This note was originally published March 19, 2013 at 09:31 in Restaurants
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 bases points. 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.