CHICAGO, April 19, 2011 /PRNewswire/ -- Today, Zacks
Equity Research discusses the Restaurant Industry, including
BJ's Restaurants Inc. (Nasdaq: BJRI), Chipotle Mexican
Grill Inc. (NYSE: CMG), Buffalo Wild Wings Inc. (Nasdaq:
BWLD) and P.F. Chang's China
Bistro Inc. (Nasdaq: PFCB).
(Logo:
http://photos.prnewswire.com/prnh/20101027/ZIRLOGO)
A synopsis of today's Industry Outlook is presented below. The
full article can be read at
http://www.zacks.com/stock/news/51437/Restaurant+Industry+Stock+Review+-+April+2011
A recent survey by the National Restaurant Association revealed
that the Restaurant Performance Index (RPI), measuring the health
and outlook on the U.S. restaurant industry, was 100.7 in February,
up 0.4% from January. The RPI gain in February connotes
improvements in same-store sales and customer traffic.
The Current Situation Index, which measures comparable-store
sales, traffic counts, labor costs and capital expenditures in the
restaurant industry, was 99.4 in February, up 0.9% sequentially.
The Expectations Index, which measures restaurant operators'
six-month's outlook on the above indicators, stood at 101.9, up
slightly from 101.8 in the prior month. Restaurant operators'
capital spending plans rose to the highest level in 40 months
reaffirming their optimistic outlook on the industry.
Going Forward
Looking ahead, we see solid top-line trends. International
travel to the U.S. also continues to grow. We believe
well-positioned companies will drive above-average traffic trends
and enjoy pricing power, leading to same-store sales increases in
2011. The economy is continuing to improve, albeit at a modestly
lower rate, but a sluggish labor market, over-supply of restaurants
in the industry, higher gasoline prices and food cost inflation may
weigh on industry profitability.
Restaurants have been trying to win back cash-conscious guests
by revamping promotions, offering discounts and focusing on
value-for-meal menus. However, the tendency to offer discounts has
been moderating. We remain cautiously optimistic over the
near-to-medium term, with consumers continuing to look for value,
distinct dining experiences, as well as convenience and enhanced
menu deals in a gradually improving economic backdrop.
Drivers of the Restaurant Industry
The U.S. restaurant industry consists of Quick Service
Restaurants (QSR), Midscale Restaurants, Casual Dining,
Non-Commercial and Fine Dining/Upscale restaurants.
In the midst of what is considered to be a moderate recovery,
there are three potential drivers of net income growth for the
restaurant industry: unit expansion, same-store sales,
cost-containment efforts and marketing tools.
Unit Expansion: In response to an economy that lacks
luster, most of the companies have slowed their pace of restaurant
openings. However, with the expected resurgence of consumer
confidence, companies are turning back slowing to unit expansion,
though not aggressively.
BJ's Restaurants Inc. (Nasdaq: BJRI) plans to open 12 to
13 restaurants in fiscal 2011 compared with 10 restaurants in
fiscal 2010. In the long run, there still exists room to open at
least 300 outlets. Chipotle Mexican Grill Inc. (NYSE: CMG)
plans to open 135–145 new restaurants in 2011, maintaining a growth
rate of 13%.
In fact, the companies are set to explore international markets.
While Chipotle is primarily concentrating on European countries
including U.K., Germany and
France, Buffalo Wild Wings
Inc. (Nasdaq: BWLD) will expand its overseas footprint by
opening more than 50 company-owned and franchised restaurants in
Canada over the next 5 years.
Another restaurant, P.F. Chang's
China Bistro Inc. (Nasdaq: PFCB) has also eyed the Canadian
market.
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