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Must-know: Starbucks’ key value metrics—same-store sales
Same-store sales are one of the important drivers in the restaurant industry. Same-store sales directly drives the revenues. It measures the percentage change in the revenues generated by existing restaurant locations over the same period last year.
Starbucks’ third quarter earnings were released on June 24, 2014. It reported adjusted earnings per share (or EPS) of $0.67. EPS increased by 21%, compared to an EPS of $0.55 in the same quarter last year. The increase was due to a 11% increase in top line and a 23% increase in net income.
Wendy’s is moving its focus from owning more company-operated restaurants to franchising more restaurants. The company is also implementing the image reactivation initiative, which has helped company-operated same-store sales by a 0.80% increase, or 80 basis points, over franchise restaurants.
Share volume was ~14.4 million shares, compared to the 50-day average daily volume of ~4.7 million, according to NASDAQ. Wendy’s closed 2.2%, up at $8.16. Wall Street analyst consensus estimated an adjusted earnings per share (or EPS) of $0.09.
Due to the shift in restaurant responsibilities from the company to the franchisee, some of the costs included as a cost of sales moved to other operating expenses. For example, the company incurred $4.4 million in its other operating expense, compared to $0.4 million a year ago in 2013.
Management expects to reduce ~$8 million in general and administrative costs (or G&A) in the first quarter of 2015. The adjusted earnings before interest, taxes, depreciation, and amortization (or EBITDA) is expected to be further reduced by $5 million in 2015.
The system optimization initiative will help Wendy’s penetrate and grow in the Canadian market more quickly, according to management. This is because the franchise owner takes full responsibility of costs such as labor, occupancy, and food and beverage.
Same-store sales for company-operated restaurants were 3.9% in North America during the quarter. The company credits the difference between company-operated and franchised same-store sales to its “Image Activation program.”
Total combined revenues of company-operated restaurants and franchises for the North American segment and the global segment were $523 million, down 19.5%, compared to $650 million in 2Q13. The sale of company-operated restaurants attributed to this decline in revenues.
Wendy’s announced that it intended to sell 425 company-owned restaurants by the first quarter of 2014. Since 2013, the company has sold 418 restaurants in the U.S. market. Wendy’s is on track to almost achieving the set goal.
As of the second quarter ended June 29, Wendy’s had a total of 6,545 restaurants system-wide. 5,540 of these restaurants were franchised, and 1,005 restaurants were company-operated.
As of August 8, 2014, Chipotle Mexican Grill’s (CMG) year-to-date (or YTD) return was ~26.2%, compared to a YTD return of 4.57% on the S&P 500 Index and -1.49% for the restaurant industry.
On July 22, Chipotle’s shares began trading at $649.9, which was 10% up from previous day’s closing of $589.93. The day’s high and low was $667.9 and $649.27, respectively.
Chipotle Mexican Grill (CMG) is exposed to three primary risks: price risk, interest rate risk, and currency risk.
The Chipotle Mexican Grill’s (CMG) new restaurant opening sales volume has been in the range of $1.6 million to $1.7 million.
Since the company owns all of its restaurants, these G&A costs are spread over all of its units. As a percentage of sales, the G&A costs accounted for 4.1%, excluding stock-based compensation, which remained flat compared to 4% over the same quarter a year ago.
Chipotle Mexican Grill opened a total of 45 new restaurants in the second quarter, compared to 44 new restaurants in the same quarter a year ago.
Chipotle Mexican Grill (CMG) reported $228 million in labor costs, $56 million in occupancy costs, and $115 million in other operating costs.
Chipotle Mexican Grill reported $363 million in food costs. Food costs accounted for 34.6% of the revenue, which increased year-over-year, compared to 33.1% in the second quarter of 2013.
Chipotle Mexican Grill actively propagates its food culture of serving food with integrity—food made with the best quality ingredients. The company stresses that it doesn’t use meat from animals that were conventionally raised with antibiotics or added hormones.