McCormick & Schmick's Hooks a Big One

Seafood restaurant operator McCormick & Schmick's (Nasdaq: MSSR  ) posted some seriously tasty numbers in its second-quarter earnings results.

Net revenue rose 16.8% year over year. Restaurants open for more than a year contributed a 2.3% increase in same-store sales. The rest of the growth came from 11 new restaurant locations, as well as five recently acquired The Boathouse locations.

Top-line growth was solid, but I found M&S's profitability performance its most impressive trait. During the conference call, management admitted that the second quarter faced a difficult environment in terms of commodity pressures; seafood and dairy prices alike were higher than year-ago levels. To offset these pressures, management used innovative measures.

For instance, chefs employed more salsas in place of dairy-based sauces. Also, menus introduced "higher-end premier" fish entrees; at least for now, customers were willing to pay up for them. As a result of these measures, restaurant operating costs as a percentage of net revenues actually declined to 83.5%, from 83.7% in the year-ago period.

Growth has been solid so far, but this ship isn't porting anytime soon. With only 73 McCormick & Schmick's in operation, there is plenty wind left in the company's sails. Management will focus development efforts to fill out existing markets and expand into new ones. Look for 50% restaurant unit growth in 2008.

McCormick & Schmick's isn't the only full-blown seafood operator in town -- among others, Darden Restaurants' (NYSE: DRI  ) Red Lobster and Landry's (NYSE: LNY  ) target the value end, while OSI Restaurants' Bonefish Grill is a little more upscale. Despite these challengers, and the constant threat of steak-focused locations shifting to a greater seafood mix, McCormick & Schmick's recipe appears to be resonating with customers.

Motley Fool CAPS has McCormick & Schmick's listed a prime catch, giving it the maximum five-star rating. It looks like some Fools had their bait in the right investment waters. It's time for the rest of us to start paying attention.

Does McCormick & Schmick's deserve such a high ranking? Join CAPS and voice your opinion today -- it's free and fun!

Fool contributor Jeremy MacNealy didn't have his bait in the right waters -- he had no financial interest in McCormick & Schmick's or any other company mentioned. The Motley Fool's disclosure policy tips the scales.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 533569, ~/Articles/ArticleHandler.aspx, 10/25/2016 12:11:46 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,178.28 -44.75 -0.25%
S&P 500 2,144.67 -6.66 -0.31%
NASD 5,288.34 -21.49 -0.40%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/25/2016 11:55 AM
DRI $61.51 Down -1.80 -2.84%
Darden Restaurants CAPS Rating: ***
LNY.DL2 $0.00 Down +0.00 +0.00%
Landry's Restauran… CAPS Rating: *