Fitch expects market share to shift in the restaurant sector in 2017.
The research firms forecasts food away from home sales to increase 4% next year vs. 5% growth in 2016.
"Even as the job market improves, consumers are looking for relatively low price points and the convenience to order online when they eat away from home," says Fitch director Carla Norfleet Taylor.
"With persistent food price deflation, deal promotions will likely be a tactic restaurants use to get people in the door," she adds.
Fitch thinks Starbucks (SBUX -0.4%) and Darden Restaurants (DRI -0.8%) will gain market share due to their strong positions in coffee and to-go, respectively. McDonald's (MCD +0.1%) is seen losing U.S. market share as specialty burger competitors continue to rise and Brinker International's (EAT -1.6%) high exposure to energy-dependent markets is seen as a negative.
Music to the ears of Starbucks (NASDAQ:SBUX) investors is the promise from CEO Howard Schultz that the company is only in the "early days" of growth. Despite the consternation of Wall Street analysts, the company isn't sweating out the quarterly U.S. comparable sales comparisons.
The Starbucks leader pointed to the Reserve business and strong growth in China as revenue drivers. He also noted that there is no evidence of cannibalization from the Starbucks expansion track.
Schultz also continued his broad theme that started almost two years during the company's conference calls on the demise of brick-and-mortar retail in the U.S. As he sees it, Starbucks will prosper as other chains revert to an e-commerce model leaving a void for consumers seeking social interaction. The Reserve and Roasteries stores are expected to premiumize the brand to help fill this need for a meeting place.
Incoming CEO Kevin Johnson also took the stage. Johnson said cold beverages and food in the lunch daypart will be significant sales drivers in the coming years. Cold beverages are seen accounting for 50% of all drinks sales. The tech-experienced Johnson also dug into the digital side of the Starbucks business and explained how data mining is playing in to strategy and ROI.
Starbucks (NASDAQ:SBUX) management is presenting today in New York City at the Investor Day event. Some key updates and product reveals have already been disclosed.
The financial highlights from SBUX include 5-year targets for 10% revenue growth, 15%-20% EPS growth and mid-single digit comparable sales growth growth annually.
Starbucks says it plans to open 12K stores globally by 2021.
The company notes that it's on track to open more than 5K stores in China by 2021 and expects that China will eventually be a bigger market than the U.S.
The channel development segment is expected to generate an incremental $1B in revenue, increase operating income by 75% and double its ready-to-drink business outside of the U.S.
Starbucks aims to open 1,000 Reserve stores over time. Standalone Princi are also scheduled to be launched in Seattle, New York and Chicago late in 2017.
My Starbucks Barista is introduced as an AI-powered powered complement to the Starbucks mobile app that can help customers place their orders via voice command or messaging interface.
Next spring, the launch of bottled Starbucks Cold Brew Cocoa and Honey with Cream in select markets across U.S. is planned.
"Industry-leading innovation is driving our core business and creating further separation from competitors all around the world," says CEO Howard Schultz. The exec is expected to outline the upside for the Roasteries and Starbucks Reserve stores later during the conference.
Starbucks (NASDAQ:SBUX) is down 2.68% as investors settle down after some initial panic selling off of news that Howard Schultz is stepping down as CEO.
Schultz and CEO-in-waiting Kevin Johnson made a reassuring appearance on CNBC this morning (video) and there is plenty of analyst commentary to chew on.
RBC Capital: "We believe the company is transitioning to a new CEO during a period of strength, with a solid macro-economic backdrop, a strong leadership team, and a robust pipeline of innovation in technology, food, beverages."
Wells Fargo: "While we acknowledge that Schultz is without question one of the strongest and most visionary leaders in the consumer/retail world, we believe the succession planning put in place several years ago assures the recent exceptional performance will likely continue."
Cowen: The analyst team sees the new narrowed focus by Schultz on the Roastery and Reserve business as an effort to "premium-ize" the brand. The firm advises to buy SBUX on the pullback.
On Seeking Alpha, Josh Arnold put the Schultz departure in perspective."Schultz isn't retiring - he isn't going anywhere - he's just refocusing his efforts towards growth instead of operations," he wrote. "Johnson seems more than capable of filling those shoes and not only do I not think this is a negative event, I see a lot of positives," adds Arnold.
Starbucks (NASDAQ:SBUX) CEO Howard Schultz said on a conference call that his replacement will be better prepared to handle the tech changes coming to the company. Kevin Johnson spent 33 years in the tech industry, including 10 years at Microsoft and 5 years at Juniper Networks as CEO.
Schultz reiterates that he's not leaving the company, but will shift focus to the Reserve Roasteries business.
The Starbucks founder is convinced that the U.S. is over-retailed. He says to survive traditional bricks-and-mortar retailers have to evolve their physical spaces into relevant customer destinations such as the Reserve concept.
The company plans to issue more details on long-term strategy at its Investor Day event next week in NYC.
Millions of workers poised to start earning overtime pay next week are now in limbo after a federal judge in Texas blocked new wage rules set by the Department of Labor with a temporary injunction.
The new DOL rule raised the exemption for OT pay to $47,476 in annual pay, from the current level of $23,360, impacting a huge number of workers in the retail industry.
Piper Jaffray says it's uncertain how the Obama administration will react. It's also unclear if major companies have the ability to quickly pull back on the new OT rules set to go into effect on December 1 due to the programmed changes in their payroll and IT systems.
The investment firm says the retailers most affected by overtime changes include Dollar General (NYSE:DG), Dollar Tree (NASDAQ:DLTR), Sally Beauty Holdings (NYSE:SBH), Regis Corporation (NYSE:RGS), Bojangles (NASDAQ:BOJA), Starbucks (NASDAQ:SBUX), Sonic (NASDAQ:SONC), Noodles (NASDAQ:NDLS), Potbelly (NASDAQ:PBPB), Del Taco (NASDAQ:TACO) and Zoe's Kitchen (NYSE:ZOES).