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Posted
Dec 07 2007, 11:42 AM
by
Robert Walberg
Rating:
Money Blog: Top Stocks Blog - MSN Money
According to the experts, the high cost of fuel, rise in foreclosure rates, decline in the dollar and turbulence in the financial industry has consumers so nervous and scared that they aren't going to spend much money on travel, clothes, food, etc. Today's Reuters/University of Michigan preliminary Consumer Confidence report lent credence to the market's concerns, as the data showed confidence dropping to its lowest level in two years.
But if I've learned anything over the past 20 years it's that what consumers say and how they actually behave are two different things. We might be annoyed by higher gas prices and a little freaked out by the fact that our neighbor just lost his house to foreclosure, but these facts aren't going to turn us into gourmet chefs overnight. Americans are busy people that like their conveniences, and we're not about to turn the clock back 30 years and start cooking all of our meals at home just because some financial geek from Citigroup announced that the company is writing off $11 billion in bad loans.
Granted we might decide to cut back on the big steak dinners and forgo the $70 bottle of wine -- bad news for a company like Morton's Restaurant Group -- but we're going to continue eating out. It's what we do. Over the past 20 years restaurant sales have more than doubled. Two-income families are simply too busy to cook at home all the time, while many young adults don't want to spend the time or effort.
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Posted
Feb 01 2008, 02:08 PM
by
Robert Walberg
Rating:
Money Blog: Top Stocks Blog - MSN Money
This weekend when you get up early, grab the newspaper and head over to Starbucks for some coffee and a breakfast sandwich, you better savor the flavor of the eggs and bacon, as management announced that it will be pulling its egg sandwiches from the menu. Apparently, management is under the impression that consumers aren't frequenting its stores as often as in the past because the odor from the eggs overpowers the aroma from the coffee, thereby destroying the whole Starbucks sensation.
Something stinks, but it's not the breakfast menu. Okay, so there is a faint smell of bacon and eggs from time to time, but so what. Are we really to believe that the average Starbucks consumers' sense of smell is so refined and/or delicate that they can't stand the odor wafting from the kitchen area while waiting a few minutes for their coffee? Seems to me people have been doing it for years at McDonalds, Dunkin Donuts, and the local diner. The two -- coffee and breakfast -- aren't incompatible. In fact, they seem to go together rather nicely.
Frankly, what I smell is a lot worse than eggs and bacon -- it's a management team trying to pull a fast one on investors. Traffic at Starbucks is down from the pace it enjoyed a couple of years ago, but that has less to do with the customer experience being scrambled by breakfast items and much more to do with ever higher coffee costs, a sluggish economy and increased competition. That's the three-headed monster depressing growth and until management starts to honestly address these problems, the stench coming out of Starbucks will be its quarterly financials.
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Posted
Jul 21 2008, 01:41 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
It's not just health-conscious diners who should be concerned about restaurants like Cheesecake Factory, Red Robin Gourmet Burgers, P.F. Chang's China Bistro, and Texas Roadhouse.
With food and fuel inflation at critical levels, investors should be worried about the health of the entire casual dining sector, including companies like Darden Restaurants and Brinker International, operators of Olive Garden, Red Lobster, and Chili's.
All must contend with rising food prices, especially for meats, seafood, and dairy products at a time people are drastically reducing discretionary driving and rediscovering the joys of eating in.
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Posted
Jul 24 2008, 10:07 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Rising food and energy prices are forcing McDonald's to take aim at its popular Dollar Menu. "In this current environment, we've got to make sure we're pricing smart, not just pricing low," COO Ralph Alvarez said as the chain reported better-than-expected quarterly results.
For hurried moms, nocturnal teens, lunch-run dads, and anyone who appreciated the food-inflation hedge of one dollar double cheeseburgers, the news comes as a super-sized disappointment.
Investors should be worried too.
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Posted
Jul 29 2008, 05:04 PM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
Confirming a trend we discussed last week, the corporate parent of Bennigan's and Steak & Ale restaurants filed for Chapter 7 bankruptcy protection as consumers continue to shy away from dining establishments in favor of home-cooked meals.
The closures affect only 0.5% of the U.S. bar-and-grill sector -- but they're a warning of tough times ahead for the $43 billion casual dining industry.
The rapid plunge into oblivion shocked patron Donna Wimes, who noted that "the food was good; they always seemed to generate a crowd." Others are reminiscing about Bennigan's deep-fried mozzarella sticks, while also noting that locations "looked full" anytime they passed by
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Posted
Aug 04 2008, 11:00 AM
by
Minyanville
Rating:
Money Blog: Top Stocks Blog - MSN Money
Fast food enthusiasts beware the coming catastrophe of McDonald's Dollar Menu, especially the $1 double cheeseburger.
McDonalds, purveyor of fine fast food, faces a basic problem to maintain its profit margins: Raise prices or slice portions. You can bet Burger King, Wendy's and Chipotle face a similar choice.
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Posted
Aug 27 2008, 11:29 AM
by
Minyanville
Money Blog: Top Stocks Blog - MSN Money
The casual dining space is an extremely difficult place to trade these days. Just ask Darden Restaurants. On Tuesday the Florida based chain, known for its Olive Garden, Red Lobster and LongHorn Steakhouse locations provided what could probably best be described as a very lackluster outlook for its first quarter.
More specifically, the chain said that excluding certain adjustments and costs it expects to earn 60 to 62 cents a share in its Q1.The trouble with that is that per Yahoo Finance the company had been expected to turn in 75 cents a share.
What happened?
Reuters quoted a Darden spokesman as saying, “people were not in the restaurants in the volume we were anticipating."
Geez, I could have told you that.
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Posted
Feb 02 2009, 12:28 PM
by
Kim Peterson
Rating:
Money Blog: Top Stocks Blog - MSN Money
 OpenTable, apparently a very optimistic restaurant reservation service, has filed for a $40 million initial public offering. It must be kinda lonely out there. Only one company, Grand Canyon Education (LOPE), has made it to market since August.
OpenTable is one of those services that sounds great, but isn't something I would remember to use. You make table reservations on its Web site, and the company earns money by charging restaurants a subscription fee plus $1 for every diner. In a hot restaurant market, maybe this might make sense. But these days, it's not hard to nab a table at most places.
The company is not profitable,
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Posted
Mar 18 2009, 11:12 AM
by
Anthony Mirhaydari
Rating:
Money Blog: Top Stocks Blog - MSN Money
In a sign the recession is may be nearing its end, restaurant stocks are enjoying improved business and boosted stock prices as consumers slowly begin to reopen their wallets. This is a surprising reversal from the bankruptcies and traffic declines we saw last year.
According to research by UBS analyst David Palmer, sales started stabilizing at casual restaurants back in January and improved into February. Following months of cut backs and meals at home, pent-up demand was released thanks to better weather and heavy discounting. After all, what fun is it to deny oneself an occasional luxury?
As a result, Darden Restaurants (DRI), which runs the popular Olive Garden and Red Lobster chains, reported better-than-expected quarterly results Wednesday and issued positive guidance for the rest of the year. Thanks to cost-cutting efforts and higher ad spending, the company expects earnings per share of $2.66 to $2.74 for the year, ahead of the $2.52 consensus estimate. Shares are up more than 35% year-to-date versus a 15% fall in the S&P 500.
Here are two other stocks you should know about:
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Posted
Apr 28 2009, 01:56 PM
by
Louis Navellier
Rating:
Money Blog: Top Stocks Blog - MSN Money
Conventional wisdom says that during a recession people will reduce their dining out frequency and opt to eat and entertain at home. Conventional wisdom is often not very prescient. As I said when I revealed my 5 Hot Stocks in Ice-Cold Sectors, there are always opportunities to profit if you know where to look. While stocks of food companies have been depressed for the better part of the last 18 months, stocks of companies engaged in the restaurant business have been among the best market performers during the same period. Companies in the casual dining business, including Buffalo Wild Wings (BWLD), Chipotle Mexican Grill (CMG), BJ’s (BJRI), Panera, (PNRA), Darden (DRI) and California Pizza Kitchen (CPKI) are all trading near the high for the last 12 months and are continuing to report sales and profits growth in spite of the recession
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