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Strong performance yesterday, particularly in QSR, after well received earnings from Sonic on Monday and Ruby Tuesday yesterday after the close

Notable news items and price moves yesterday:

  • A notable divergence in price action yesterday was EAT up on accelerating volume, while DRI, CAKE, RRGB and PFCB were down on accelerating volume
  • RT posted strong results after the close last night, beating expectations with strong same-store sales results showing a healthy gap emerging between RT and the Knapp-Track casual dining benchmark.
  • Cosi outperformed once again and remains one of my favorite names.  Yesterday’s 13% gain was confirmed by strong volume and Cosi is now the top performing stock over the last month and week.
  • Sonic posted strong gains following Monday’s earnings results.
  • Some upgrades/downgrades from Piper Jaffray hit the tape: CAKE was raised to “Neutral" from "Underweight", CMG was raised to "Overweight" from "Neutral" CPKI was downgraded "Neutral" from "Overweight" and BJRI was downgraded to "Neutral" from "Overweight".
  • CBOU coffee upgraded at Jeffries.
  • RT upgraded by BofA/ML.
  • CMG article in Fortune: “Chipotle Mexican Grill is the hottest restaurant stock around”.  CMG founder Steve Ells said Wednesday he is developing an Asian fast-casual concept that he expects to debut in mid-2011.
  • MCD is selling Lattes in the Atlanta market for $1 until January 17th.
  • Year-over-year food prices rose 10 percent for the most popular store-bought grocery items, especially breakfast foods, according to the American Farm Bureau Federation.
  • SBUX removed the words “Starbucks Coffee” from its logo, seeking to emulate NKE and AAPL as a brand that is ubiquitous and instantly recognizable.  The move also reflects company’s shift from being purely about coffee to selling food and other beverages.  Much of the reaction online has been negative, which could make SBUX’s move look more like GAP than NKE.

TALES OF THE TAPE: EAT, RT, DRI, CAKE, RRGB, PFCB, COSI, SONC, CBOU, CMG, MCD, SBUX - sbuxlike

TALES OF THE TAPE: EAT, RT, DRI, CAKE, RRGB, PFCB, COSI, SONC, CBOU, CMG, MCD, SBUX - stocks 16

Howard Penney

Managing Director