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Monday Mashup: LOCO, BLMN and More - 1111

Recent Notes

11/10/14 Monday Mashup: Covering CHUY

11/10/14 MCD: October Sales Weak

11/13/14 PLKI: World-Class Quarter

Events This Week

Tuesday, November 18th

  • Morgan Stanley Global Consumer & Retail Conference: CAKE, SONC, JACK
  • PZZI Annual General Meeting

Wednesday, November 19th

  • Morgan Stanley Global Consumer & Retail Conference: MCD, DPZ, NDLS, TSN, DNKN, GMCR
  • JACK earnings call 11:30am EST
  • GMCR earnings call 5:00pm EST

Thursday, November 20th

  • ZOES earnings call 5:00pm EST

Chart of the Day

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Recent News Flow

Monday, November 11th

  • RRGB announced it is two weeks away from opening its newest restaurant in Tracy, CA, in the state's Central Valley.
  • BLMN announced a secondary public offering of common stock, as Bain Capital Partners sold an aggregate of 18,307,782 shares of the company's common stock to Goldman, Sachs & Co.

Tuesday, November 12th

  • DRI upgraded to buy from hold at KeyBanc with a $62 PT.
  • CAKE announced the opening of its newest restaurant at the CoolSprings Galleria in Franklin, TN, a suburb of Nashville.  The new store is approximately 8,700 square ft. and accommodates approximately 215 guests.
  • CBRL downgraded to hold from buy at Miller Tabak with a $120 PT.

Wednesday, November 13th

  • BBRG announced the commencement of a modified "Dutch auction" tender offer to purchase up to $50 million in value of its common shares.  This tender offer will be financed from borrowing under BBRG's new, five-year $100 million senior secured credit facility.

Thursday, November 14th

  • BJRI announced the opening of its newest restaurant in Laurel, MD, on Monday, November 10th.  The restaurant is approximately 7,300 square ft. and accommodates approximately 225 guests.
  • LOCO celebrated the opening of its newest restaurant in Roseville, CA.  This is the 17th El Pollo Loco in the Sacramento area and the third opening in the last months.  LOCO is targeting 8-10% unit growth annually in Sacramento, which it considers a key expansion market.
  • DRI announced it will terminate its shareholder rights plan, effective November 28th, as part of its corporate governance reform.  It also announced several changes including, but not limited to: termination of the "poison pill," majority voting standard for election of directors, a 10% voting threshold to call a special meeting, and elimination of supermajority vote for certain charter amendments.

Sector Performance

The XLY (+1.9%) outperformed the SPX (+0.4%) last week.  Both casual dining and quick service stocks, in aggregate, underperformed the XLY.

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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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Quick Service Restaurants

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Howard Penney

Managing Director

Fred Masotta

Analyst