Discover more from Random Walk
Daily Data: Consumer Desiderata
Of dining, home improvement and subprime lending
A few scattered observations about consumers and the things they want (or don’t) that Random Walk found interesting, for you to take or leave.
Everything reads better in your browser or in the app. The footnotes especially, and Random Walk is really leaning into the footnotes. Plus, if you have the app, you can set delivery to “app only” and then my daily barrage will feel less like a barrage. Unfortunately, substack does not yet have a “Weekly Digest” option, but I’m hectoring them aplenty.
If this email was forwarded to you, please click the shiny blue button:
No to dining out, yes to ordering out
People have generally dialed back their restaurant spending, except for Fine Dining, in which case, they are all in:
Dining out is go-big-or-go-home, apparently.1
Given that times are getting a little tougher, it makes sense that consumers are eating more homemade food—except of course with fine dining.2
The other interesting thing that Earnest points out is that online ordering has stayed pretty steady (even as on-prem restaurant orders have shrunk).
The blue bars aren’t growing much anymore, but they’re not shrinking either:
People like mobile ordering.
Homes not improving
Consumers have put their home improvement projects on hold, or at least are visiting the big home improvement stores less and less.
Add in Floor & Decor (FND) and it’s a real mess:
Again, not at all surprising—it’s a combination of lower discretionary spend and of course higher home equity loan rates that make big home improvement projects less palatable.3
Pawn Shops are pawning
Random Walk was pondering what happens when consumer credit gets a bit tight, and people need money, and well, pawn shops came to mind—plus RW has already written about BNPL (another subprime offering) a few times before.
It turns out there is one fairly large publicly traded pawn shop (or family of pawnshops) called FirstCash Holdings FCFS 0.00%↑ and it’s definitely doing A-OK.
About one third of its ~3000 shops are in the US, while the rest are in LatAm, and they grow revenue pretty steadily:
The company also made a point of noting the counter-cyclical nature of the business:
Anyways, I wish I could say that highlighting Pawn Shops was an original idea, but it seems like investors area already all over it.
Random Walk is an idea company dedicated to the discovery of idea alpha. Find differentiated data, perspectives and people, and keep your information mix lively. A foolish consistency is the hobgoblin of small minds. Fight the Great Idea Stagnation. Join Random Walk. Follow me on twitter. Follow me on substack:
My guess is that 2022 was a down year, and so this is just growth off a low base. Also, seniors and wealthy people are probably going to change their behaviors the least, and they’re the people who like fine dining (even if fine diners did change their behavior a bit, as per below).
The average check size for fine dining did actually get smaller (whereas it went up in every other category), so people dined fancy more frequently, but spent slightly less.
Fine dining was the only checksize to have negative growth.
Apparently the regulatory moats are pretty high, and you could do worse than fully secured lending. Also, there’s two whole slides on ESG. Lol.
What a joke. Don’t hate the player, hate the game, I guess.