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| Here's your daily business briefing. - 🍔 McDonald's targets 9,000 stores, 100 million members
- 🛍️ Deep Dive: Retailers streamline inventories for holidays
- 🚬 BAT writes down $31.5B on U.S. brands
Make sure to continue reading the Quarterly Earnings Report and the Quick Hits.
Shriram
p/Shriram | |
| 1 | | McDonald's has outlined plans to open more than 8,800 new locations and increase its loyalty program membership by 100 million by 2027 as part of its global sales growth strategy, focusing on new restaurant expansions and loyalty program enhancements. McDonald's, with 41,198 restaurants globally as of Sept. 30, 2023, aims to reach 50,000 locations worldwide by 2027. More: - In 2024, McDonald's expects 4% net new restaurant growth, contributing to systemwide sales, with anticipated capital expenditures of $2.5B.
- Beyond 2024, McDonald's targets annual restaurant count growth of 4%-5%, with new locations contributing about 2.5% to systemwide sales in constant currency.
- By 2027, McDonald's hopes to have a quarter of a billion active members in its loyalty program, highlighting the program's significant contribution to increasing mobile sales.
- McDonald's announced a collaboration with Google Cloud to improve restaurant operations worldwide with artificial intelligence.
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What the numbers say: September saw a decline in the total ratio of inventories to sales for retailers (except auto and parts dealers) from 1.21 to 1.18 YoY. In the third quarter, Target, Dick's Sporting Goods, and Best Buy streamlined their operations by reducing inventory by 14%, 2%, and about 4%, respectively, while Gap significantly cut its inventory by 22% year-over-year. Relevance: In preparation for the critical holiday season, retailers, including major players like Walmart and Target, have altered their inventory approach by adopting leaner supply chains and emphasizing products that closely match consumer demand, moving away from overstocked warehouses and shelves filled with discounted items. More data: In October, U.S. retail sales fell by 0.1%, the first decline since March, and Macy's reported a 6% decrease in third-quarter inventory compared to the previous year and a 17% decrease compared to 2019. The National Retail Federation predicts U.S. holiday retail sales will grow between 3% and 4% over 2022, ranging from $957.3B to $966.6B. | | | |
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| 3 | | British American Tobacco faces a $31.5B impairment charge due to declining U.S. cigarette sales, driven by a shift to cheaper nonpremium options and increased illegal disposable vape usage. BAT attributes declining sales to macroeconomic pressures and plans to increase investments in non-combustible products, constituting one of the most significant recent corporate write-downs. More: - In 2017, BAT increased its presence in the U.S. by acquiring complete ownership of Reynolds American to enter the American tobacco market.
- The corporation has been concentrating on smokeless products to lessen its dependency on regular cigarettes.
- By 2035, BAT wants to see up to 50% of its sales come from noncombustibles, such as nicotine pouches without tobacco and vape pens.
- BAT projects low single-digit revenue growth for 2023, which would be at the lower end of its previous range of 3% to 5%.
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| 4 | | Once hailed as revolutionary, ghost kitchens are now challenged, with Kitchen United, backed by Kroger, announcing the sale or closure of all its locations. These commercial kitchens, without dine-in options, cater exclusively to online orders via delivery apps like Grubhub and Uber Eats, and despite significant pandemic growth, projections of them constituting over 20% of the restaurant industry by 2025 are now uncertain. More: - With $175M in financing, Kitchen United executed delivery-only restaurants out of places like chain restaurants, malls, and Kroger stores.
- Ghost kitchens faced several obstacles, including the resurgence of in-person dining, drive-thru orders, and slowed development in delivery.
- Ghost Kitchens' poor sales were caused by their lack of branding and promotion.
- Furthermore, in a recent survey, 70% of consumers prioritize ordering from brick-and-mortar restaurants, highlighting the importance of food from accessible, physical locations, according to the National Restaurant Association.
- Ghost kitchens faced high fees from third-party delivery, health inspection issues, and market saturation, resulting in funding shortages and significant names like Wendy's and Applebee's abandoning plans.
Zoom Out: - In 2023, To combat ghost kitchens, Uber Eats removed thousands of listings from its database this year.
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| 5 | | McCormick & Company has designated tamarind as the "Flavor of the Year" for 2024, citing its tangy-sweet taste from a tree found in Africa, Mexico, Asia, and India. This selection aligns with trends such as the rising popularity of tangy and sour foods, modernized regional dishes, and innovative twists on childhood favorites, per McCormick's annual report. More: - Black Tap Craft Burgers and McCormick are teaming up to offer tamarind in milkshakes, burgers, and fries at seven U.S. locations beginning on Feb. 1, 2024, for a limited time.
- Although tamarind has long been a staple in Mexican and Asian cuisines, McCormick concentrates on the newest culinary trends.
- The selection of tamarind is from a month-long process that involved traveling to various nations, including South Africa, China, and Poland, looking through restaurant menus, speaking with industry experts, and analyzing data to spot new flavor trends.
- Executive Chef Hadar Cohen Aviram and a team of 50, including chefs and food technologists, led the annual Flavor of the Year selection.
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| 6 | | Quick Hits: - The Kubernetes Cookbook is your comprehensive companion, equipping you with the knowledge and techniques to harness the full potential of Kubernetes.*
- ExxonMobil unveiled a plan to increase earnings and cash flow by $14B through 2027, involving a reduction of $6B in structural costs by the end of that period.
- Shanghai authorities expressed to Microsoft's president their wish for the company to promote artificial intelligence technology to boost businesses in the Chinese financial hub.
- Trucking company XPO Inc won a bid to acquire 28 service centers from bankrupt Yellow Corp for $870M in a closely watched auction.
- Eli Lilly's Zepbound, a recently approved obesity treatment, is now available in U.S. pharmacies at $550 per month for customers whose insurance doesn't cover the drug, half the drug's list price.
- Toast to 2024: Key affiliate marketing trends to help your campaigns start off on the right foot in the new year. Get the free report.*
*This is a sponsored listing. | | | |
 | Freelance Writer | | Shriram is pursuing Master’s in Business with Marketing at Warwick Business School. He worked as a Senior Consultant in Tech and Political Consultancies before his Masters. He is passionate about Tech, Marketing, Strategy, Anthropology and Politics. He is also the Postgraduate Ambassador for Warwick Business School. | | This newsletter was edited by Aaron Crutchfield | |
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