Restaurant industry third-quarter 2019 performance is likely to have been impacted by lower foot traffic and high costs. According to tdn2k, restaurant industry’s same-store sales are likely to see a decline of 0.4%. The decrease can primarily be attributed to same-store traffic decline of 3.5%.
Further, sales-building efforts such as promotional activities and prudent pricing plans are eroding margins. Apart from this, intense competition, high wage and food cost inflation remain concerns. Moreover, most restaurateurs are facing rising employee vacancies and are perpetually understaffed, which has been affecting overall performance. With changing preferences and trends, restaurant operators are continuously trying to strategize and maintain their competitive edge. This has been evident from collborations with delivery channels and digital platforms to drive incremental sales. These efforts are anticipated to reflect on third-quarter results. Per the latest Earnings Preview, total earnings of the Zacks Retail/Wholesale sector are expected to be down 0.4%. However, revenues for the sector are likely to improve by 8.4%. Let’s take a sneak peek into how the following restaurant operators are poised prior to their third-quarter earnings release this week. According to the Zacks model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter. McDonald's Corporation MCD is scheduled to report third-quarter 2019 financial numbers on Oct 22, before the opening bell. Sharp increase in franchise revenues is anticipated to get reflected in the company’s third-quarter revenues. The company’s sales-building initiatives and increase in the global guest count are likely to have contributed to the company’s comparable sales (comps) in the third quarter. Australia, Canada, France, Germany and Italy have all been witnessing robust sales growth. McDonald’s has been driving comps in these markets through the introduction of value meals, customizing menu according to local customer tastes, reimaging of restaurants, efficient marketing and promotions, improved service and increased convenience via delivery. (Read more: Factors Setting the Tone for McDonald's Q3 Earnings) The company has a Zacks Rank #4 (Sell) and an Earnings ESP of -0.48%.
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Chipotle Mexican Grill, Inc. ( CMG Quick Quote CMG - Free Report) is scheduled to report third-quarter 2019 results on Oct 22, after the closing bell. New menu innovation, continued use of technology and higher store opening are anticipated to have contributed to Chipotle’s third-quarter comps. The company’s shift of strategy from giveaways, discounts and rewards to new menu items, operational excellence, enhancement of guest experience, technology-driven convenience, and more aggressive brand marketing are anticipated to get reflected in the third-quarter top line. (Read more: Chipotle to Post Q3 Earnings: Is a Beat in the Cards?) The company has a Zacks Rank #2 and an Earnings ESP of +2.51%. Chipotle Mexican Grill, Inc. Price and EPS Surprise
Restaurant Brands International Inc. QSR is expected to release third-quarter 2019 results on Oct 23. The company’s third-quarter performance is anticipated to reflect various sales boosting initiatives expansion strategies, menu innovation and robust loyalty program. Moreover, growth across each of its breakfast, lunch and dinner dayparts, supported by new products are likely to have contributed to Tim Hortons restaurants sales. In fact, its coffee, cold beverage, wraps and breakfast sandwich platforms, particularly, are likely to have continued to gain traction. Meanwhile, enhancement of restaurant image, technology, operations and marketing, and expansion of delivery program are likely to have driven sales at Burger King. In the second quarter, comparable sales at Burger King rose 3.6% on account of robust international sales. The company has a Zacks Rank #3 and an Earnings ESP of +0.51%. Restaurant Brands International Inc. Price and EPS Surprise
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