BWLD Buffalo Wild Wings, Inc. (delisted)

CHICAGO, Jan. 12, 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 Darden Restaurants Inc. (NYSE: DRI).

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A synopsis of today's Industry Outlook is presented below. The full article can be read at http://www.zacks.com/stock/news/45797/Restaurant+Industry+Stock+Review+%96+Jan.+2011

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 (SSS) and cost-containment efforts.

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 third quarter of 2010, BJ's opened 4 restaurants and 2 are scheduled for the fourth quarter. In the long run, there still exists room to open at least 300 outlets.

By the end of fiscal 2010, Chipotle Mexican Grill Inc. (NYSE: CMG) plans to open 122 to 130 new restaurants, reflecting year-over-year net growth of 12.6% to 13.6%. For 2011, the company expects 135–145 new restaurants, maintaining a growth rate of 13%.

In fact, the companies are all set to explore international markets. While Chipotle is primarily concentrating on European countries including the U.K., Germany and France, Buffalo Wild Wings Inc. (Nasdaq: BWLD) is expanding its footprint outside the U.S. by opening more than 50 company-owned and franchised restaurants in Canada over the next 5 years. Darden Restaurants Inc. (NYSE: DRI) also announced a formal area development agreement with Americana Group to develop and operate in the Middle East.

Same-Store Sales: The second driver consists of menu price increases and traffic counts. Restaurant operators reported positive same-store sales and customer traffic growth in recent months and remain optimistic about sales growth in the months ahead. Growth in menu price has accelerated, as per figures from the Bureau of Labor Statistics.

Cost-Containment Efforts: Some cost cuts have been achieved through integrated information systems, including point-of-sale, automated kitchen display, labor-scheduling and theoretical food cost systems.

Over the last five years, Darden has been able to keep its restaurant operating cash flow margins stable at 22%−23%, despite the current economic headwinds.

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