• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Takeaway: We’ve been bearish on the casual dining sector since early June, and the latest data doesn't change our opinion.

This note was originally published September 09, 2013 at 11:36 in Restaurants

We’ve been bearish on the casual dining sector since early June and, on Friday, Black Box gave us a look at August sales trends which showed little improvement from an ugly July.

Black Box reported that August 2013 same-restaurant sales declined -0.2%, while comparable traffic trends declined -1.9%—both metrics accelerated 70 bps and 30 bps on a sequential basis, respectively.  These estimates come against August 2012 comps of +1.0% and -1.1%, respectively.

Malcolm Knapp also released his August 4-week estimates this weekend.  Knapp-Track casual dining same-restaurant sales declined -1.7%, while comparable guest counts declined -3.1%.  These results come against full 5-week August 2012 comps of +1.0% and -1.2%, respectively.  Knapp will release his 5-week August estimates later this week.

Currently, consensus estimates for the 24 casual dining chains we track in the space are for 3Q13 same-store sales growth of +1.2% (excluding the DRI brands) versus +1.7% in 2Q13.  For the first two months of 3Q13, Black Box has reported same-store sales of -0.6%.

With September traditionally being a difficult sales month given the back-to-school trends, it is unlikely we will see a significant uptick in same-store sales.

The following companies saw SSS revised down over the past month: BWLD, CBRL, DRI, EATRT.

The following companies saw SSS remain unchanged over the past: BJRI, CAKE, DIN, RRGB, KONA, RUTHTXRH.

CASUAL DINING TRENDS REMAIN WEAK - BBOX chart1

 

CASUAL DINING TRENDS REMAIN WEAK - BBOX chart2

 

CASUAL DINING TRENDS REMAIN WEAK - BBOX chart3