Investment Ideas
Recent Notes
06/30/14 Monday Mashup: DNKN, NDLS and More
07/02/14 DFRG: A Castle-in-the-Air
Events This Week
07/08/14 BOBE earnings release 4:00pm EST
07/09/14 BOBE earnings call 10:00am EST
Chart of the Day
With BOBE set to release earnings tomorrow after the close, we thought we’d take a close look at the value destruction the current Board and management team have perpetuated since mid-2012. We are expecting a disappointing release and would be buyers on any negative news. BOBE remains our highest conviction long idea. We run through our long thesis in this slide deck.
Recent News Flow
Monday, June 30th
- DIN Applebee’s brought back its Take Two menu for a limited time, giving guests the ability to pair any two selections from its Taste of Summer menu, starting at $10.99.
- NDLS debuted catering in Colorado.
- RRGB eliminated the position of COO, currently held by Eric. C. Houseman, in an internal restructuring. Houseman’s employment will end on or around August 1st.
Tuesday, July 1st
- WEN announced the return of its #PretzelLoveSongs campaign, in which the company takes select social media posts and turns them into lyrics of songs. This year, the songs will be performed in a series of music videos by Boyz II Men and Jon Secanda.
- NDLS unveiled plans to add a floating server at its stores in order to drive dessert and drink sales. CEO Kevin Reddy expects this addition to the restaurants will result in a 3% boost in same-store sales. Noodles & Company has been testing the floating server in select restaurants for the past two years and plans to roll out the program system-wide by 2016.
Wednesday, July 2nd
- No significant news.
Thursday, July 3rd
- BOBE holder Sandell reported a 8.4% beneficial ownership in the company.
- CAKE announced plans to celebrate National Cheesecake Day on July 30th and 31st by offering any slice of cheesecake at half price.
Friday, July 4th
- No significant news.
Sector Performance
The XLY (+1.7%) outperformed the SPX (+1.0%) last week. Both casual dining and quick service stocks underperformed the SPX Index.
XLY Quantitative Setup
From a quantitative perspective, the sector remains bullish on an intermediate-term TREND duration.
Casual Dining Restaurants
Quick Service Restaurants
Howard Penney
Managing Director
Fred Masotta
Analyst