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Notable news items from the past few days and price action from Friday’s session.

  • Malcolm Knapp reported casual dining comparable restaurant sales of +0.6%, which implies a gain of 115 bps in two-year average trends.  Comparable guest counts declined -1.5%, which signifies a two-year average gain of 100 bps.
  • GMCR and Dunkin Donuts announced a promotion, manufacturing, and distribution agreement that will make Dunkin’ Donuts coffee available in single-serve K-Cup portion packs for use with the Single-Cup Brewers.  This is yet another data point that affirms my conviction that a GMCR/SBUX deal is not likely.  Starbucks is looking for more control and more distinction, not less.
  • CBRL reported 2Q EPS of $1.20 versus consensus $1.21.  Management reaffirmed guidance for the year of $3.95-$4.10 versus consensus of $4.12.
  • DPZ, PZZA EPS estimates cut at Janney, citing price of cheese
  • RRGB gained 12.5% on Friday following strong earnings on Thursday.  RRGB reported $0.14 ($0.12 excluding tax and one-time items) versus expectations of $0.05.  Management indicated that the company will take a 1.5% price increase in April.
  • The coffee stocks outperformed QSR on Friday. 
  • CMG declined on solid volume; I see inflation as a significant headwind for CMG and see copious downside in the stock price.
  • RUTH declined on earnings that were in line with expectations.  Management cited price gains as a remedy to beef inflation.

TALES OF THE TAPE: GMCR, CBRL, EAT, DPZ, PZZA, RRGB, SBUX, PEET, CMG, RUTH - stocks 222

Howard Penney

Managing Director