Starbucks\u00a0is expected to report its quarterly earnings on Tuesday, kicking off several weeks of reports from restaurant companies as investors\u00a0anticipate improving demand\u00a0for dining out.<\/p>\n
A handful of restaurants released preliminary results earlier in January ahead of presentations at the annual ICR Conference in Orlando. For many, like\u00a0Red Robin\u00a0and\u00a0Noodles & Company, their early report showed sales trends improved during the fourth quarter, giving investors more confidence and pushing their shares higher. Only\u00a0Shake Shack\u00a0saw its stock fall; its outlook disappointed shareholders, who were hoping for higher targets.<\/p>\n
But the largest restaurant companies have yet to announce any results. Starbucks paves the way with its announcement on Tuesday after the bell.\u00a0Yum Brands\u00a0and\u00a0Chipotle\u00a0won\u2019t share their earnings until next week.\u00a0McDonald\u2019s, often\u00a0considered a consumer bellwether, isn\u2019t on deck until Feb. 10.<\/p>\n
However,\u00a0a rollercoaster 2024 for restaurants\u00a0might have ended on a high note \u2014 and that could bode well for the industry in the year ahead.<\/p>\n
Industry data suggests that the fourth quarter was better for restaurants overall than the rest of the year. Same-store sales grew in both October and November, according to data from market research firm Black Box Intelligence. December was the only month same-store sales fell during the quarter, but Black Box attributed the swing to the calendar shift caused by a late Thanksgiving.<\/p>\n
\u201cWe came out of [the fourth quarter] with a lot of momentum and started off really strong \u2026 That gives me a feeling that the consumer is still very resilient,\u201d Shake Shack CEO Rob Lynch said. \u201cConsumers are still out there spending money. There\u2019s still a lot of jobs for people who want to go out and get great jobs. We\u2019re kind of bullish on \u201925.\u201d<\/p>\n
Most casual-dining chains have been in turnaround mode, hoping that revamped menus and new marketing plans will reinvigorate sales. For most of last year,\u00a0only Chili\u2019s, owned by\u00a0Brinker International, won over customers with its strategy, helping the chain report double-digit same-store sales growth.<\/p>\n
But some of Chili\u2019s rivals saw an improvement in the fourth quarter.<\/p>\n
For example, Red Robin said it expects to report a 3.4% increase in its fourth-quarter comparable restaurant revenue, excluding a change in deferred loyalty revenue.<\/p>\n
\u201cWe\u2019ve been doing a ton of work behind the scenes, and I believe that these stories take time, and you can\u2019t skip the process,\u201d Red Robin CEO G.J. Hart told CNBC earlier in January.<\/p>\n
For two and a half years, the chain has implemented a broad comeback strategy, which included bringing back bussers and bartenders and overhauling its signature burgers. More recently, Red Robin has launched a loyalty program and unveiled promotions for certain days of the week, reintroducing customers to its revamped restaurant experience and helping it compete with Chili\u2019s.<\/p>\n
California Pizza Kitchen also had a strong fourth quarter, and the momentum hasn\u2019t slowed, according to the chain\u2019s President Michael Beacham.<\/p>\n
\u201cWe had a great [fourth quarter], and we\u2019re already starting out in 2025 with some really strong numbers, and that\u2019s just with our in-dining guests,\u201d Beacham said. CPK is privately owned and doesn\u2019t publicly report its quarterly results, but its sales trends can offer clues about how other casual restaurants are performing.<\/p>\n
It helps, too, that diners aren\u2019t feeling as strapped for cash as they were earlier in 2024.<\/p>\n
\u201cIt looks like the consumer is starting to feel a little bit better than they were in prior quarters,\u201d\u00a0Darden Restaurants\u00a0CEO Rick Cardenas said on the company\u2019s earnings conference call in December.<\/p>\n
Before the holidays, Darden, which operates on a different fiscal calendar than most of its peers,\u00a0reported stronger-than-expected demand\u00a0for its food during the quarter ended Nov. 24. In particular, same-store sales at LongHorn Steakhouse and Olive Garden beat Wall Street\u2019s estimates. Executives credited more frequent visits from diners with annual incomes of $50,000 to $100,000.<\/p>\n
Some of the biggest restaurant names might have the most disappointing quarters.<\/p>\n
Starbucks is still in turnaround mode. Now under the leadership of former Chipotle CEO Brian Niccol, the coffee giant is in\u00a0the early innings of a turnaround.<\/p>\n
\u2033[Fiscal quarter one] is expected to be another challenging quarter as SBUX implements a host of operational changes. Margin pressure is expected to be similar to Q4, but we believe investors likely look through [near-term] headwinds while focusing on evidence of [long-term] turnaround potential,\u201d Wells Fargo analyst Zachary Fadem wrote in a research note on Thursday.<\/p>\n
While Niccol has already tweaked the company\u2019s advertising and promotional strategy, it will take more time for Starbucks to implement larger changes, like a menu overhaul and faster service. The company also recently said it will lay off some of its corporate workforce, although it hasn\u2019t shared how many jobs will be affected.<\/p>\n
Wall Street is expecting the Starbucks to report quarterly same-store sales declines of 5.5%, according to StreetAccount estimates.<\/p>\n
And then there\u2019s McDonald\u2019s, which spent much of its fourth quarter handling a foodborne illness crisis.<\/p>\n
In October, the Centers for Disease Control and Prevention connected a fatal E. coli outbreak to McDonald\u2019s Quarter Pounder burgers. The chain reacted by temporarily pulling the menu item in affected areas and eventually switched suppliers for the slivered onions targeted as the likely culprit.<\/p>\n
Traffic to McDonald\u2019s restaurants across the U.S. fell as consumers reacted to the headlines, although analysts expect the company to report that trend reversed later in the quarter.<\/p>\n
\u201cWe expect headwinds related to the E. coli outbreak likely weighed on 4Q US [same-store sales], with data indicating pressured trends in November, but our franchisee discussions and traffic trends highlighting recovering guest counts in December,\u201d UBS analyst Dennis Geiger wrote in a note to clients on Wednesday.<\/p>\n
Though some chains are lagging behind, restaurant executives generally seem more positive about 2025, citing improving consumer sentiment and wage growth.<\/p>\n
\u201cI\u2019m cautiously optimistic about where we\u2019re headed, and it feels good \u2014 it really does,\u201d Red Robin\u2019s Hart said.<\/p>\n
Restaurants will also be facing easier comparisons to last year\u2019s sales slump, making their growth this year look more impressive.<\/p>\n
But industry optimism doesn\u2019t ensure smooth sailing for the year ahead. Investors will be listening carefully for executive commentary about how traffic and sales are faring so far in the first quarter.<\/p>\n
For example, restaurants have had to contend with the wildfires that ravaged Los Angeles, displacing residents and temporarily shuttering some eateries, in addition to the usual seasonal snowstorms and frigid temperatures that keep diners at home.<\/p>\n
\u201cI think overall, if you take out weather, this tragic thing that\u2019s happening in California, we see green shoots already for restaurants that aren\u2019t impacted,\u201d Fogo de Chao CEO Barry McGowan said. \u201cWe\u2019re hopeful this year.\u201d<\/p>\n<\/p>\n
Starbucks\u00a0is expected to report its quarterly earnings on Tuesday, kicking off several weeks of reports from restaurant companies as investors\u00a0anticipate improving demand\u00a0for dining out. A handful of restaurants released preliminary results earlier in January ahead of presentations at the annual ICR Conference in Orlando. For many, like\u00a0Red Robin\u00a0and\u00a0Noodles & Company, their early report showed sales […]<\/p>\n","protected":false},"author":0,"featured_media":14435,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-14434","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business"],"_links":{"self":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14434","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/comments?post=14434"}],"version-history":[{"count":0,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/posts\/14434\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media\/14435"}],"wp:attachment":[{"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/media?parent=14434"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/categories?post=14434"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstriumphs.com\/index.php\/wp-json\/wp\/v2\/tags?post=14434"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}