🥯 McDonald's brings back Breakfast Wars

Thursday, October 8, 2020 by Robinhood Snacks | Disclosures

"Nope— I hit Mickey D's before"

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Hey Snackers,

Most anxiety-inducing collab of 2020: Cole Haan teamed up with Slack for Slack-branded sneakers. Each step triggers the aggro notification sound (in your head).

Stocks shot back up after President Trump tweeted support for airline aid and direct relief checks, a day after he shut down stimulus package talks. Airline and cruise stocks caught the upswell.

McMuffin
1. McDonald's brings back baked goods after 8 years: it's the donut-shaped recovery

Breakfast is back, baby... At least, according to Mickey D’s index. McDonald’s is adding baked goods to its permanent menu for the 1st time in eight years. The star pastries: apple fritter, blueberry muffin and cinnamon roll. This news might sound like empty calories – but it's actually a pretty big deal for McD's, which has focused on trimming its menu during the pandemic:

  • Breakfast was the most disrupted meal of the corona-conomy. You ditched the Starbs bagel for WFH cereal, so a.m. sales at major chains plunged.
  • Lost breakfast traffic accounted for over half of McDonald’s US sales declines in May. Meanwhile: General Mills and Pepsi thrived as you stocked on Lucky Charms and Quaker Oats again.

Breakkie is the most important meal of the day... for fast-food restaurants. Chains from Taco Bell to Shake Shack have dished out big to make it a priority. Starbucks and Dunkin' have been upselling protein-stuffed breakfast sandwiches. Wendy’s breakfast launched nationwide before lockdowns, and it already made up 8% of the chain's sales last quarter.

THE TAKEAWAY

A donut-shaped recovery?... There are lots of ways you can gauge how the economy is doing, from unemployment numbers to GDP data. Donuts might be worth adding to the list. Rising chain-store breakfast sales suggest people are commuting more and hoarding less. The fact that McDonald's and Taco Bell are investing to revive breakfast could be a sign of sweeter times.

Unwash

Sapphire and faded jeans... Levi's didn't quite get its dreams last quarter, but it did offset big corona losses with a profit-boosting 52% surge in e-commerce. Digital sales made up 1/4th of the denim icon's revenue (vs. just ~1/10th last year). Total sales still fell 27%, but Levi's stock popped after earnings on the positive momentum. Also:

  • Women’s apparel surprisingly thrived, making up 37% of total sales, up almost double from 2015. Brand ambassadors like Hailey Bieber have been keeping Levi’s well-dressed (not distressed).

Jeanius idea... Levi's just launched a "recommerce" site for second-hand jeans/jackets. You drop off your old Levi's at a store in exchange for a gift card. Levi's cleans and sells them, and the lucky buyer doesn’t have to dig through flea market bins for that Insta-perfect pair. While this could threaten demand for new jeans, it's actually a win-win:

  • Bankable: According to Levi's, 60% of Gen Z consumers shop second-hand. Levi's can cater to them without the extra cost of making more clothes. That way Levi's gets paid instead of Poshmark.
  • Green: If everybody bought one item used instead of new, we’d save 449M pounds of waste/year, Levi's says. Denim recycling is the perfect fit to boost Levi’s rugged, sustainable image (#neverwashthem).
THE TAKEAWAY

Avoid the "discount spiral of death"... By controlling the full “life cycle” of its denim, Levi's can reduce overstocking on pricey new clothes. When inventory piles up, companies discount — that hits profits. Levi's CEO says he's "cautiously optimistic” they won’t tumble into never-ending promotions. With recommerce, Levi's could cash in on the same pair of hip-huggers five times over.

What else we’re Snackin’
  • Grilled: The House of Reps drops a 449-page report condemning Apple, Amazon, Google and Facebook's "monopoly power."
  • Perky: DoorDash adapts its corporate delivery service for remote companies (think: free meal credits). 4K companies already signed on.
  • Bad: Netflix faces a criminal charge in Texas for promoting "lewd" inappropriate visuals of children in the French film “Cuties.”
  • LOL: Takeaway.com shareholders vote "yes" on its $6.9B proposed acquisition of Grubhub, and "no" on Grubhub CEO's pay package.
  • Treat: Eli Lilly asks the FDA to approve emergency use of its COVID-19 antibody treatment, saying it could supply 1M doses this year.

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Snacks Daily Podcast

It's like Photoshop, for your DNA...

Gene-editing stock CRISPR Therapeutics jumped 11% yesterday. More importantly: its founders just took home Nobel Prize gold.

Jennifer Doudna and Emmanuelle Charpentier won the Nobel Prize in Chemistry, joining just 5 other female winners in this category. Their gene-slicing tech lets scientists remove the disease-susceptible parts of our DNA.

Tune into our digestible 15-minute pod to hear why CRISPR's big potential comes with a side of controversy.

Thursday

Disclosure: Authors of this Snacks own shares of Amazon, Apple, Google, and Delta

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