Regular acolytes of my due diligence will recognize a particular affinity towards food stocks, this is not merely coincidence. Before embarking on due diligence, I believe one should conduct “food” diligence, the following food diligence examples show the methodology, visualization, self actualization, and emotional analysis of several public companies for which this concept was used:
The following FD’s were conducted Mid-2017.
None of the following FD’s should be taken as recommendations to buy or sell the following equities. These FD’s represent emotional responses to perceived marketing and business practices and show how they can be weaponized for the sake of alpha.
Papa John’s Int’l, Inc. (NASDAQ: PZZA)
It’s 10:00 AM, and the scene is set for a pizza party. You ordered Papa John, and everyone at the event has high expectations. Unfortunately, the pizza is here and it’s nothing but red, red, red. Someone forgot the cheese and you’re footing the bill.
32 years ago, when Papa John was founded, America was a very different place. The white-cis patriarchy was still in full force and feeling battered by the strides made by civil and women’s rights activists over the 20th century. This feeling of waning toxic male power drove a counter cultural movement which has continued to this day. Papa John is the enigmatic embodiment of this male patriarchal micro aggression. The slogan “Better Ingredients, Better Pizza” suggests that male influence alone makes this cancer ridden, GMO, gluten, filled, cattle fodder somehow superior to a mother’s intuition. The cultural death of Papa John may be here. Women across the world should be protesting, boycotting, and speaking out against female oppression. Together they will speak in a united voice and stand up against filial piety, “He will not divide us!”.
- Papa John, John Schnatter, founder and namesake, was recently exiled in August, 2018 for a racist slur made during a conference call.
Domino’s Pizza, Inc. (NYSE: DPZ)
It’s 3’oclock in the morning and you are starving. As a Proud American Citizen you work a high paying manufacturing job, second shift at the local coal power plant. You’ve just gotten home and you’re rolling in the dough. It’s Tuesday, you ordered a Domino buffalo chicken pizza, and you’re about to get paid for the second time this week.
Domino is as American as pizza pie. Founded almost 60 years ago, most people don’t know that Domino pizza is the second largest pizza chain in the world. On the list of non-shitty pizza chains, however, Domino pizza is number one. That’s right, if you are a starving Chinaman and would like to order pizza, your options are slim… and when it comes to high quality American brands, Domino pizza is the only logical choice. In a declining American pizza market, pizza franchises have the imperative to colonize and conquer growing markets in Africa, India, and China. The notable capital city of North Korea, Pyongyang, even has a shitty Italian pizza joint. Supply and demand. While Chinese are “busy” taking the whole month of February off to celebrate China new year’s, the employees of Domino pizza have been busy making cash monies selling America’s greatest export, the Supreme X-Large Handmade Pan Pizza with Classic Crust. Much like their 30 minutes or less guarantee, Domino pizza is set to surprise investors; investors who have been facing an existential pizza crisis after disappointing $PZZA John performance.
- Indeed, Dominoes continued to rally through 2017. Positive earnings releases potentially saved the pizza industry from collapse.
- PR stumbles by Papa John have indeed allowed for $DPZ to further increase marketshare.
Shake Shack Inc (NYSE: SHAK)
It’s March first and you’re in the middle of Madison Square Park. Suddenly, the urge to take a massive shit hits you. Panicked, you make a mad dash for Shake $SHAK. The cashier informs you that the code to use the restroom is inside every order, like a crappy cracker jacks prize, so you purchase a $20 plain Shackburger brand burger. After 30 minutes waiting for your order you can’t hold it in any longer, you squat down in the middle of the store and, much like Shake $SHAK’s stock price, prepare to take a massive dump after earnings. It’s going to be OK; you brought an extra pair of shorts.
Speculators may believe the bacon bubble hit Shake Shack like a ST elevation myocardial infarction. While Shake $SHAK arrogantly prides itself for using premium ingredients, in this economy, investors understand better ingredients means lower margins. In a market where pigs get fat and hogs get slaughtered, Shake $SHAK is likely to have been purchasing only the finest overpriced “all-natural” hogs. Furthermore, Shake $SHAK employees mixed up my order, evidently incapable of telling the difference between a burger and a hotdog. Customers could care less whether or not you “Stand for something good” try “Standing for shareholder value” instead. With fries like unsalted Styrofoam brand insulation, it’s undeniable, Shake $SHAK is likely to have faced a multitude of challenges, from shitty locations, to crappy service, to strong competition from the sushi sector.
- Shake Shak’s performance in 2017 was relatively flat, although appreciating slightly going into 2018 suggesting senior management may have heard and are working on correcting my complaints.