00:00 Speaker a
Look at a stock. We open the market here, which is the company's first-quarter revenue mixed yields below expectations after revenue, more than 5%, but sales in the same store increased by 3.5%. During the revenue call, leaders acknowledged some macro headwinds, including consumer sentiment and of course taxes. The comments responded to comments from other companies such as McDonald's, which said they are not immune to industry volatility. Chipotle said during the call that consumers have reduced visits to restaurants due to economic concerns. Manchester City restaurant analyst John Tower is now joining us to break how consumer demand affects the industry. John, your insights are always great before we get into the individual companies here. I just want you to have a macro understanding of the health of the industry and consumers. How do you describe how consumers are now holding in macro uncertainty?
01:52 John Tower
I think it's pretty good. I mean, our weather was really an important factor in the first quarter, and then April, sorry, March, and then April made a lot of noise, which brought a lot of noise to consumers. Confidence has dropped, well, a lot this month, and I think that has caused a lot of people to retreat at least temporarily. But we have also heard from many companies that actually improve compared to what they certainly saw in February and March. So it's kind of like a mixed bag. At present, not everyone cares about the health of consumers. Look, I don't know where we're going from a U.S. economic standpoint, but if we do slow down, I think the restaurant category is actually relatively good to outperform the rest of the consumer.
03:20 Speaker a
When you hear this number of businesses talking about continuing to focus on the fundamentals of our business, what they can control, what are the main controls, what are what, these variables are a little more in their hands, they can basically do tensile leverage here and there to make sure they do recognize an uncertain environment in some capacity or otherwise?
04:07 John Tower
It has high value and high-quality service, and is a related product. It stays in front of guests with good news, which means, you know, you're staying there with important or related products, right? You're not just saying that this is a value point. This is a value price point, with new product news behind it. That's high quality food, right? And, you're entering the environment you want to be, and this is not a tired restaurant with poor service. Frankly, it's a waitress or waitress and say, hey, how are you? I hope you have a good time. Oh, by the way, you know, we'll come to your table more often to make sure your drink stands out and you get what you want. In fact, those soft styles drive customers back to the store, rather than eating at home or going to competitors. So, I think all of this, it's really a gentle thing, but they're important when consumers are backing off.
06:00 Speaker a
So, in the process, some people will hear value and read, say, sound more promotional. So to what extent do some of these promotions start to reach the edge?
06:48 John Tower
Yes, I think many operators are smarter about their promotional methods, promoting and valuing any promotions they offer to their guests. So it's not only a blunt discount, but it also ensures that whatever they put on the menu is not only making some profit for the company itself, but also in the franchise model, that their franchisee profitability is not falling into the tank. So, I know, everything you know might humbly lower the profit dollar, but they also want it to attract traffic to the store. Then, when the guests pass, they add the drink and add a side item they won't do, uh, if they don't generally come to the store. So when there are a lot of panic conditions throughout the industry, it is even more thoughtful than before to recall the financial crisis, and only straightforward discounts can get guests into the door. This is an orderly industry with much more analysis behind it. So II does think that as we see promotions, more discounts will pass, which is not only a direct discount, but also unprofitable. This is a more thoughtful and profitable promotion.
09:10 Speaker a
Thank you so much for spending time with us today after the opening clock. Thanks for it.
09:20 John Tower
Nice to meet you. Thanks.
