Knapp released his casual dining same-restaurant sales estimate for February and the results confirmed the trend implied by the sequentially-worse Black Box data we saw earlier in the month.  The Knapp Track same-restaurant sales and traffic numbers were the worst since September '09 and July '09, respectively.

Knapp Sequential Moves

February estimated Knapp Track same-restaurant sales growth came in at -5.4%.  If the accounting period number is unchanged from the estimate, that will imply a sequential change in the two-year average trend of -240 bps.  This would be the most significant sequential slowdown in the two-year average trend since December 2009.  It is important to note, however, that Knapp believes that snowstorms caused a drop of 1-1.5% in same-restaurant sales in February.

February estimated Knapp Track same-restaurant traffic growth came in at -6.3%.  If the accounting period number is unchanged from the estimate, that will imply a sequential change in the two-year average trend of -250 bps.  This would be the most significant sequential slowdown in the two-year average trend since December 2009. 

Stock Prices Couldn’t Care Less

Perhaps in anticipation of sunnier times ahead, investors seem to be buying a casual dining recovery that is yet to materialize.  We continue to like Darden and Brinker, for very different reasons, but believe that many casual dining names are up on a rope at this point.  BWLD is one name we would avoid on the long side despite some recent strength that was prompted by decreasing wing prices.

Casual Dining Trends Not Spooking Stocks - KNAPP VS CAS INDEX

Howard Penney

Managing Director

Rory Green

Senior Analyst