THE HBM: MCD, TAST, BWLD

THE HEDGEYE BREAKFAST MONITOR

MACRO NOTES

Restaurant Industry Starting to Simmer

The restaurant industry is in good health, according to GE Capital.  As sales trends improve, according to the company, operators are translating those positive feelings into a greater willingness to invest in their businesses.  The article also notes that for 21 consecutive months, consumers have spent more at restaurants than grocery stores, and the trend is expected to continue.

SUBSECTOR PERFORMANCE

THE HBM: MCD, TAST, BWLD - subsector

 

QUICK SERVICE

MCD: McDonald’s filed a document with the SEC yesterday with additional details regarding its CEO transition.  As part of his promotion, Thompson will receive a 26% increase in base pay, to $1.1 million.  The hike, no doubt, is to compensate for the pressure he is coming under to maintain the momentum of the Skinner years.

MCD: McDonald’s was rated new “Neutral” at Atlantic Equities.  The target price is $102 per share.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

TAST: Carrols Restaurant Group gained 12.5% on accelerating volume as news emerged that the company has agreed to acquire 278 company-owned Burger King restaurants through an asset purchase agreement with Burger King Corp.

CASUAL DINING

BWLD: Buffalo Wild Wings was downgraded to “Hold” from “Buy” at Deutsche Bank.  The PT is $100 per share.

NOTABLE PERFORMANCE ON ACCELERATING VOLUME:

BWLD: Buffalo Wild Wings ripped higher yesterday on new analyst optimism.  Sales desks on the Street cited Ohio State’s progress to the final four of the NCAA basketball tournament, 2011 executive compensation, and even the progress of Louisville and Kentucky to the final four, as being indicative of strong fundamentals in BWLD’s business.  Louisville was cited as the city where BWLD is based which, of course, is incorrect.  Besides that chatter, Stephens Inc. upped its price target on expectations of a strong 1Q. 

BJRI: BJ’s restaurants gained 6.7% on accelerating volume.

RT: Ruby Tuesday is trading well into earnings next week.

THE HBM: MCD, TAST, BWLD - stocks

Howard Penney

Managing Director

Rory Green

Analyst