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Monday Mashup: DFRG, EAT and More - 1

Notable Callouts

  • We removed DFRG and EAT from our Investment Ideas list as shorts in a note last week.  CLICK HERE to access the note.

Recent Notes

10/06/14 Monday Mashup: PBPB, MCD and More

10/09/14 DFRG, EAT: Covering Our Shorts Given Strong Knapp Sales

10/10/14 Estimates Are Heading Higher

Events This Week

Tuesday, October 14th

  • DFRG earnings call 8:30am EST
  • DPZ earnings call 10:00am EST

Thursday, October 16th

  • SAFM Investor Day 9:00am EST

Chart of the Day

Black Box reported the strongest monthly same-store sales and traffic data in September since 1Q12.

Monday Mashup: DFRG, EAT and More - 2

Recent News Flow

Monday, October 6th

  • BWLD downgraded to neutral from outperform at Wedbush with a $135 PT.
  • BKW upgraded to overweight at Morgan Stanley with a $38 PT.
  • MCD downgraded to equal-weight at Morgan Stanley with a $96 PT.
  • JMBA entered into a master franchise development agreement with Quan Hung Gourmet company to develop 35 stores in Taiwan over the next ten years, effectively securing its 11th international market.
  • BAGL JAB Holding Company commenced its tender offer for all outstanding shares of Einstein Noah Restaurant Group at a price of $20.25 per share.

Tuesday, October 7th

  • YUM WSJ's Ahead of the Tape column was negative on YUM, citing a same-store sales slump in China due to the recent supply issuer and subsequent publicity surrounding the event.
  • GMCR was initiated buy at Goldman Sachs with a $166 PT. 

Wednesday, October 8th

  • CMG announced a partnership with Slow Food USA to create or support ~100 school gardens in 10 metropolitan areas across the country.
  • BAGL announced the launch of two new gourmet chicken sandwiches (Bavarian Chicken Sandwich, Napa Valley Chicken Sandwich) now available at Einstein Bros Bagels and Noah's New York Bagels nationwide.

 Thursday, October 7th

  • TXRH Chairman and CEO Kent Taylor was named Operator of the Year during the MUFSO Industry Awards Gala in Dallas.
  • TAST completed its previously announced acquisition of 30 Burger King restaurants in North Carolina for ~$20 million in cash.
  • LOCO celebrated the grand opening of its newest restaurant located at 8428 Elk Grove Florin Road at Calvine Road in Elk Grove, CA.  This is the 16th El Pollo Loco in the Sacramento area.

Friday, October 8th

  • DRI Shareholders elected all 12 Starboard-nominated directors to Darden's board.
  • BOBE elected Mary Kay Haben as Non-Executive Chair, while Steven Davis will remain CEO and a director.  Mary Kay Haben joined the Bob Evans board in 2012 and most recently served as President, North America for the Wm. Wrigley Jr. Company from 2007-2011.  She currently sits on the board of The Hershey Company and Equity Residential.

Sector Performance

The XLY (-3.6%) underperformed the SPX (-3.1%) last week.  Both quick-service and casual dining stocks, in aggregate, outperformed the SPX.

Monday Mashup: DFRG, EAT and More - 3

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XLY Quantitative Setup

From a quantitative setup, the sector remains bearish on an intermediate-term TREND duration.

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Casual Dining Restaurants

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Monday Mashup: DFRG, EAT and More - 7

Quick Service Restaurants

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Call with questions.

Howard Penney

Managing Director

Fred Masotta