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Financing

In brief: Sysco sees more supply challenges, STK comps soar 93%, Waitr continues to non-conform

A roundup of recent earnings reports provides a clearer picture of a rebounding industry's challenges and opportunities.
Photograph: Shutterstock

A new round of financial reports provided additional insights into the restaurant industry's recovery. According to the companies that aired results, operators can expect more disruption of the supply chain and continuing upward pressure on food costs, while concepts promising a unique experience are seeing historic sales highs. Meanwhile, DoorDash and the other big third-party delivery brands are being challenged by a smaller player with a different business model.

Here are the details.

Sysco: Your pain is our gain
Domestic sales for the distribution giant rose 7.7% above 2019 levels during the fourth quarter ended July 3, a figure management tied in part to an increase in what it’s charging restaurants as food costs escalate. Executives said they expect that inflation to continue, in particular for beef, pork, paper and packaging.

They also warned investors that turmoil is likely to persist within the supply chain, with vendors unable to scale up fast enough to meet surging demand for restaurant products. The labor shortage is aggravating the problem, the officials indicated.

They announced that Sysco will try to ensure a steady flow of drivers by starting its own truck-driving school. Participants will be paid while they train, and the company will pick up all the necessary licensing fees.

Management said they’ve seen no erosion of demand from restaurant accounts as a result of the delta variant and the spike in COVID-19 infections that it’s triggered.

The One Group: 59.5% jump in comps over 2019
Paced by a near doubling of same-store sales for its high end STK concept, this operator of highly experiential eating and drinking places posted a two-year leap in blended comps for July of 59.5%. The 92.8% lift for 23-unit STK followed a rise in the brand’s average unit sales to $288,000 a week in the second quarter. One Group’s most extensive brand, 24-store Kona Grill, generated a 31.9% gain in same-store sales for July and a 23% increase for Q2.

The company opened six new venues year-to-date, and management told Wall Street that the U.S. market could eventually support 200 Kona Grills and 200 STKs.

Waitr: Pivoting to payments 
The small third-party delivery provider has always been content to zig where larger competitors like Uber Eats and DoorDash have zagged. It is continuing to do that in earnest by expanding its business to include payment processing, executives revealed on Waitr’s second quarter earnings call Monday. 

That move will be jump-started by the acquisition of three companies that process payments for merchants—ProMerchant, Cape Cod Merchant Services and Flow Payments—and an investment in Figure Technologies, which uses blockchain technology to process payments.  

“Ultimately we're in this business now where we can't be a mini-me of DoorDash,” Waitr CEO Carl Grimstad said on the call, according to a transcript from SeekingAlpha. In thinking beyond just the last-mile delivery, the addition of these payment businesses is really the first big step in giving ourselves the capability to offer a full suite of payment services, not only to our installed base, but beyond that into other verticals.” 

Waitr generated revenues of $49.2 million in the quarter, down from $60.5 million in the year-ago period. Average daily orders were roughly flat quarter over quarter, as were its number of active diners. After a string of profitable periods, the company posted a net loss of $5.6 million in Q2, its second consecutive unprofitable quarter. Executives attributed that trend in part to higher labor costs. 

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