'For a restaurant open as recently as this one is, it should have been busier than it was'... That was what restaurant consultant/analyst John Gordon of Pacific Management Consulting told me as we were walking away from a Sweetgreen (SG) restaurant just east of Del Mar in San Diego.
Maybe this is the strategy of picking off upper income demographics. People in Del Mar can afford to eat healthy. And it works as long as wages increase and more blue-collar workers are upwardly mobile.
Where I live it’s $15 per salad. The QSR in my area is running between $10-$15 per person. My family of five eats QSR or fast food less than once per month. We’re probably lower middle income but there are too many other expenses. Everything has gone up and is still going up. One of our subs is going up $2 per month in September. And then student loans restart...
My personal perspective / situation has kept me from investing in restaurants.
So here's the deal: By my math, since Covid and inflation was reignited, most of my QSR expenses have gone up by 30+, minimum. The thing you have to consider from an investor perspective is whether it sticks, and watch (as you could do with Chipotle last week) how that ultimately impacts traffic... and THEN if they have to continue to raise prices. Crazy times we live in.
CMG quality is WAY down - if I shorted only on quality, I'd be betting the house short there. They can't seem to hire people to do the job right in my area (Cambridge/Watertown MA area) and 2 locations I have tried have bad service. I prefer a local burrito shop - but perhaps many areas don't have that? We have many local taqueria alternatives to Chipotle ( thankfully)
Oops, sorry I missed it. I think what John meant were big non regional malls - centers of shopping. In California, it's the outgrowth of the old "strip" centers. Some, like this one, are magnets for people... usually anchored by a grocery store, drug store but then have boutiques, chains that are doing well. Just not as big as or as extensive as a "mall".
Herb, interesting article. I was in DC last weekend to see Giants. Ate at my first Cava. Was tasty and I felt good that I was eating healthy, but it was not Chipotle busy.
Two interesting facts: 1) Phil Jaber started Philz at 24th & Folsom in the middle of my beat. He first ran a liquor store there but got tired of all the borrachos and converted to single-pour coffee. Phil swears it is his bean selection, and not the single-pour technique that fueled his business. He frequently called me into his office (the refrigerator) to talk real estate and stock strategies, and I always begged him for an equity interest.
Not focused on sports, but I did go back/forth with Phil or one of the family members a few years ago. It'll be interesting to see if they can avoid the temptation to go public. We don't know each other, but I suspect ran in similar circles? Tho I'm long gone from there.
One of the toughest businesses. Low margin, low barrier = Hi risk /reward. Generally a hard pass
Maybe this is the strategy of picking off upper income demographics. People in Del Mar can afford to eat healthy. And it works as long as wages increase and more blue-collar workers are upwardly mobile.
Where I live it’s $15 per salad. The QSR in my area is running between $10-$15 per person. My family of five eats QSR or fast food less than once per month. We’re probably lower middle income but there are too many other expenses. Everything has gone up and is still going up. One of our subs is going up $2 per month in September. And then student loans restart...
My personal perspective / situation has kept me from investing in restaurants.
So here's the deal: By my math, since Covid and inflation was reignited, most of my QSR expenses have gone up by 30+, minimum. The thing you have to consider from an investor perspective is whether it sticks, and watch (as you could do with Chipotle last week) how that ultimately impacts traffic... and THEN if they have to continue to raise prices. Crazy times we live in.
CMG quality is WAY down - if I shorted only on quality, I'd be betting the house short there. They can't seem to hire people to do the job right in my area (Cambridge/Watertown MA area) and 2 locations I have tried have bad service. I prefer a local burrito shop - but perhaps many areas don't have that? We have many local taqueria alternatives to Chipotle ( thankfully)
Same problem everywhere, esp in restaurants.
Noob question, what are “non-superpower suburban malls?”
Oops, sorry I missed it. I think what John meant were big non regional malls - centers of shopping. In California, it's the outgrowth of the old "strip" centers. Some, like this one, are magnets for people... usually anchored by a grocery store, drug store but then have boutiques, chains that are doing well. Just not as big as or as extensive as a "mall".
Probably where I live: middle to low income suburb.
Thank you Merriless!
Herb, interesting article. I was in DC last weekend to see Giants. Ate at my first Cava. Was tasty and I felt good that I was eating healthy, but it was not Chipotle busy.
Two interesting facts: 1) Phil Jaber started Philz at 24th & Folsom in the middle of my beat. He first ran a liquor store there but got tired of all the borrachos and converted to single-pour coffee. Phil swears it is his bean selection, and not the single-pour technique that fueled his business. He frequently called me into his office (the refrigerator) to talk real estate and stock strategies, and I always begged him for an equity interest.
2) Since you are reading my other articles, here is my big (baseball) story on how a dog was instrumental in Cody Ross becoming the Giants’ right fielder in 2010: https://missionlocal.org/2018/08/the-amazing-true-story-of-how-a-dog-yes-a-dog-helped-the-san-francisco-giants-win-their-first-world-series/ (I wrote this in third person and the ML converted it to first person.)
Sadly, Mac passed away recently, as did Mike Ivie.
Lou
Not focused on sports, but I did go back/forth with Phil or one of the family members a few years ago. It'll be interesting to see if they can avoid the temptation to go public. We don't know each other, but I suspect ran in similar circles? Tho I'm long gone from there.