Specialist
Director at American Dairy Queen Corp
Agenda
- Key trends and developments across fast food operators given regulators' guidance in response to the novel coronavirus pandemic
- Cost drivers and operating leverage on mandated restaurant closures across key geographies
- Relationship dynamics of fast-food operators with third-party delivery and online ordering platforms
- Medium- to long-term outlook
Questions
1.
How is the coronavirus pandemic impacting major fast food operators?
2.
Could you outline average ticket, traffic and other metrics for fast food operators to contextualise the decrease going into March?
3.
How do you think QSR wallet share has shrunk across regions which have mandated shelter-in-place and work from home guidance, and assuming consumers procured groceries before these measures came into force?
4.
When did you notice a traffic-decline inflection point? How precipitously did it drop-off?
5.
Which players do you think are most or least exposed to in-store or general traffic declines? I assume drive- thrus have been a boon for operators with that capability.
6.
Assuming drive-thru sales account for 70% of fast food QSR sales for major operators, how might this mitigate revenue coronavirus-related headwinds for operators with drive-thru capabilities compared to those without?
7.
How would you say government guidelines are helping or hurting fast food operators? Who do you think is most impacted by these mandates? Have you noticed government measures which might mitigate short-term impacts from the novel coronavirus pandemic?
8.
You mentioned President Trump’s remarks on the importance of QSRs for Americans. What percentage of the US do you think can access fast food chains via delivery?
9.
How could an increased presence of third-party platforms in QSR operators’ sales mix impact operators’ margins, considering the fees associated with leveraging some of these platforms?
10.
Would you say the novel coronavirus pandemic makes Wendy’s recent foray into breakfast especially poor timing? How do you think the company is handling the breakfast menu launch?
11.
Could you outline differences in unit economics between a fast casual and quick-service operator, making a distinction between those with dine-in capabilities and carry-out, only?
12.
Could you outline the major cost drivers for operators such as McDonald’s and Burger King, to understand which costs are fixed regardless of sales vs variable?
13.
Could you estimate rent as a percentage of total sales for operators who do not own their real estate? How does this vary by market?
14.
How do you think franchisees are dealing with rent costs during the coronavirus pandemic? You mentioned that McDonald’s might be willing to provide franchisees with rent relief. Could landlords potentially provide relief? How do franchisees think about renegotiating with landlords, and what sort of leverage might they have?
15.
Could you highlight any other levers fast food operators have to reduce their OPEX lines? What expenses can be first to go without repercussion?
16.
Have you noticed bottlenecks in supply chains? How could suppliers react to the situation, assuming stores are allowed to open?
17.
Do you think lower demand for a lot of staple items will give QSR operators leverage when negotiating prices with suppliers?
18.
How would you estimate the percentage of McDonald’s orders which are delivery compared to pick-up? How should we think about this?
19.
You mentioned that franchisors might shave two percentage-points from royalty fees from franchisees. How could franchisors tap into their balance sheets to support franchisees? When might they do this?
20.
How much control would you say a franchisor has over a franchisee to make it remain open? At what point could a franchisor step in and prevent the closure of a franchisee with no traffic and revenue generation? How would you characterise those dynamics?
21.
Could you highlight any players who have significant exposure to underperforming assets, and did so prior to the coronavirus pandemic? Is there any industry notion around players for whom closures caused by the coronavirus will be more than temporary?
22.
Which operators could benefit from Subway’s potential headwinds?
23.
Could you outline the characteristics of winners and losers in this operating environment?
24.
What are your expectations for same-store sales in calendar Q1 2020 for the major fast food operators? What is your outlook beyond that?
25.
You mentioned that the length of shelter-in-place mandates in the US will be a major determinant of end- of-year coronavirus impact. Do you think local and state governments could eventually mandate a complete operational halt for fast food operators? Could any shut their doors altogether?
26.
You mentioned that Goldman seemed quite positive on its Q3-Q4 2020 outlook. Are you of the same school of thought? What should we expect once operators can reopen their doors and resume full-service operations?
27.
How do you assess operators’ ability to rehire employees, given how many have or might have to furlough them? Do you think those employees will wait to be re-hired by the same operators? Will they go elsewhere?
28.
You mentioned that Subway does not have third-party delivery relationships in place. Would it be difficult to form them now? Is it too late? What happens to regional or national chains without agreements with third- party platforms?
29.
What are your key takeaways for fast food operators facing headwinds from the coronavirus? Who do you think is best-positioned to weather the storm? What happens to operators if the situation persists beyond April? What should we be monitoring from operators in that scenario?
