactive. Brand, somewhat nimble, seems to be somewhat nimble.
Do you think this is all leadership driven or do
you feel like maybe there is a new wave of
talent starting to make their way into these brands right
now and we're starting to see the results of this.
Speaker 2 (12:10):
Well. Good leaders bring good talent with them.
Speaker 3 (12:12):
Kevin Hockman brought in George Felix and Jesse Johnson and
many of the people he had worked with in the
past at Young Brands and.
Speaker 2 (12:24):
Taco Bell as well.
Speaker 3 (12:25):
So no, he's brought some great talent in there with him,
and this is a brand that people used to love
exactly right, And I think that's what you know. I
got a chance to sit down with Kevin a couple
of weeks ago, and he said he was like, this
was a great brand once apon of time, you know,
and I just saw that there was a lot of
potential here. And I told him I loved your brand
(12:45):
twenty years ago, and then about ten years ago, my
son loved your brand when he was little and he'd
always want to go there. And I was like, oh, man,
I don't know to chilies, you know, but it's changed
over the last three years. They've leaned pretty hard into
the stuff that's made Chilies great, you know, the differentiation,
the different menu than the other casual dining competitors, really
(13:07):
leaning more into that Southwestern cuisine. And yeah, man, it's
been an incredible, incredible result.
Speaker 2 (13:16):
Yeah.
Speaker 1 (13:16):
I think they also because this is something that my
wife brought up not too long I said, Honey, we
got to go to a Chili's. It was after I
saw these numbers. I haven't been to one in at
least three years, and I went in for the first
time in a long time. And first of all, the
one thing I noticed, more so than anything, was their
customer service had really elevated, and the greet was better,
(13:40):
the service speed was better, the check back was better.
They made sure all the entrees were right, and they
then they asked if we liked them, and I was like, Okay,
this is a different kind of experience at a casual
dining restaurant, so I kind of see maybe this has
started to seep down into their operations. Which is cool
to see a brand like Chili's which is obviously. I mean,
(14:02):
this is kind of these kind of numbers and performance
pretty amazing.
Speaker 3 (14:05):
There's just a lot of low hanging through right like
that the operations twenty years ago, this was Chili's right
and now they're exactly getting back getting back to that,
which is great to see.
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you there. We got to hit on Shakeshack. They're opening
up their kitchen innovation lab. This is coming up in
(15:57):
Atlanta this year, so it's going to test whip meant layout.
So I'm kind of interested to see if they've got
maybe a new layout planned. But also they're going to
improve on processes and optimizations. I don't know where shakeshack
would really I mean, because their speed is pretty good
inside the restaurant itself. But it's good to see an
(16:21):
innovation lab starting, you know, in a major brand like Shakeshak.
Anything that you think this will do in terms of
improving what Shakeshak is bringing to market.
Speaker 3 (16:31):
You're bringing up all of the companies we're most excited
about this shift. So this has been this has been fun, Paul.
So there is some low hanging fruit here as well.
And so when Shakeshak was created, it was created by
the Union Square Hospitality Group, and it really has a
fine dining type set up in the sure not how
(16:54):
you should be running a fast, casual, quick service burger joint.
And so there needs to be work done on the
kitchen layout. And what what new CEO Rob Lynch has
talked about is he wants a line that you know,
starts on one end of the restaurant and ends at
at the at the drive through window, right. And so
they want to they want to improve their speed of
(17:17):
service in the in the kitchen, uh, And then that's
going to tie in pretty closely to the drive through, right.
Rob Lynch is a big believer in the drive through.
But wait times have been you know, pretty poor, and
it makes sense, right when you're making food to orders
drive through is going to be slow, right, and so
they're going to have to make some some changes to their.
Speaker 2 (17:37):
Drive through processes.
Speaker 3 (17:38):
But he's a big believer on it, and so although
it hasn't been very incremental just yet, you know, he
believes that that this is going to be a huge
driver for this company. And you know, these are the
two areas that that innovation kitchen is going to focus on.
Speaker 2 (17:53):
First, well, if.
Speaker 1 (17:54):
They get into a scenario where they can reduce some
of the build out costs, because that that will open
up maybe some real estate opportunities for them, which I
think we'll expand maybe give some venue to expand the
brand itself. And if you look at where they are
right now in terms of their growth and what they
could bring to the market. Back to your point is
(18:16):
drive through seems to be one of the growing sectors
for Shakescheck and it's a very good competitive edge for
them if they can actually speed it up. So that
will be a big one for Lynch if he pulls
it off. I'm going to look at this one in
a few months and see if it's actually had some
kind of impact on drifting. We get new shake checks
(18:37):
down here, in Florida where am we finally got one
out very close to our studio here and with your
drive through not too long ago, and exactly the same
problem is that made to order you know, spends that
drive through time up to around seven to nine minutes,
and that is just unfortunately too long for most consumers.
Speaker 3 (18:56):
Yeah, yeah, yeah, And it's you know, listen, the dining
room and the drive through the they work good together
in terms of easing pressure on one versus the other, right,
and maybe the opposite for Shakeshack.
Speaker 2 (19:06):
So whereas us are you know, people use the dining
room only when the drive through line is too long.
Well maybe at Shakeshack it's the opposite.
Speaker 3 (19:12):
If the dining room's too busy, I'll use the drive
through lean right, But they can use pressure on the
other channel, which is nice to have.
Speaker 1 (19:21):
They've done a good job, I think with the design
of their restaurants too. In general, most of the news stores,
you know, they all kind of have unique footprints. I'm
intrigued to see what Lynch comes up with because of
his background and how he can you know, increase throughput,
because I like this whole idea around the line really
(19:43):
maximizing what drive through speed could be. But with that
that's probably going to open up and they mentioned it
in the article, is going to open up a lot
of opportunity in terms of a kitchen equipment, which could
really get intriguing if they implement some of this new
advanced you know tech that seems to be coming in
from the kitchen industr in terms of you know, back
of house stuff, so a lot of low hanging back
(20:05):
to your point, a lot of low hanging fruit. Let's
get into the healthy eating category, all right, So this
has been a category that has been winning for years,
you know, I'd say easily the last decade protein bar
courses talking about this. But I'm more intrigued with your
opinion on, first of all, how and if healthy can
(20:29):
truly maintain its current market position or do you feel
like we're going to start to see a little bit
of a shift, because if you look at shakesheck covet
to a certain extent, I would say a little bit
more healthy, but still very you know, very decadent in
the sense that you really get really great food there.
Do you think healthy as maybe run its course or
(20:52):
do you feel like it's still got an opportunity.
Speaker 3 (20:54):
Here now it still has an opportunity because gen Z
loves it.
Speaker 2 (20:59):
Right.
Speaker 3 (20:59):
Gen Z is is you know, it's a small, uh
demographic cohort, but they are the trendsetters right now. And
chains that are attracting large numbers of gen Z seem
to be outperformed. They are outperforming so and they a
lot of them want you know.
Speaker 2 (21:16):
Healthier food.
Speaker 3 (21:17):
Right, it's going to continue to do better on the coasts.
I think Middle America is going to take longer, I think,
to adopt some of these healthier eating habits, but not
we We think this is here to stay.
Speaker 1 (21:29):
You mentioned u gen Z and the healthy eater and
eat healthier eating habits, and then I look at you know,
some of the categories that are big, you know, really
big market share for a lot of these casual dining
which has been you know, the liquor business and the
beverage business. Now you're talking or we hear more and
(21:50):
more of gen Z is going to where uh you know,
the mocktail concept. Do you think that's going to split
up or start to adjust product mix and some of
those day parts for some of these casual dining chains.
Since we're seeing some of that healthiness, maybe seep into
other brands.
Speaker 3 (22:10):
Uh yeah, Texas Roadhouse just announced a mocktail program, right,
so this is this is here and and and I
don't think the the push you know, the lower alcohol
consumption is just gen Z, right, because a lot of
go across Yeah, a lot of gen Z members are
are you too young to drink?
Speaker 2 (22:30):
Anyway?
Speaker 3 (22:31):
But you know, when I was at you know, you
know these restaurant conferences.
Speaker 2 (22:36):
People really like to get after it.
Speaker 3 (22:37):
And I wasn't drinking at the last ICR conference, and
there was a lot of people that I know that
I'm friendly with or friends with that were not drinking.
They were all partaking in dry January. So this is
you know, very much a headwind for full service dining
establishments casual dining, right, And so the mocktail program is smart.
(23:00):
You can offset some of that loss with some fancy,
expensive non alcoholic drinks.
Speaker 2 (23:06):
Yeah, there you go.
Speaker 1 (23:06):
Well, I think, you know, if it's hitting the right
vein in terms of how some consumers are kind of
going in on this. Typically you see those kind of
things or you know, the calorie counters in the beginning
always you know, kind of resolution based. But it's starting
to last and it seems though the people we've talked to,
the strategies are working in terms of creating a lot
(23:28):
more unique menu offerings, doing like energy infused stuff in
some of the categories. Now we're starting to see some
more savory elements, so it's getting very creative, which I
think could blend into a new opportunity there. Back to
your point on healthy eating that will be interesting to watch.
I want to talk about funding because this is a
(23:51):
story that surprised me that came across Nation's Restaurant News
and Just Salad, which for those of you listening in,
this is a I would say a medium sized chain,
not a massive chain, but they drew in about two
hundred million in funding on a round that was multi
lad here. But the bigger question to me, Michael, is
(24:12):
when you look at where the market is right now
on these medium sized regional chains and or maybe some
of these chains like a Chipotle, or not a Chipotle,
but like a Chili's or some of the other emerging
casual dining concepts that could be going out after cash,
do you think this is something that is kind of
(24:33):
a one offer. Do you feel like there's more money
opening up to the market right now.
Speaker 3 (24:38):
We think there's more money opening up backup restaurant finance.
In November, a lot of the bankers that we know
had become more bullish about twenty twenty five versus twenty
twenty four. There's a lot of pent up demand for deals.
Twenty twenty four. Obviously, we're in that restaurant recession. It
was a tough year for valuations and deals, and you know.
Speaker 2 (25:00):
Buyers and sellers had to get really creative.
Speaker 3 (25:02):
But things that seem to be opening up, and you know,
seam store sales have improved. I know they've been kind
of bumpy, especially here in February with some of the weather,
but they have improved since before the election. And then
I think we have some really you know, I know,
we have some easy uh saame sort of sales comps
to lap and so you know, top lines should be
(25:24):
getting better here. We have asset prices near all time highs,
which should boosts you know, middle and upper income consumer spending,
and so, you know, I think there's a brighter outlook
right now, and we'd expect a lot more deals to
get done this year than last year.
Speaker 2 (25:37):
For sure.
Speaker 1 (25:38):
What are you looking at for twenty twenty five that
you guys, when you're researching all these brands and you
see these opportunities that seem to be starting to bud
for some of these chains, do you think we're going
to see some more breakouts like what we saw with
Chili's in twenty twenty five for some other brands.
Speaker 3 (25:58):
Well, you know, we wrote in our year ahead out
look was that, you know, we're really where we're seeing
a lot of movement and success is with like just
nailing the operations and then marketing right. And so that
what we've seen Chili's do and and continue to do,
and actually now the same store sales are accelerating. There's
(26:19):
some companies that have management changes that we think can
use a similar playbook to boost their same source sales.
Speaker 2 (26:27):
And we've talked about all but one.
Speaker 3 (26:30):
We talked about Starbucks, we talked about Shake Shack, we
talked about and then it was uh.
Speaker 2 (26:37):
Cracker Barrel. Cracker Barrel is the other one.
Speaker 3 (26:39):
We think Cracker Barrel has a pretty they have a
new ceou. We think she's doing a phenomenal job. We
think she has a great plan for boosting you know,
same source of sales and traffic going forward. And uh,
that's another company we think has a pretty good opportunity.
Speaker 1 (26:54):
Do you think that demographic has shifted for Cracker Barrel
some or or is it just there maybe their approach
toward their own business itself of just remodeling it to
where it's going to get better in terms of performance. Yeah.
Speaker 3 (27:08):
So the food, you know, the food innovation, you know,
is going to be a big one this year to
help draw in.
Speaker 2 (27:18):
You know, draw in customers.
Speaker 3 (27:20):
But it's really it's the same thing starting with the operations, right,
It's like getting nailing the service, getting the experience right,
you know, and then it's menu innovation. So now when
we bring in a customer, they're not going to have
a bad experience and they're going to want to come back, right,
And so they've nailed those. Now they're going to market
more aggressively.
Speaker 2 (27:39):
Right.
Speaker 3 (27:39):
They're doing some stuff on TikTok as well. They're doing
more advertising during NASCAR and Bravo, which has a huge
overlap between CDR customers and Bravo watchers.
Speaker 1 (27:52):
Right.
Speaker 3 (27:52):
And so now they're they're you know, advertising around more
relevant modern food. It's you know, their typical Southern like
classics with a twist, right, and and and then the
remodels will be next year. The remodels are are a
big part of drawing in the gen Z customers. Right,
(28:12):
They're gonna have a brighter, brighter tones in terms of paint,
They're gonna have more lighting in the stores, and they
think that will help attract the younger generations.
Speaker 1 (28:23):
Yeah, that's what I'm a little bit more excited about
is to see a new design theme kind of brought
forward to because we are seeing quite a few brands
that that have done some fairly successful remakes over the
last few years in terms of just what they've done
from a design standpoint. So Cracker Barrel, of course, has
been a long standing brand that kind of lives in
(28:46):
that theme, you know, of very southern roots, and I
get it. So it'll be interesting considered.
Speaker 2 (28:53):
It was interesting. Sorry, yeah, it was interesting.
Speaker 3 (28:56):
It's a it's an old country store theme, so they
thought and for the longest time they were right that
they didn't have to do a full remodel of the
stores because it's in an old country store, right, And
it was a great you know, point of emphasis for
investors going back ten years ago. It is like this
company spends way less on cap X and then they
can use that cash to buy back shares and pay
(29:17):
a dividend.
Speaker 2 (29:18):
Right, And but it caught up to them, right.
Speaker 3 (29:20):
The younger generations want.
Speaker 2 (29:24):
You know, they're more discerning and then they almost what
they want.
Speaker 1 (29:27):
Yeah, yeah, so always do for sure. Michael has been
good catching up with you. I love to do the
rundown on where some of these are. Each quarter we
try to look at what's happening in the performance. Obviously
we're ending up here in Q one and getting ready
to in March. Uh So this will be a good
one because we'll get a chance to see some new
earnings come in hopefully soon and see how some of
(29:49):
these brands are doing. So we'll definitely get you back
on the show. But thanks for coming in today. I
appreciate it.
Speaker 2 (29:54):
Sure think you.
Speaker 1 (29:55):
Bet are you guys? If you're not, you know, subscribe
to the channel. Make sure do that. Of course you
can catch Michael Haling over on Bloomberg and learn a
little bit more about what their analysis is. But all
you have to do is jump over to sav Fm.
You'll find us over there and all of our podcasts.
Also check out the YouTube channel, which is approaching two
hundred thousand subscribers.
Speaker 2 (30:16):
That's right.
Speaker 1 (30:16):
It's because of you guys, so make sure and comment
down below. Give us a like or two if you
are watching the video version of this. If you're in
the audio version, just give us a start and we'll
catch you next time right here on the restaurant Report
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