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Looking at the recent short interest moves in the restaurant space, one can see confirmation of what we already knew; red meat costs are going to pressure earnings over the next few quarters.  Casual dining concepts with said exposure are first choice on the menu for short sellers of late (MRT, RUTH, TXRH, CHUX). 

Some other thoughts:

  • Notable that PFCB’s short interest remains at such elevated levels, and even increased over the past month’s reported data, despite overall declines in short interest in the casual dining category.  Bert Vivian’s optimism does not seem to be gaining much traction with investors
  • The Brinker story is gaining momentum and this metric also confirms it
  • Red Robin are not talking to the Street as they attempt to stimulate their brand.  I would become more and more bearish as this stock goes higher. 
  • CAKE and RT remain favored by the Street
  • CMG’s short interest has declined significantly (from ~12%) over the past month
  • Those short GMCR certainly made some money today
  • PEET also being pressed by the shorts, perhaps because of coffee prices, but this is a well-run company with one of the better management teams
  • The shorts certainly don’t seem afraid of a deal emerging for WEN!
  • CMG, PNRA, and DPZ remain the darlings of QSR
  • JACK has seen the shorts back off but I have very little confidence in that story


Howard Penney

Managing Director