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
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.
Howard Penney
Managing Director
Rory Green
Analyst
