MSSR: GLANCE AT THE 2Q MENU

Here is a look at MSSR guidance going into earnings today.

Comparable-store sales

  • MSSR needs to post a -6.2% comparable restaurant sales number or better in order to maintain or improve two-year average top line trends
  • Per Factset, the Street is expecting a comparable restaurant sales number of -3.5%, which would imply a 135 bps sequential improvement in two-year top line trends.  In fact, with the exception of one estimate of -5%, all of the estimates comprising the Factset estimate are -3%.  A -3% comparable-store sales number would imply a sequential improvement of 160 bps in two-year average top line trends

Guidance

  • Completing 15-20 audio-visual upgrades during 2Q
  • Opening a third Houston, Texas location this summer (three total openings this summer)
  • Revenue for the year between $355 and $365 million
  • Fully diluted 2010 earnings per share are expected to be between $0.40 and $0.45
  • Depreciation and amortization for 2010 is expected to be approximately $16 million
  • G&A is expected to be between $20 and $21 million for 2010
  • Annualized effective tax rate between 10% and 15%
  • Capex for 2010 between $15 and $16 million
  • Beef prices for the company will be 5% to 10% higher this year versus last year

Notable remarks from the most recent earnings call

  • “We believe that driving more traffic through deliberately managing our check average down, driving higher guest satisfaction, and broadening our guest base, will result in higher sales levels on a long-term basis”
  • “Our early weak sales trends on Monday, Tuesday, and Wednesdays are also starting to rebound, which suggests that the business guest base is beginning to strengthen as well”
  • Promotions are responsible for the recent drop in pricing and check
  • Rolling out new menu platform – this had added more value, flexibility, and consumer satisfaction
  • April sales trends were better than March

Howard Penney

Managing Director