Water Tower Hour Recap
On the latest edition of The Water Tower Hour, WTR’s Head of Business Development Tim Regan interviewed WTR’s Head of Consumer Discretionary Lynne Collier to discuss the state of the restaurant industry, her outlook for 2024, and key takeaways from the Restaurant Finance and Development Conference (RFDC) in Las Vegas on November 13-15. Key takeaways from RFDC. The tone of the conference was more upbeat than last year given the expectation of better cash flows in 2024. Thus far in 4Q, restaurants are seeing better same-store sales (SSS) and traffic after the lull in September, creating more optimism for operators. Most operators anticipate benign food costs for 2024, except for beef, which is expected to be inflated in 2024/25. Restaurant operators expect better labor inflation in 2024 versus 2023 but costs remain elevated, especially for those companies with a concentration of locations in California, which is battling the effects of the new AB 1228 legislation (discussed on page 2). Less menu pricing is expected in 2024. Given the fragile state of guest traffic, the industry’s pricing power is more limited in 2024 versus 2023. In polling restaurant operators at the conference, we estimate that restaurants will be pricing in the 3-5% range for 2024 versus high single digits to low double digits in 2023. Subdued unit growth in 2024 is expected given higher interest rates and inflated construction costs. In polling restaurant operators, it is evident that 2024 industry development will be subdued as operators have become more risk-averse given negative guest traffic, higher interest rates, and increased construction costs, which we have heard are ~30% above pre-COVID levels. There also remain substantial permitting and inspection delays. This has been an issue for a while but is not going away anytime soon. In addition to high interest rates, stricter lending conditions will also likely slow unit development a bit as we look at 2024. Those interested can listen to the episode on Apple Podcasts, Google Podcasts, Spotify, as well as our website. Links accessible in our full report.
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform.
Our research analysts are Wall Street veterans with the experience and knowledge to work with companies and investors in tandem. We provide access to the information and content that anchors the due diligence process for both professional money managers and individual investors. We leverage traditional research distribution channels and the best of modern digital strategies and tactics to amplify this information flow globally to engage all categories of investors and stakeholders.
Information flow is the foundation for creating investor awareness, knowledge, and engagement. Our mission is to help companies and investors have the tools they need and achieve their goals.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.