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Monday Mashup: BOBE, RT and More - 1

Recent Notes

12/15/14 Monday Mashup: DRI, BLMN and More

12/17/14 DRI: Expectations for a Recovery are Premature

12/18/14 Call Invite | Statement Analysis - Putting Companies Through a Linguistic Polygraph Test

12/18/14 DNKN Debacle & Parallels to SBUX


Events This Week

Tuesday, December 23rd

  • Hedgeye Call with Mark McClish at 11am EST (Putting Companies Through a Linguistic Polygraph Test)

Chart of the Day

Monday Mashup: BOBE, RT and More - 2

Recent News Flow

Monday, December 15th

  • BOBE announced CEO Steve Davis has stepped down by mutual agreement with the board, effective immediately.  The board has established an interim office of the chief executive (CFO Mark Hood, BEF President Mike Townsley) to provide ongoing leadership and oversight while they search for a new CEO.
  • DRI was upgraded to market perform from underperform at Telsey Advisory Group with a $54 PT.
  • COSI announced completion of its previously announced rights offering.  Cosi anticipates issuing 13.3 million common shares for gross proceeds of $20 million.

Tuesday, December 16th

  • RT preannounced same-restaurant sales and traffic declines of -1% and -1.3%, respectively.  This compares to same-restaurant sales guidance provided in early October of up +1-2% for the second fiscal quarter.  RT is scheduled to release full second quarter earnings on January 8, 2015.

Wednesday, December 17th

  • PBPB announced it has signed an agreement with a franchisee to develop Potbelly shops in London.  The company expects the franchisee to open 10 Potbelly shops in London over the next five years.
  • KKD announced Jim Morgan will transition from Executive Chairman of the Board to non-executive Chairman of the board, effective January 29, 2015.
  • WEN announced several changes to executive assignments among members of the current Senior Leadership Team that are designed to drive growth and restaurant development for the company.  You can read more about the changes here.
  • QSR announced the appointment of executive officers of Tim Hortons.  Elias Diaz-Sese, former president of BK AsiaPac, was appointed President, Tim Hortons.  Jill Granat, former Senior Vice President, General Counsel, and Secretary of Burger King Worldwide, was appointed General Counsel and Corporate Secretary, Tim Hortons.
  • LOCO celebrated the opening of its newest location at Copperfield in Houston, TX.

Thursday, December 18th

  • DNKN offered up disappointing guidance for both 4Q14 and FY15.  It expects Dunkin’ Donuts U.S. full-year same-store sales growth to be approximately +1.4% in 2014, below the current +1.8% consensus estimate.  This guidance implies that 4Q same-store sales are running in the +0.5-0.8% range, well below the current +2.2% consensus estimate.  In 2015, the company expects to deliver full-year same-store sales growth of +1-3% in the U.S and adjusted EPS of $1.88-1.91 (current consensus estimate is $2.02).
  • COSI holder AB Value Management filed to sell its total stake, 550K shares, through BTIG.  The transaction is expected to occur by December 30th.

Sector Performance

The SPX (+3.4%) outperformed the XLY (+1.2%) last week, as both casual dining and quick service stocks, in aggregate, underperformed the XLY Index.

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XLY Quantitative Setup

The XLY continues to be bullish on an intermediate-term TREND duration.

Monday Mashup: BOBE, RT and More - 5

Casual Dining Restaurants

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Monday Mashup: BOBE, RT and More - 7

Quick Service Restaurants

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Howard Penney

Managing Director

Fred Masotta