By
Lawrence A. Rothman, CFA
|
More Articles
September 5, 2007
|
You can't satisfy everyone. Some customers may leave grumbling that Bob Evans Farms (Nasdaq: BOBE ) increased its prices from last year, but the restaurateur sure did serve up some satisfying results to its investors.
Despite the average 2.6% rise in menu prices, same-store sales in August at Bob Evans' namesake stores grew by a solid 4.3%. People will typically pay more for what they like, of course, and by keeping fresh and innovative products in the menu mix, such as the new Country Stir-Fry, management kept customers coming back for more.
However, it looks as though people weren't willing to shell out the extra 3.9% in menu prices to sit down at the company's Mimi's Cafe stores, where comps fell 1.9%. That chain has run into difficulties, more in line with the trend that seems to be forming in much of the casual-dining sector, triggered by higher gas and food prices that have stalled consumer spending. You wouldn't want to dine on Brinker's (NYSE: EAT ) latest results, for example. The numbers at O'Charley's (Nasdaq: CHUX ) were hard to swallow, too, and it was also a not-so-hopped-up quarter at Applebee's (Nasdaq: APPB ) .
Bob Evans' management is not oblivious to Mimi's struggles, and it's looking for strategies to rejuvenate the chain's performance, such as including curbside service, rolling out new promotional activities, and strategizing its menu mix with appetizers and bar items.
I'm willing to give Bob Evans the benefit of the doubt. The company is taking positive steps to improve its Mimi's Cafe business, even though its sluggish performance is of lesser importance because Bob Evans restaurants outnumber Mimi's locations five-to-one. However, at a trailing P/E of nearly 20, the stock is not extremely cheap. So for now, even though offering fresh food at decent prices will never go out of style, this company looks more appealing to me as a consumer than as an investor.
Other appetizing Foolishness:
RSS Headlines
Fool UK