Restaurant Stocks Portfolio - Stockpickr! Your Source for Stock Ideas

Restaurant Stocks

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Created by arnabdgp

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Date updated:04-25-2007

We remain selective on the restaurant sector in 2007, with ongoing challenges from the current/operating environment.Rising corn and feedstock prices along with cyclical changes and food-industry capacity rationalization will likely continue to impact proteins (beef and chicken being primary restaurant inputs), as we look out toward 2008. Many restaurant companies have 2007 contracts at prices below current spot-market levels, but appear to be staring at material "reinvestment risk" as they look out to next year.We received what could be an "early shot across the bow" yesterday as Brinker International (EAT) discussed food-cost pressures in some of its contracts that expire with its coming June fiscal year end.
Given the above-mentioned food-cost pressures as well as labor-costs pressures (from state and likely federal minimum-wage increases), we remain cautious regarding the stocks, particularly casual-dining names, many of which continue to have negative same-store sales.The quick-service restaurants sector appears to be better positioned, given positive sales trends and franchise business models, which provide some degree of inflationary protection. Price increases are one way to help offset food costs, but the current casual-dining sales environment makes this lever harder to pull.
Banc of America Securities

EAT
Brinker Intl Inc
$13.53
-0.07%
$13.39

No Analysis added

People owning EAT also tend to own: HOG AAPL CEG CSCO EMR FPL HP

TheStreet.com Rating: C What is this?

APPB
Appb
$0.00
N/A
$N/A

No Analysis added

People owning APPB also tend to own: DXYN FRN IPAS NABI PCNTF PFCO PRCS

TheStreet.com Rating: No Rating What is this?

DRI
Darden Restaurant
$32.65
-0.40%
$32.72

No Analysis added

People owning DRI also tend to own: AAPL CBRL AKS BFB BTU CHE CHK

TheStreet.com Rating: B- What is this?

OSI
Osi
$0.00
N/A
$N/A

No Analysis added

People owning OSI also tend to own: BKC CASA HNZ LSS MCD PZZI WEN

TheStreet.com Rating: No Rating What is this?

CAKE
The Cheesecake Fa
$18.37
-0.22%
$18.12

No Analysis added

People owning CAKE also tend to own: BBBY EXP GE MSFT XOM BEN C

TheStreet.com Rating: C+ What is this?

PNRA
Panera Bread Comp
$61.39
-0.03%
$60.94

No Analysis added

People owning PNRA also tend to own: SHFL SIRI UTX XMSR BAM BBD BWF

TheStreet.com Rating: B What is this?

RUBO
Rubio's Restauran
$6.90
-4.56%
$7.08

No Analysis added

People owning RUBO also tend to own: CLF CNE ENT FCX GS LMC NSTK

TheStreet.com Rating: C What is this?

CHUX
O'charley's Inc.
$7.27
-4.97%
$7.65

No Analysis added

People owning CHUX also tend to own: DENN F BBY HYEG.OB INTC REST SYNO

TheStreet.com Rating: D What is this?

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