Notable news items and price action from the restaurant space including our fundamental view on select names.
- DRI - Red Lobster is focusing on value this summer with the limited-time offer of a $15 four-course meal. The “$15 Seafood Feast” includes soup, salad, entrée, dessert and unlimited Cheddar Bay Biscuits and runs through July 25th
- SBUX signed a deal with Chinese joint-venture partner Maxim’s Caterers Ltd., which gives the coffee company full ownership of Starbucks retail outlets in six Chinese regions.
- CMG was reiterated “Buy” with the headline “CMG: A $1,000+ Stock by Decade’s End?” This is based on CMG’s strong comps and unit growth continuing to approximately 6,000 worldwide.
- YUM CEO David Novak, speaking at an investor conference, says that the company’s acquisition strategy is focused on China. The company, he says, is not interested in U.S. brands. Food costs and labor inflation were also highlighted as challenges in China.
- YUM supporting the use of food stamps in KY. Under the federal food-stamp program, states may authorize that elderly, disabled or homeless people, who often have difficulty preparing meals, can use food stamps in restaurants. Three other states — Michigan, Arizona and California — already allow such purchases.
- Also speaking yesterday was MCD CEO Jim Skinner. He said that MCD will open 175-200 stores in China this year with a focus on more drive-thrus.
- McDonald’s Issuing Coffee Apology in Australia for serving bad coffee. It should be noted that the McCafé concept originated in Australia in 1993
- A new strain of E coli is causing fears in Europe. 17 people have died due to infection and hundreds, primarily in Germany, have fallen ill due to the bacteria.
- The vast majority of restaurant names declined yesterday. JACK, AFCE, PZZA, BOBE, and MSSR traded down on strong volume.
- RRGB and DIN were the only names that we monitor to gain yesterday. DIN was up 30 bps while RRGB gained 3.2%.