DOCSLIB.ORG

Finding Restaurant Investment Opportunities As the Moat -Disruptive Fast-Casual Category Matures

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Finding Restaurant Investment Opportunities As the Moat -Disruptive Fast-Casual Category Matures ? April 2015 September 2014 Finding Restaurant Investment Opportunities as the Moat-Disruptive Fast-Casual Category Matures Contents Executive Summary Restaurants have been one of the most intriguing categories within the consumer space the past several 2 Key Takeaways 5 Best Ideas years, with fast-casual chains like Chipotle and Panera increasingly becoming disruptive forces for both traditional quick-service and casual-dining restaurant chains. Broadly speaking, we believe that many 7 Fast-Casual Has Reshaped Preferences Across the Restaurant Category, fast-casual concepts warrant premium valuations relative to their peers because of the pricing power Resulting in Material Changes in inherent in their brands—the impetus for positive moat trends for many players in the space—as well Industry Pricing Power as a cost-effective model than casual-dining players. However, as many established fast-casual chains 27 Are There Any Restaurant Investment reach maturity at a time when smaller emergent players have relatively easy access to attractive real Opportunities in a Market Willing to Pay estate and inexpensive rents, we believe investors must be cognizant of the potential fast-casual More Than 500 Times for Shake Shack? "bubble" in the market today. 49 Assessing Traditional Restaurants' Countermeasures to Fast-Casual Additionally, increased competition from fast-casual players has triggered many strategic Competitive Pressures countermeasures to unlock value across other quick-service and casual-dining restaurant chains. This 67 How Have Restaurant Industry includes more straightforward efforts such as localized/regional menu and marketing decisions, Changes Reshaped Our Moat Rating increased customization, mobile ordering, and reimaging efforts leveraging digital platforms but also Methodology? more aggressive tactics such as more aggressive franchising/refranchising, real estate transactions, and Restaurant Coverage Universe spin-offs. In this report, we also examine which strategic actions can realistically unlock shareholder value, and opportunities where these efforts haven't been priced into the stocks. 69 Panera 71 Yum Brands 73 Starbucks Morningstar’s Top Restaurant Investment Ideas 75 Restaurant Brands International 77 McDonald's Economic Moat Fair Value Current Uncertainty Morningstar Credit Market 79 Chipotle Name/Ticker Moat Trend Currency Estimate Price Rating Rating Rating Cap(Bil) 81 Darden Panera PNRA None Positive USD 184.00 165.97 Medium QQQQ — 4.4 83 Dunkin' Brands Starbucks SBUX Wide Positive USD 50.00 47.62 Medium QQQ A- 71.4 Yum Brands YUM Narrow Stable USD 88.00 78.30 Medium QQQQ BBB 33.9 85 Appendix Page 2 of 86 Consumer Observer | 9 April 2015 Page 2 of 86 Healthcare Observer | 14 April 2015 Key Takeaways Fast-Casual Has Reshaped Preferences Across the Restaurant Category, Resulting in Material Lead Analyst Changes in Industry Pricing Power × Fast-casual restaurants have better adjusted to changes in consumer behavior during the past several R. J. Hottovy, CFA years, including increased spending power among minority groups and millennials (which has created Consumer Equity Strategist +1 312-244-7060 demand for a wider variety of flavors, better-for-you products, and locally sourced food), evolving views [email protected] about in-restaurant experiences (resulting in consumer calls for customizable menus and faster throughput), and widespread advances in consumer-facing technologies (leading to mobile-based ordering, payment, and loyalty programs as well as in-restaurant wireless offerings). × More important, consumers aren't just willing to visit fast-casual chains more frequently; they're also willing to pay premium prices for the product and restaurant experience. The companies that have stayed ahead of changing consumer preferences have also experienced a meaningful increase in average checks during the past five years, while the increase for traditional quick-service restaurants, or QSRs, has been more muted. In our view, the increase in average check suggests greater pricing power, and by extension, a strengthening of the brand intangible asset source that we consider when evaluating economic moats among retailers and restaurants. × The ability to adapt to evolving consumer preferences, and the subsequent pricing power, was a key consideration behind the positive moat trends we've assigned to fast-casual chains such as Chipotle and Panera as well as Starbucks. Likewise, the inability to react to these changes was a factor in our negative moat trend for McDonald's and the removal of our narrow moat rating for Darden. Are There Any Restaurant Investment Opportunities in a Market Willing to Pay 500 Times for Shake Shack? × With fast-casual restaurants aligned with changes in consumer dining-out preferences and favorable retail rent and vacancy trends, we expect the fast-casual category revenue to grow at a compound annual growth rate (CAGR) of 9.4% during the next five years, taking share from QSRs and casual-dining restaurants, or CDRs, which we expect to grow 4.1% and 3.7%, respectively. × The rise of e-commerce has reduced the number of reliable growth concepts among traditional retailers, which we believe has led to higher valuations across much of the restaurant industry (which now trades at a forward price/earnings multiple of almost 26 times, up from 16 times five years ago). While some of this multiple expansion is warranted given the growth potential and the lack of a major disruptive presence like Amazon, we generally believe the market has overshot the longer-term potential of many fast-casual concepts such as Noodles & Company, Zoe's Kitchen, and Habit Restaurants. × Conversely, we find shares of Panera attractive at current levels and believe the market isn't giving the company enough credit for its longer-term unit growth opportunities (both traditional locations and delivery and catering hubs) and the cash flow potential of its "Panera 2.0" restaurant remodeling initiative. Page 3 of 86 Consumer Observer | 9 April 2015 Page 3 of 86 Healthcare Observer | 14 April 2015 Assessing Traditional Restaurants' Countermeasures to Fast-Casual Competitive Pressures × We believe consumers' willingness to pay premium prices has been at the heart of the recent QSR industry movement toward fewer menu items, but more customization options. However, we believe it will take time for QSRs to realize the benefits of these menu changes, where rationalizing the number of menu items helps speed up service and customer experience improves over the next year or so followed by increased awareness and adoption of menu customization options. × For many traditional restaurant operators, we believe that expansion into other dayparts (breakfast and snacking, for example), increased adoption of technology to increase throughput via mobile ordering and payments, and greater delivery/catering alternatives have the potential to improve store productivity through both increased guest counts and higher average checks. We view each of the Best Ideas that we've highlighted in this report—Panera, Starbucks, and Yum Brands—as well-positioned to achieve better utilization trends out of their existing restaurants in the years to come. × While refranchising isn't the sole factor driving multiple expansion in the industry, it's noteworthy that the companies that have pursued refranchising more aggressively have generally experienced greater multiple expansion over the past five years. We believe McDonald's will probably explore refranchising options in the near future, as recently appointed CEO Steve Easterbrook has said he is committed to considering "all options" to improve shareholder value. However, refranchising efforts at Panera and Yum could also provide positive catalysts over the next several years. × We believe the market's appetite for potential real estate transactions have increased over the past year given the current low interest-rate environment and REIT spin-off announcements from other retailer and restaurant chains. With $39 billion in land and building assets on its balance sheet as of December 2014 and $6.1 billion in rents collected from franchisees last year, McDonald's remains a popular target for real estate transactions among activist investors and hedge funds. The potential tax savings would ultimately depend on how much real estate the company was willing to commit to a property company subsidiary, but because REITs must pay out at least 90% of taxable earnings to shareholders as dividends and don't pay federal income taxes on income distributed to shareholders, we believe McDonald's could unlock shareholder value by creating an internal REIT. × We generally have mixed views on separating multibrand restaurant companies into separate publicly or privately held entities. On one hand, we appreciate that different chains have different target audiences, growth trajectories, and capital needs, which can put considerable strain on management teams. On the other hand, separating brands also runs the risk of trading short-term gains for diminished scale advantages—particularly with respect to overhead, purchasing, and advertising—which can destroy value. The idea of separating Yum's China division has some merit, as we've long thought that Yum was much more than a China growth story and believe that separation would allow investors to tailor their level of exposure to China and Yum's other emerging markets. Additionally, Yum China is a mostly self- contained supply chain, distribution, site selection,
Load more

Recommended publications
  • 21St Annual Restaurant Industry Conference
    21ST ANNUAL RESTAURANT INDUSTRY CONFERENCE WEDNESDAY, MAY 3, 2017, COVEL COMMONS, UCLA WELCOME UCLA Extension is proud to present the 22nd Annual Restaurant Industry Conference, with this year’s focus on Dining Disrupted! The “digital tsunami” is powerful and unrelenting, posing life-changing challenges, opportunities, and seeming to require immediate responsiveness. It’s no secret that many established restaurants and suppliers are not only facing economic volatility but are continuously challenged by more informed and demanding diners. This year we honor Robert Brozin, who built Nando’s Roger Torneden from one restaurant to a truly world-wide brand serving millions of diners. As chief executive of Nando’s until Associate Dean, Executive Director of UCLA Online 2010, he used sheer creativity (and Portuguese- Director, Department of Business, Management style peri-peri sauce) to take a little restaurant from & Legal Programs, UCLA Extension Rosettenville, South Africa, to the world. Today, Nando’s is loved in America, Australia, the United Kingdom, and 20 other countries as diverse as Fiji and Bangladesh. UCLA Extension serves approximately 40,000 students annually through Westwood, Downtown Los Angeles, and Woodland Hills campuses, plus a substantial selection of online courses. Our students typically already have degrees and years of experience but are seeking enhanced or new careers. Our instructors are “best in class” practitioners approved by UCLA’s campus schools for academic and teaching qualifications. In the Business, Management & Legal Programs Department, we focus on certificate programs and courses across industries (e.g., web analytics and social media marketing, small business management, credit analysis, finance, accounting, etc.) and on specific industries (hospitality, financial services, consulting, security, real estate, etc.).
    [Show full text]
  • Chipotle's Strategic Marketing
    International Journal of Scientific & Engineering Research, Volume 7, Issue 2, February-2016 1248 ISSN 2229-5518 Chipotle’s Strategic Marketing Ibrahim Alhadlaq Abstract— This paper is going to analyze the target market and positioning strategy of Chipotle Mexican Grill as well as predicting future challenges. —————————— —————————— INTRODUCTION he Chipotle Mexican Grill craze is real if you ask just city of Toronto, Ontario. The initial success of that location, T about any person who has every sat down and enjoyed an generated the company to open four more locations in the item off Chipotle’s menu. They lead the charge in what is Greater Toronto area. Also in Canada, a location was opened considered the globes new obsession in how their food is pre- in the city of Vancouver, British Columbia. Owing to pared in a timely manner, known as “fast casual” dining. Due Chipotle’s success across the border, they then managed to to a recent health kick and more people starting to be con- break into the European markets as well, with three additional scious about what they are putting in their bodies the fast food cities. Multiple locations were opened in London, England, industry has taken a hit and those who remain have been Paris, France, with the latest in Frankfurt, Germany. forced to make adjustments. It’s no secret that the ingredients your food might contain coming out of a drive thru window ARKET OF PERATION such as McDonalds or Wendy’s may not be very healthy for M O you, in fact it is been publically exposed for about the past Most Chipotle restaurants are located in heavily urban areas decade now.
    [Show full text]
  • Restaurant Monthly Update M a R C H 2 0 1 8
    Restaurant Monthly Update M a r c h 2 0 1 8 1 Duff & Phelps Restaurant Monthly Update | March 2018 KEY Market Update INFORMATION Following an uptick in December, same-store sales (SSS) in January and February fell back into negative territory. Although January’s (0.3%) and February’s (0.8%) SSS declines reflect an improvement over the (1.1%) growth rate reported for 2017. The last two months have reversed the positive momentum experienced in Q4 2017, and have revived concerns that the industry may not yet be positioned for sustained growth. Same-store traffic declined (3.0%) in January and (3.1%) in February, February SSS fell by (0.8%) while respectively; representing the worst performance since September 2017. comparable traffic slid (3.1%) Although traffic dropped by only (0.1%) compared to January, the negative effect on sales was amplified by a significant slowdown in the growth of guest checks. However, favorable macroeconomic conditions, strong consumer confidence, and the fact that some of the decline in February sales could be attributed to factors external to the industry, fuels optimism for increased restaurant spending in upcoming months. Fast casual was the top performing Severe winter storms and record rainfall hit large regions of the U.S., segment for the first month in three years primarily in the Midwest and East Coast, causing significant losses in restaurant sales during the last two months. The three worst performing regions were the Mid-Atlantic, Midwest and New England, each experiencing more than (2.0%) declines in SSS. If sales from these three regions were excluded from all calculations, restaurant sales would have remained essentially flat.
    [Show full text]
  • Redefining Culinary Expectations- How the Fast-Casual Sector Is Dominating the Industry
    ™ Redefining Culinary expectations HOW THE FAST-CASUAL SECTOR IS DOMINATING THE RESTAURANT INDUSTRY How Often Do Consumers Eat Out? Source: Restaurant Success in 2019 Industry Report 45% 24% 20% 6% 3% 2% Multiple Times A Couple Times Once a Every A Couple Times Multiple Times a Week a Month Week Day a Year a Day The prolonged economic expansion can be a what has remained the same is their need good indicator of how the fast-casual dining for speed and convenience. Fast-casual has sector is performing. The unemployment rate is at taken over this in-between establishment a 50-year low and wages are steadily increasing, by appealing to a demographic on the move meaning people can afford to eat out more. through creative cuisine and dining concepts. Today’s consumers are beginning to question what’s in their food, creating a health-conscious demographic. Fast-casual restaurants have important qualities in restaurants for guests stepped in to accommodate the new demand for Source: Restaurant Success in 2019 Industry Report a healthy lifestyle while providing convenience. But what is fast-casual? It’s a new-age concept 1 QUALITY OF FOOD 72% that provides a mixture of elements offered in full- service restaurants and quick-service restaurants 2 TASTE/FLAVOR PREFERENCES 63% (QSR). According to the National Restaurant Association’s 2019 State of the Industry Report, the restaurant industry is expected to reach $863 3 VALUE 48% billion in 2019 sales. 4 PRICE POINT 33% In this article, Matthews™ takes a look at the restaurants that are dominating the limited- 5 CONVENIENCE 12% service sector and how their strategies make them stand out among their competitors.
    [Show full text]
  • Wendy's Final
    FAST CASUAL FINAL RFP JHENI GIBSON EXECUTIVE SUMMARY What do we want to do? How will we do it? What’s the timeline? • Wendy’s would like to reposition its • We will address Wendy’s • This campaign plan will run for brand as “Fast Casual” offering higher quality foods and lite service millennial target audience by the full 2018 Fiscal Year. coupled with the convenience of exploring their habits, budget, • All testing will be completed quick output. lifestyle and priorities. within the first 2 months of • Competitors such as • We’ll test and launch campaigns the FY. Chipotle, Shake Shack, and that highlight Wendy’s fresher • Progress will be measured Smashburger have adopted ingredients, sourcing, nutrition, monthly to incrementally the fast casual business analyze success and optimize model and continue to and our new Fast Casual dining attract millennials taking experience. Channels used will towards goals through the market share from “fast be Advertising, PR, Sponsorships year. food” restaurants like and Promotions. • Final success metrics McDonalds, Wendy’s and • Creative and copy will will be gathered at the Burger King. feature fresh and end of the fiscal to • The Fast Casual dining observe if goals and experience provides a progressive images of modern, comfortable and new menu options and objectives have been inviting aesthetic where millennials enjoying a met. customers can enjoy a more quick and nutritious meal. upscale dining experience. • Food is locally sourced, honest and made to order. • . "Everybody in the world is talking about fast casual… It just has a broad appeal.” BONNIE RIGGS – INDUSTRY ANALYST WITH NPD GROUP (The Washington Post) BUSINESS SITUATION • With the success of fast casual restaurants, its evident that customers prefer an in- store, upmarket experience.
    [Show full text]
  • United States' Fast Casual Firm Entering the Brazilian Food Market
    International Market Assessment and Entry – United States’ Fast Casual Firm Entering the Brazilian Food Market A thesis presented to the faculty of the Center for International Studies of Ohio University In partial fulfillment of the requirements for the degree Master of Arts Rafael Bizzotto Magalhães Garcia May 2019 © 2019 Rafael Bizzotto Magalhães Garcia. All Rights Reserved. 2 This thesis titled International Market Assessment and Entry – United States’ Fast Casual Firms Entering the Brazilian Food Market by RAFAEL BIZZOTTO MAGALHAES GARCIA has been approved for the Center for International Studies by John M. Geringer Professor of Management Systems Arthur Hughes Associate Professor of Modern Languages Lorna Jean Edmonds Vice Provost for Global Affairs 3 ABSTRACT BIZZOTTO MAGALHÃES GARCIA, RAFAEL, M.A., May 2019, Latin American Studies International Market Assessment and Entry – United States’ Fast Casual Firm Entering the Brazilian Food Market Director of Thesis: John M. Geringer This thesis strives to analyze the fast casual food market in order to understand if Chipotle would be successful in Brazil and what the concerns would be if the American chain decides to internationalize its operation to Brazil. This thesis has developed as a prospective case study based mainly on business and cultural analysis. The study analyzed Brazil by using the theory of market assessment, and also analyzed the fast casual, fast food, and food service industries and products by applying other business theories such as PESTEL, Porter Five Forces and VRIO. Furthermore, the study interviewed one entrepreneur in the fast casual industry in Belo Horizonte, Minas Gerais, Brazil to understand the local industry dynamics.
    [Show full text]
  • KFC Holdings Japan / 9873
    R KFC Holdings Japan / 9873 COVERAGE INITIATED ON: 2016.10.31 LAST UPDATE: 2018.12.07 Shared Research Inc. has produced this report by request from the company discussed in the report. The aim is to provide an “owner’s manual” to investors. We at Shared Research Inc. make every effort to provide an accurate, objective, and neutral analysis. In order to highlight any biases, we clearly attribute our data and findings. We will always present opinions from company management as such. Our views are ours where stated. We do not try to convince or influence, only inform. We appreciate your suggestions and feedback. Write to us at [email protected] or find us on Bloomberg. Research Coverage Report by Shared Research Inc. KFC Holdings Japan / 9873 RCoverage LAST UPDATE: 2018.12.07 Research Coverage Report by Shared Research Inc. | www.sharedresearch.jp INDEX How to read a Shared Research report: This report begins with the trends and outlook section, which discusses the company’s most recent earnings. First-time readers should start at the business section later in the report. Executive summary ----------------------------------------------------------------------------------------------------------------------------------- 3 Key financial data ------------------------------------------------------------------------------------------------------------------------------------- 5 Recent updates ---------------------------------------------------------------------------------------------------------------------------------------- 6
    [Show full text]
  • Retail Location Analysis: an Award Winning Proposal for Locating a Winning Franchise G G Restaurant
    4/8/2010 Retail Location Analysis: An Award Winning Proposal for Locatinggg a Winning Franchise Restaurant Lauren Skinner Beitelspacher, PhD University of Alabama at Birmingham 1 4/8/2010 Overview | Marketppylace Analysis z Industry overview z Target market z 4 P’s z Competitive Analysis | Location Analysis z Simply Map z Retail Trade Area z Site Selection Marketplace Analysis | Industry overview z 1992-2005: Fast food sales grew at an average annual rate of about 5% z 2001-2004: Fast-casual restaurant sales grew at an average annual rate of about 12% z Fast food offering innovative locations: kiosks, carts, airports, gas stations, mass merchandisers 2 4/8/2010 Marketplace Analysis | Industry Overview z Economic factors • Families face recession • Cost-benefit analysis z Socio-demographic factors • Dual income families • Time starved consumers • NtitiNutrition nee ds c hang ing z Global factors • US- market saturation • International expansion Marketplace Analysis | Target Market | PiPrimary z Age: 25-45 z Lunch z Professional/ Technical Services z Annual Household Income $50K to $150K z Value- convenience, health benefits, costs | Secondary z Event planners z Catering z Professional Services z Value- convenience, delivery, quality 3 4/8/2010 Marketplace Analysis | Product | Place z Sub-sandwiches z 140 in Western U.S. z Deli-sliced at counter z 200 by 2011 z Environment z Close vicinity to office parks and recreation centers | Price | Promotion z $3.00- $13.00 z Local advertising z No drive thru z Corporate advertising z Made-to order z Coupon program Marketplace Analysis Competitive Analysis Rank 2001 2003 2005 2006 2008 1 Subway Subway Subway Subway Subway 2 Quizno's Quizno's Quizno's Quizno's Blimpi 3 Blimpi Togo's Eatery Firehouse Mr.Submarine Firehouse 4 Jersey Mike's Blimpi Penn Station Firehouse Lenny's 5 Cousins Subs Penn Station Cousins Subs Penn Station Port of Subs Beallacino's Pizza & Beallacino's Pizza & 6 Mr.
    [Show full text]
  • JAB – September 2021 Table of Contents
    JAB – September 2021 Table of Contents JAB at a glance 3 JAB Holding Company 4 Our Heritage 4 About JAB Consumer Fund 6 Our Investment Philosophy 8 Our People 17 Our Governance 20 Risk Management 21 JAB Holding Company S.à r.l. Company Holding JAB JAB – September 2021 JAB 2 1 JAB at a glance $50bn+ $27bn JAB Managed Capital JAB Holding Company Net Asset Value A global Investment Firm, with a solid Our leading Investment Platforms investment grade rating, focused on the consumer goods and services sector Coffee & Fast-Casual Petcare Beauty & Indulgence Beverages Restaurants Luxury With a total Enterprise Value of $130bn+ JAB’s Managed Capital has significantly increased since its formation in 2012 JAB Total Managed Capital in $bn 75 CAGR +20% 50 25 S&P: BBB+ with stable outlook Moody’s: Baa2 with stable outlook - 2012 2013 2014 2015 2016 2017 2018 2019 2020 H1 2021 Managed Capital Distribu�ons A privately held partnership of ~50 professionals with global S.à r.l. Company Holding JAB investment offices in Washington D.C., London, Amsterdam, São Paulo, Luxembourg and Mannheim with a long-term global ambition to invest in industry-leading consumer JAB – September 2021 JAB businesses. 1 JAB in this context refers to JAB Holding Company, together with JAB Consumer Fund and other Co-investors 3 JAB Holding Company Our heritage A global leading private 1823 Investment Firm in Consumer Goods and Services, with a The incorporation of Benckiser as strong heritage chemicals producer in Germany 1980 - 1990 Peter Harf joins Benckiser Benckiser acquisition of North American and European household products and cosmetics including 1990 - 2010 the spin off of the cosmetics activities Started investing in the Beauty & Luxury Investment Platform Beauty & Luxury IPO Benckiser and Merger to form Reckitt Benckiser M&A of several cosmetics companies 2012 - 2013 The formation of JAB Holding Company and core JAB team.
    [Show full text]
  • Quick Service Restaurant Trends How Are Global Quick Service Restaurant Trends Changing the Icelandic Quick Service Restaurant Industry?
    Quick Service Restaurant Trends How are global quick service restaurant trends changing the Icelandic quick service restaurant industry? Sigurjón Arnórsson May 2013 M.Sc. Thesis: International Business How are global quick service restaurant trends changing the Icelandic quick service restaurant industry? Sigurjón Arnórsson Instructor: Dr. Frank Hoy International Business Reykjavik University 2013 1 2 Abstract It is relevant for quick service restaurant operations to have a clear understanding of their industries leading market trends. New brands are constantly entering the market with new concepts and trends. Most of these quick service restaurant trends originate from the US and then spread throughout the world’s leading brands. Iceland´s quick service restaurant industry was fairly undeveloped until an industry surge in the 1980´s. During this time, Iceland’s restaurant scene has been greatly affected by changing global quick service restaurant trends. Iceland’s process of adapting US quick service restaurant trends can be demonstrated by looking at the two nations’ different stages of their quick service restaurant industry development. The current leading global trends in the quick service restaurant industry are healthy food, fast casual, quality, simplicity, convenience, snacking, declining popularity of carbonated soft drinks, social media marketing, complex product development mechanisms, international human resource management strategies, internationalization and changing pricing strategies in response to the 2008 financial crisis. Despite its history of being slow to adopt global trends, Iceland’s quick service restaurant industry has become efficient in adopting modern trends. However, the Icelandic industry has yet to produce a brand that has achieved considerable success through international expansion.
    [Show full text]
  • How Top Restaurants Rate on Reducing Use of Antibiotics in Their
    CHAIN REACTION II How Top Restaurants Rate on Reducing Use of Antibiotics in Their Meat Supply Acknowledgements Several public interest organizations working to eliminate the routine use of antibiotics in animal agriculture co- authored this report. Sasha Stashwick of the Natural Resources Defense Council is the lead author, with significant contributions from Lena Brook of the Natural Resources Defense Council, Jean Halloran and Meagen Bohne of Consumers Union, Kari Hamerschlag of Friends of the Earth, Cameron Harsh of Center for Food Safety, and Steve Roach of Food Animal Concerns Trust and Keep Antibiotics Working. Lena Brook was project leader for Chain Reaction II. The authors would like to thank Michael Hansen from Consumers Union and David Wallinga, MD from the Natural Resources Defense Council for their valuable review of this report. The opinions expressed in this report do not necessarily reflect those of our organizations’ supporters or reviewers. ©Copyright September 2016 2 Executive Summary America’s biggest restaurant chains feed millions of people billions of pounds of beef, chicken, turkey and pork every year. The vast majority of this meat is produced in industrial-scale facilities where thousands and even tens of thousands of animals at a time are routinely fed antibiotics to help them survive and make them grow faster in unsanitary, crowded and stressful conditions.1 This misuse of antibiotics contributes to antibiotic resistance— the ability of bacteria to withstand exposure to an antibiotic. Antibiotic resistance makes treatment of bacterial infections harder, increases how long people are sick, and makes it more likely that patients will die.2 Curbing the misuse of antibiotics in the meat industry is a public heath imperative.
    [Show full text]
  • Mcdonald's Corporation
    MH0037 1259420477 REV: SEPTEMBER 14, 2015 FRANK T. ROTHAERMEL MARNE L. ARTHAUD-DAY McDonald’s Corporation SEPTEMBER 1, 2015. Steve Easterbrook walked into his office in McDonald’s corporate headquar- ters. He had finally achieved his dream of becoming chief financial officer (CEO) at a major Fortune 500 company, but somehow he had expected it to feel better than this. Don Thompson, the former CEO who had recently “retired” had not been just his boss, but his friend. They had both started their careers at McDonald’s early in the 1990s and had climbed the corporate ladder together. He had not taken personal joy in seeing either his friend or his company fail. Rather, Easterbrook had fantasized about inheriting the company at its peak and taking it to new heights—not finding the corporate giant on its knees in desperate need of a way to get back up. The company’s troubles had snowballed quickly. In 2011, McDonald’s had outperformed nearly all of its competitors while riding the recovery from a deep economic recession. In fact, McDonald’s was the number-one performing stock in the Dow 30 with a 34.7 percent total shareholder return.1 But in 2012, McDonald’s dropped to number 30 in the Dow 30 with a –10.75 percent return. The company went from first to last in 12 brief months (see Exhibits 1 and 2). In October 2012, McDonald’s sales growth dropped by 1.8 percent, the first monthly decline since 2003.2 Annual system-wide sales growth in 2012 barely met the minimum 3 percent goal, while operating income growth was just 1 percent (compared to a goal of 6 to 7 percent).3 Sales continued to decline over the next two years.
    [Show full text]