Tags: jim chanos | dunkin | burger king | bet | stocks

Jim Chanos: Bet Against Dunkin' Brands, Burger King

By    |   Thursday, 26 April 2018 09:36 AM

Investment guru Jim Chanos is betting against Dunkin' Brands and Burger King's parent.

Chanos told CNBC that he has been shorting fast-food stocks Dunkin' Brands Group Inc. and Burger King's parent Restaurant Brands International Inc. "for about a year."

The founder and president of Kynikos Associates said in a "Squawk Box" interview that he's shorting Dunkin' Brands and Burger King's parent Restaurant Brands International.

"We've been short these things for about a year," said Chanos.

Chanos said price-to-earnings ratios for restaurant stocks have been going "higher, higher and higher as restaurants themselves have struggled."

"At some point, that has to come to an end," he said.

"This is part of a broader theme ... the franchisers versus the franchisees," Chanos said. He said he doesn't like what he calls "this asset-light idea" of these companies not owning their restaurants while "basically clipping the coupons, collecting royalties" from the franchises, CNBC.com reported.

For its part, Restaurant Brands International’s most recent quarterly profit topped analysts’ estimates, helped by strong sales of Burger King’s cheaper-priced menu items and popular Whoppers.

Ontario-based Restaurant Brands said comparable sales at Burger King rose 4.6 percent in the fourth quarter ended Dec. 31. Analysts on average had expected growth of 2.5 percent, according to Consensus Metrix.

Restaurant Brands, which also owns coffee chain Tim Hortons, and other food-chain owners such as McDonald’s Corp., Yum Brands Inc. and Dunkin’ Donuts Group have been trying to attract diners with cheaper-priced meals and more breakfast and coffee items in a highly competitive market, Reuters explained.

Restaurant Brands has also introduced mobile applications and online ordering to attract more millennials to Tim Hortons and Burger King.

“The digital channel has been and will continue to be a key focus of ours as we grow the Tim’s brand,” Chief Executive Daniel Schwartz said on a call with analysts.

Meanwhile, Dunkin’ Brands reported its most-recent quarterly profit that exceeded analyst estimates as revenue came in stronger than expected amid a bitter fast-food price war, but shares fell amid indications of a weak start in January, Reuters explained.

The Canton, Massachusetts-based owner of Dunkin’ Donuts, like fast-food giant McDonald’s Corp (MCD.N), is using low-priced “value” deals to lure consumers in a breakfast market crowded with competitors ranging from Starbucks Corp. (SBUX.O) to convenience stores.

Dunkin’ Brands also owns the Baskin-Robbins ice cream shop brand.

Executives signaled a January traffic slowdown due to cold, snowy weather and said the company and its franchisees faced pressures from “value wars” and a tighter labor market.

(Newsmax wire services contributed to this report).

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Investment guru Jim Chanos is betting against Dunkin' Brands and Burger King's parent.The Kynikos told CNBC that he has been shorting fast-food stocks Dunkin' Brands and Burger King's parent Restaurant Brands International "for about a year."
jim chanos, dunkin, burger king, bet, stocks
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2018-36-26
Thursday, 26 April 2018 09:36 AM
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