It’s been quite a challenging period for fast casual restaurant operators and their investors; that’s the result of a smaller “pie” and more mouths at the table. The pie is smaller due to shifts in consumption to gas & convenience and at-home as consumers seek out lower-cost calorie consumption, as well as fewer calories consumed (Wegovy, Ozempic, and Zepbound). More mouths at the table is the result of the high unit growth in the industry (+7% for the larger publicly-traded companies).

Grocery comp-sales are picking up and our hypothesis is that it’s driven by more share-of-stomach coming from restaurants (out-of-home). Inflation is also a contributor; Q2 CPI for at-home was +2.3%, up from Q1’s +1.8%. Added convenience may be a driver. We’ve been surprised by the ongoing strength in store delivery. Instacart reported a +17% increase in orders for Q1, up from the Q1 rate of +14%. Walmart has shared that store-delivery is growing substantially, especially by more affluent households.

As readers know well, anything housing-related has been in the dumps since 2022. Mattress retail has been especially in the dumps, with production volumes well below the levels of 2009 and the Great Financial Crises. However, the trend now appears to be slightly improving despite the 30-year mortgage rate still at 6.5%, based on early reports; what gives? Somnigroup (the rebranded Tempur Pedic company, along with its purchase of Mattress Firm) reported better top-line results today.

McDonald’s reported a much-improved US comp-sales increase of 2.5%, a 510bps QoQ improvement. Advan data estimates that traffic improved 200bps QoQ and that ticket improved 300 bps to a +2.1% increase. The 2.1% increase is less than inflation (CPI) at 3.5% indicating that McDonald’s is underpricing the market in order to amplify its value positioning; we know that they are aggressively messaging “McValue” deals. CEO Chris Kempczinski said, “Overall, we’ve made good progress with our value offerings.

The forth issue of The Advan Buysider is now available, featuring updates to the names from previous issues, along with new themes on GWW, FAST, HRL, MLM, CAR, HTZ, WM, RSG, WSN, ORLY, GPC, AAP, SYK, ZBH and TKR . As a reminder, The Buysider is designed to provide timely, novel, and impactful insights on specific names and topics using Advan’s data. Download Issue #4 Watch the webinar

Growth in all of Amazon’s reported revenue lines accelerated for Q2, save AWS, which held at +17% growth (its 2-year rate improved by +230 bps QoQ). Focusing on just US eCommerce, paid units increased around +12% with sales a couple points less due to lowered prices on general merchandise and a shift in the sales mix to consumables, which generally have a lower average price as well as a lower merchandise margin rate.

As the data implied, Caesars Entertainment’s Las Vegas segment results were down for Q2, including table drop falling -5%, food & beverage down -6%, other down -9% (which is last year’s strong concert programming), hotel occupancy down -190 bps, and EBITDA down -9%. That said, the higher-end (we put Caesar’s Palace in that category) pulled higher going through June, as shown in the chart below. (We filter for >1 hour visits when trying to estimate hotel and casino revenue.

Avis’ Q2 results allow for a glimpse into travel trends during this current period of softer demand, especially for big-ticket travel like Vegas and destination resorts . Rental Days for Avis’ Americas segment increased by +1% and rate fell by -2%. The volume increase drove an improvement in the fleet utilization by 50bps to 70.7%. That, combined with lower fleet unit cost (-14%), led to a strong increase in EBITDA (+18%).

On the surface of Starbucks’ quarterly results, little improvement is visible for the US segment; US comp-transactions were again down -4% and profits fell -36%. However, as we highlighted in our last review of Starbucks’ results, it is succeeding in reclaiming the third place in people’s lives. We draw that conclusion as the dwell time and visit frequency improved once again, and especially for those visits exceeding 30 minutes – as shown in the table below.

Auto part retail, and specifically, O’Reilly (ORLY), Advance (AAP), and NAPA (GPC), are interesting businesses from an alternative data estimate perspective given that commercial (or DIFM) is half of the industry’s revenue and that’s billed business vs. POS / credit card. (For NAPA it’s nearly 80%.) Mobility data captures both – the DIY visit to the store and the store’s delivery truck leaving the store to deliver parts to a repair shops.