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Monday Mashup: YUM, RUTH and More - 1

Recent Notes

11/17/14 Monday Mashup: LOCO, BLMN and More

11/18/14 MCD: An Activist's Dream? Not So Fast.

11/19/14 Jack and Qdoba

11/20/14 DRI: Still Lacking Direction

11/21/14 Please Join Hedgeye for Holiday Cocktails & Appetizers

Events This Week

Tuesday, November 25th

  • CBRL earnings call 11am EST

Chart of the Day

Monday Mashup: YUM, RUTH and More - 2

Recent News Flow

Monday, November 17th

  • LOCO commenced a proposed public follow-on offering of its common stock.  The lead book-running managers (Jefferies and Morgan Stanley) in the IPO waived a lock-up restriction for shares held by certain selling stockholders, including some directors and officers of El Pollo Loco.
  • RUTH announced its agreement to sell Mitchell's Restaurants to Landry's for $10 million.  In the deal, Landry's will receive 18 Mitchell's Fish Market restaurants as well as three Cameron's Steakhouse restaurants.  RUTH purchased Mitchell's Restaurants in February 2008 for $92 million.
  • CMG The Chipotle Cultivate Foundation awarded a $500,000 grant to the International Rescue Committee in show of its continued support.  The grant is intended to help finance the expansion of IRC's MicroProducer Academy, which aims to help "refugee farmers adapt existing agricultural skills to an urban American environment and marketplace, all while improving their access to healthy, locally grown foods."
  • WEN announced the return of its Bacon Portabella Melt on Brioche for a limited-time.  The sandwich will be available for a recommended price of $4.99.

Tuesday, November 18th

  • BOBE initiated buy at APB Financial with a $75 PT.
  • PLKI announced the release of four new Coca-Cola Limited Edition Holiday Collector Cups.  The cups will be free with any 32 oz. beverage purchase and will be available through December 31st.
  • BJRI announced the opening of its newest restaurant in Fort Meyers, FL (Gulf Coast Town Center).  The 7,300 sq. ft. restaurant seats approximately 225 guests.  This marks BJ's 11th restaurant opening this year and its 19th restaurant in Florida.

Wednesday, November 19th

  • JMBA launched Jamba eGifting, which allows customers to purchase Jamba Juice gift cards online. 

Thursday, November 20th

  • YUM upgraded to buy at Janney Capital with an $88 PT.
  • CMG launched a new mobile app for smart phones and tablets that allows job applicants to apply from their phones.  The company reportedly received 5,000 mobile applications within the first week of its launch.
  • LOCO announced the pricing of its public follow-on offering by selling stockholders of 6 million shares of common stock at $27.00 per share.
  • HABT The Habit Restaurants IPO opened at $30 on the Nasdaq.  The 5 million share IPO was originally priced at $18.00 per share, above its expected $14.00 to $16.00 range.
  • CBRL announced it expects to serve approximately 1.4 million meals over the nine day Thanksgiving holiday season, noting that Thanksgiving is typically the busiest day of the year for its restaurants. 
  • SONC announced a multi-year endorsement agreement with the Oklahoma City Thunder, and NBA Superstar, forward Kevin Durant.  Durant is expected to serve as a national brand ambassador, to aid in the development of balanced menu, and to promote co-branded philanthropic efforts.
  • TXRH announced a quarterly dividend of $0.15 per share, payable on January 2, 2015 to shareholders of record by December 17, 2014.
  • BOBE announced a quarterly dividend of $0.31 per share, payable on December 15, 2014 to shareholders of record by December 1, 2014.
  • YUM announced the authorization of up to $1 billion in share repurchases through May 31, 2016.  The company has repurchased 9.4 million shares, totaling $691 million, year-to-date.
  • DENN announced the reopening of its remodeled Las Vegas Casino Royale restaurant.  It is historically Denny's highest volume company-owned restaurant and now features an updated look and feel with expanded capacity to accommodate approximately 300 guests.

Friday, November 21st

  • PZZA announced two new limited-time offers, the Philly Cheesesteak Pizza and the Red Kettle Cookie, that will be available on the menu from November 24 through December 28.

Sector Performance

  • The XLY (+1.2%) performed in-line with the SPX (+1.2%) last week, as both casual dining and quick service stocks, in aggregate, underperformed both benchmarks.

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XLY Quantitative Setup

From a quantitative perspective, the sector remains bullish on an intermediate-term TREND duration.

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Casual Dining Restaurants

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Monday Mashup: YUM, RUTH and More - 7

Quick Service Restaurants

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Howard Penney

Managing Director

Fred Masotta

Analyst