For Immediate Release
Chicago, IL – June 6, 2013 – Today, Zacks Equity Research discusses the U.S. Restaurants, including Burger King (BKW), Krispy Kreme Doughnuts Inc. (KKD), Domino Pizza Inc. (DPZ) and Texas Roadhouse (TXRH).
A synopsis of today’s Industry Outlook is presented below. The full article can be read at
Link: http://www.zacks.com/commentary/27609/restaurant-stock-outlook-june-2013
Not all companies performed equally well in the quarter. While some were laggards, others posted solid results mostly on their individual strength. Thanks to favorable weather last year, many restaurateurs faced tough comparisons in the first quarter and failed to exceed the year-ago quarter's solid comparable sales numbers. Most of the chains posted weaker-than-expected revenue numbers, but, on a bullish note, managed to score on earnings owing to cost savings and policies such as share repurchase. Operators blamed a softer economic trend for the insignificant growth in revenues.
Industry behemoth McDonald’s delivered weaker-than-expected results in the first quarter on both counts, while another renowned operator, Yum! Brands, registered weak sales owing to the recent ordeals in its China business. However, we believe both companies will rebound over the longer term, once global issues subside.
Some other notable companies like Brinker beat earnings but missed revenues. Burger King's (BKW) earnings were in-line but revenues outperformed. Krispy Kreme Doughnuts Inc. (KKD), Domino’s Pizza Inc. (DPZ) and Texas Roadhouse (TXRH) beat both revenues and earnings. Same-store sales growth at Krispy Kreme, Domino’s, Jamba, AFC Enterprises and Panera deserves a mention.
Road Ahead
According to the National Restaurant Association, the restaurant industry is projected to expand in 2013 on the back of U.S. recovery, albeit at a slow pace. Like 2012, focus on cost containment, extra value-for-price and international expansion will be on most restaurateurs' wish-list to tide over the some macro difficulties this year.
According to the National Restaurant Association, as much as 41% of restaurant operators expect to see an uptick in sales in the coming six months on an improving economy. Restaurant operators' capital spending plans are also riding uphill, reaffirming their positive outlook. We are optimistic of bottom-line expansion in the near term.
The National Restaurant Association estimates a 3.8% year over year increase in total restaurant sales to $660.5 billion in 2013. However, inflation-adjusted sales suggest only 0.8% growth. If realized, this would mark the third straight year of above $600 billion total industry sales. The limited-service eating-place segment will likely grow faster than the full-service restaurant segment.