News You Can Chew On

There always seems to be restaurant news on the menu. As I do every Friday, let's take a look at some of this week's more appetizing stories.

1. On the Brinker of danger
Casual dining bellwether Brinker International (NYSE: EAT) had more bad news last night. The company behind Chili's Grill & Bar is lowering its guidance for fiscal 2009.

The reporting year is off to a bad start, with Brinker expecting to post a profit of just $0.19 a share or $0.20 a share for its fiscal first quarter that concluded two weeks ago. The company is calling its new Honey Chipotle Chicken Crispers promo "successful," but with comps off by 3% at its flagship concept, winning diners with sweetened, spicy poultry isn't enough.

2. International House of Pound Cake
Is any table service concept actually growing at the unit level? Sure. DineEquity's (NYSE: DIN) IHOP has posted positive comps for 23 consecutive quarters. The streak may be coming to an end, though. The pancake flipper posted a mere 0.2% increase in same-store sales for its latest quarter.

The same can't be said for DineEquity's Applebee's acquisition. Comps there fell by 3.1% during the quarter that ended in September. It kind of makes you wonder if IHOP bit off more than it can top with maple and fork down when it teamed up with Applebee's to create DineEquity.

3. Don't tell China
How do you say "Hot Doughnuts Now" in Mandarin? Krispy Kreme (NYSE: KKD) is joining forces with a Korean conglomerate to open 35 doughnut shops in China. Yes, Krispy Kreme may have burned investors, some franchisees, and several calorie counters, but you never know which concepts will thrive overseas.

4. Goodbye, Ruby Tuesday
Casual dining chain Ruby Tuesday (NYSE: RT) -- yes, the eatery that is poking fun at its past restaurant decor choices in promoting its new look and menu -- also dropped the serving tray. It posted a crushing 97% slide in profits for its latest quarter.

If the chain needs a new Rolling Stones song to inspire a more fitting moniker, I think "Start Me Up" is a good fit.

5. Belly up to the burger bar
The Whopper Bar is coming. Burger King (NYSE: BKC) introduced the concept -- offering up a wider array of signature burgers in a smaller, hipper footprint -- back in March. The country's second-largest burger chain didn't spell out an execution strategy at the time, but it is now. The first Whopper Bar will have a springtime opening next year within the Universal Orlando resort in Florida.

It's a great location, out in the Citywalk entertainment complex that straddles the entrance turnstiles to the resort's two theme parks. It will give Burger King a great cross-section of locals and out-of-towners to see if there is enough demand in the concept to take it to the next level.

6. Taking out the Landry's
Remember when Landry's (NYSE: LNY) head honcho Tilman Fertitta was set to take his seafood empire private at $21 a share? Well, the faltering state of casual dining and the credit markets finds Fertitta now negotiating to buy the company at a much lower price.

There's a big lesson on risk to learn in the Landry's fallout. With the stock down in the low teens before Fertitta went public with resetting his buyout price, speculators probably thought they were getting a great deal in buying a stock at $14 that would be cashed out at $21 in a few months. Wide spreads don't lie, though. The market knew that something was up. What's down? Landry's stock, for starters.

7. Doing the Colonel proud
Let's close on an upbeat note, as Yum! Brands (NYSE: YUM) came through with a 16% increase in earnings per share before special items. The company is targeting 12% bottom-line growth for all of 2008.

Clearly the fast-food chains are doing better than their pricier casual-dining cousins. Are we now just months away from fine-dining bistros and upper-crust chophouses beginning to install drive-thru lanes and dollar menus? Let's hope not.

Check out this week's dessert specials:

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Longtime Fool contributor Rick Munarriz is the rare foodie who embraces restaurant chains. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

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