Happy Friday!

This edition marks lucky number 13 for Restaurant Weekly. Some more food-related facts about the number:

• FDR hated joining dinner parties of 13 people, and Victor Hugo would actually leave the table if twelve other people were there.

• A “baker’s dozen” — which refers to a set of 13 items instead of 12 — supposedly originates from medieval laws that penalized bakers for selling underweight bread.

• The mysterious 13 Club — which counted presidents Theodore Roosevelt, Grover Cleveland and Chester A. Arthur as members — was created in the 1880s with a goal of removing the stigma surrounding the number 13. They went about this by throwing truly strange dinner parties, featuring platters of lobster salad molded to look like coffins, and ringed by 13 crawfish and 13 candles. We just don’t throw down like we used to.

3 Numbers

5.5

Pounds of food that can be carried by Flytrex’s drones, which just received FAA approval to operate their drone delivery system without the requirement of visual observers. Flytrex also says it can now autonomously pick up meals from restaurants — meaning the drones can now fly to a storefront, pick up an order, and carry the order 32 miles per hour to a customer’s house… all without active human involvement.

11

Units of the growing fast casual brand Houston Hot Chicken, which this week became the latest investment in the portfolio of the private equity firm Savory Fund. Savory Fund — which has carved out a niche by investing in emerging fast-casual brands like Swig and Mo’Bettahs — plans on accelerating Houston Hot Chicken’s growth by franchising.

$500 million

Sold in bonds by Raising Cane’s, in the debut public market offering by the closely-held restaurant company. The bonds were in high demand, due in part to the strong unit financials displayed in the bond offering documents — $3.3 billion in annual restaurant sales, with adjusted earnings of $647 million.

Starbucks’ big quarter, and other takeaways from earnings season

A bunch of public restaurant companies announced their Q3 earnings this week. Let’s go over some highlights:

Starbucks

• Despite an increasing number of competitors and that pesky union, Starbucks delivered a monster quarter, reporting an 8% comparable sales increase and an increase in transactions (2%). Starbucks’ 33 million loyalty members also spent a record amount over the three-month period.

• The stores are making way more money, too — operating margins are up 420 basis points over a year ago.

• And the company says it has a pathway to save $3 billion in costs over the next three years, mostly in finding store efficiencies and using its scale to lower its cost of goods.

• What does one do with all the extra cash? Dive into a vault of gold coins and St. Helena reserve coffee beans, Scrooge McDuck-style? Starbucks is planning on putting the money to perhaps more productive uses, with plans to open 17,000 additional cafés by 2030, renovate another 1,000 stores a year, and invest in technology and increased wages for baristas.

McDonald’s

• Same-store-sales rose 8.8%, and both sales and profits beat expectations for the quarter.

• Traffic dipped slightly in Q3, but higher prices boosted sales and average check sizes. (On a somewhat related note, a Darien, Connecticut McDonald’s went viral for offering an $18 Big Mac combo.)

• The company noted that lower-income consumers are coming in less often.

• The company said the “As Featured In” marketing campaign — which highlighted McDonald’s meals featured in movies and TV shows — was a hit. (As said before in this esteemed newsletter, McDonald’s can keep returning to the pop-culture well as long as it wants.)

Chipotle

• Same-store-sales increased 5%, while traffic held steady.

• To compensate for California’s upcoming minimum wage hike to $20 an hour, the company is planning a mid- to high-single digit menu price increase in the state.

• The timeline on a broader rollout of the Hyphen automated makeline remains TBD, although CEO Brian Niccol said the company is happy with the results from its test.

Yum Brands

• Same-store-sales grew 6% for KFC and 8% for Taco Bell (thanks largely to strong performance in the China and U.S. markets, respectively). Pizza Hut’s sales grew just 1% in the quarter.

• Yum’s real-estate and construction teams continue to be the hardest-working people in the restaurant industry — the company opened 1,100 restaurants last quarter (that’s 6% growth).

Wingstop

• Same-store-sales grew, uh, 15.3% in the quarter. (Note: that’s really good.) Average unit volumes are now $1.8 million.

• Pretty soon, you could make a credible argument that Wingstop is a tech company that also sells chicken: Digital transactions now account for 67% of all sales, up from 62% in Q3 of 2022.

• The company’s chicken sandwiches a hit — boneless chicken now makes up 44% of Wingstop’s product mix, which has had a positive impact on food costs. (Historically, bone-in wings are typically lower-margin and more subject to price volatility.)

DoorDash

• Total orders on the platform increased 24% (to 543 million) year-over-year, while revenue rose 27%. The company projects that it will garner an adjusted EBITDA of over $1 billion in 2023.

• Amid a broader market rally in growth companies, DoorDash stock is up nearly 25% over the past 5 days.

RBI

• Popeyes was the real winner in RBI’s Q3 earnings call — it outperformed Wall Street estimates with a 7% same-store-sales increase. Tim Hortons met expectations with 6.8% SSS growth; underwhelming sales in China dragged on that metric.

• Burger King meanwhile saw same-store-sales grow 7.2%, while traffic remained flat — a bit of a milestone for the brand after a rough few quarters. Total restaurant footprint is 2.8% lower than it was a year ago.

• I learned something new today: Tim Hortons accounts for 60% of RBI’s total revenue (Burger King, Popeyes, and Firehouse combine for the remaining 40%).  

The Papa

• Papa Johns’ same-store-sales rose 3% in the quarter. Operating income was $32 million, up 64% year-over-year.

• Third-party delivery now makes up 15% of sales — on DoorDash, sales of Papa John’s have risen 150% over the last three years.

• CEO Rob Lynch said he believes the company’s barbell pricing strategy — with discounted options on the simpler end of the menu, balanced by more premium options for the less price-conscious consumer — is proving to be a differentiator among the national pizza players.

Shake Shack

• Whole lotta new Shacks got built in Q3 — the company said it had 25 net new openings, made up of 10 domestic and 15 licensed stores.

• Same Shack Sales were up 2.3%, while system-wide sales rose 24% year-over-year to $438 million (a company record).

Portillo’s

• Same-store-sales rose 3.9% thanks to a 7.4% increase in average check size. (Traffic dropped for the quarter, which the company chalked up to a return to pre-pandemic seasonality.)

• Here’s a term that’s going to be stuck in my head for a while: “transaction arbitrage.” That is how CEO Michael Osanloo described the company’s strategy of opening more stores in high-growth markets like Texas and Florida to counter a declining population in the brand’s Midwest home base.

Wendy’s

• Wendy’s reported a slight same-store-sales increase in Q3, thanks in part to its growing breakfast and late-night dayparts.

• Notably, the company said staffing continues to improve at its locations, allowing stores to actually stay open later — late-night sales increased by double digits in the quarter.

Brinker

• In its Q1 2024 earnings call, Brinker also reported a same-store-sales increase (6.1%) at Chili’s despite a nearly corresponding decline in traffic (5.8%).

• In a sign that margins do seem to be improving across the board, the company reported net income of $7.2 million after reporting a loss of $30.2 million in Q1 of last year.

Dine Brands

• Applebee’s execs blamed tough comps in 2022 for the 2.4% same-store-sales drop it reported this week in Q3.

• The Dollarita is back.

Texas Roadhouse

• You know, I’m gonna go out on a limb a bit here and say that, generally speaking, people really like Texas Roadhouse: the company delivered a blistering earnings report this week, with comp sales up 8.2% at company restaurants and 7.8% at franchised stores.

• The company also reported its second straight quarter of growth in to-go sales.

• As RB’s Joe Guszkowski noted, it was the only public casual dining chain with positive traffic in the quarter.

Panera (not public… yet)

• According to the WSJ, Panera is laying off 17% of its 1,800 corporate staffers, with the cuts focused on support-staff roles.

• The company may go public as early as next year.

Name That Chain!

You get three hints to guess this week’s mystery chain:

• Oddly enough, the name for this chain was inspired by a 20th-century billionaire.

• The current CEO began his career at the company as a delivery driver.

• It’s known for popularizing in its restaurant category a new way of flavoring a key part of its product.

WHAT IS THIS MYSTERY CHAIN? (The answer will be in next week’s email.)

Last week’s answer: Five Guys

#Content Recs

• How TGI Fridays’ new CEO is looking to refresh the 58-year-old brand by adding mocktails, in-store entertainment, and even Krispy Rice sushi.

• “What can I tell you? She eats, she pays, she gets the **** out:” One reporter’s quest to find out what happens when Taylor Swift visits your restaurant.

• Despite its ridiculously high average unit volumes ($8.8MM per store), until recently Portillo’s opened its stores in a pretty chaotic fashion — hundreds of staffers would fly out of Chicago with meats packed in their carry-on bags because the company didn’t have a formal supply chain. Here’s how Portillo’s grew up to handle its unit growth.  

• Technomic’s new whitepaper — “What’s in Store for 2024” — is well worth a read. (Who’s ready for “the year of the Tomato”?!)

• Enjoyed HBO’s new documentary on Mr. Chow, who’s lived a fascinating life (to put it mildly).

• Watch North Carolina BBQ legend Sam Jones show you how to cook a pig.

• It’s been 20 years since the debut of McDonalds’ “ba da ba ba ba” jingle. Marketing Brew explains why it’s had such longevity and answers a question the Internet has been asking for years: did rapper Pusha T really write the song?

International Corner!

In an attempt to spur the imaginations of fast-food R&D departments across America — each week I’ll highlight an international item that should warrant at least some menu consideration in the States.

This week: TACO BELL TIKKA MASALA BURRITO.

There look to be several winners on this list created by Taco Bell: “15 Delicious Reasons to Visit Taco Bell Around the World.” You’ve got your Gordita with Fries and Tzatziki Sauce (Cyprus), your Kimchi Quesadilla (Korea), and most intriguingly, India’s Chicken Tikka Masala Burrito, packed with grilled chicken, Mexican rice, onion, cilantro mix and tandoori mayo sauce.

Here in the States, Velvet Taco’s Chicken Tikka taco is proving to be a true leap forward in taco innovation  — perhaps the U.S. is also ready to have its minds blown with Taco Bell’s fusion creation?

See ya next week.