Posted on | February 21, 2012
Written by | BevNetwork
Several more checks suggest robust February SSS
Our checks continue to suggest that February restaurant SSS may be surprisingly robust. We wrote last Thursday about strong recent results at two mid-sized, privately held Restaurant concepts. We have subsequently confirmed these positive trends with several other chains across the QSR, Fast Casual and Casual Dining subsectors. This includes four additional privately held chains, each with several hundred locations, as well as PNRA, DIN’s Applebee’s chain, and YUM’s Taco Bell and Pizza Hut brands. This comes on the back of solid December and January results across much of the Restaurant space.
Casual Dining stocks may be a more likely beneficiary
We see these recent results as a solid positive for the Restaurant sector as a whole. However, if these trends hold, we believe Casual Dining stocks may be the primary beneficiary given depressed expectations and relative valuations in the space. QSR stocks are currently trading at a 30% premium to Casual Dining, an historic relative high.
We are reluctant to overhaul our bias towards QSR over Casual Dining until/unless these trends are sustained. This said, given these data points we are warming to Casual Dining, have increased confidence in our DRI Buy call, and incrementally less confidence in our CAKE Sell rating.
Source: Goldman Sachs