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.
Howard Penney
Managing Director
