More weakness in restaurant stocks yesterday with coffee concepts being the worst performers over the last week.
Some news items from the restaurant space:
- MCD Japan revised up its earnings outlook for the year ending December 31st due to the introduction of a new menu and the shutdown of non-profitable stores.
- PF Chang’s China Bistro has appointed Lane Cardwell, most recently CEO of Boston Market, to the board of directors
- Goldman Sachs has resumed coverage of YUM with a Neutral rating and $58 price target
- The Kraft versus Starbucks showdown continues with Kraft raising prices on both its Maxwell House and Yuban Coffee brands by approximately 12% after prices for green coffee rose to 13-year highs. Starbucks says that the move is in violation of Kraft’s agreement with Starbucks (that Starbucks is trying to sever)
- O’Charley’s CEO Lawrence Hyatt has resigned, effective this year end. As you can see in the table below, shares of CHUX sold off on high volume. Who knew what and when?
- CBRL subsequently named Hyatt as CFO
- As the second table below illustrates, the Street’s estimate of DRI’s earnings have been creeping ahead of the quarter – the company reports EPS on 12/20. Intra-quarter, DRI introduced new products and lowered select prices at Red Lobster. Business at Reb Lobster continues to lag Olive Garden and Longhorn Steakhouse
- Burger King is no longer requiring its restaurants to stay open until 2 a.m. on Fridays and Saturdays. While this is a victory for franchisees, it is a clear indication of the lack of profitability in late night for Burger King
Howard Penney
Managing Director