Fine Dining May Have Saved Del Frisco's Restaurant Group

A closer look at Del Frisco reveals some interesting metrics.

May 30, 2014 at 2:00PM

Source:  Del Frisco

Steak, steak, and more steak. That's what each of Del Frisco's Restaurant Group's (NASDAQ:DFRG) three restaurant concepts serves a lot of. While its first-quarter earnings results look pretty good, a look below the surface suggests that one concept carried the other two. A quick peek at Bloomin' Brands (NASDAQ:BLMN) reveals a similar dynamic.

The thick, juicy results
Del Frisco reported fiscal first-quarter results on April 29. Revenue increased 11.4% to $66.6 million. Same-store sales popped 1.6% on a calendar basis. GAAP net income soared 25% to $4.5 million or $0.19 per diluted share.

Mark S. Mednansky, CEO of Del Frisco's Restaurant Group, pointed out that the strength came from positive same-store sales at Del Frisco's Double Eagle, the company's fine-dining chain. The other two more-casual chains suffered as a result of "weaker trends" and the harsh winter weather.

Fine dining only, please
Bloomin' Brands saw something slightly similar. Bloomin' Brands owns five different main restaurant concepts but its smaller fine-dining steak house reported the best performance. However, its casual steakhouse, Outback, managed to tick up a bit with 0.8% growth in same-store sales. Given that reality, it's a bit concerning that Del Frisco's casual restaurants couldn't go positive, although Elizabeth Smith, CEO of Bloomin' Brands, did describe the environment as "challenging."

Del Frisco's Double Eagle did perform rather strongly with a 5.1% jump in same-store sales even though all of that stemmed from a higher average check size. Maybe guests spent more time inside ordering desserts and coffee to stay warm? Either way, it was the 17th quarter in a row of positive same-store sales growth. Del Frisco should focus on expanding this brand by adding its locations specifically as it currently accounts for only 10 of the company's 40 restaurants. For Bloomin' Brands, its fine-dining concept is its smallest chain as well.

Source:  Bloomin' Brands

Going forward
Unfortunately Del Frisco only plans to open one Double Eagle this year out of the six locations it plans to add. The company guided for full year same-store sales of between 1.5% and 2.5%. It looks like the fine-dining Double Eagle will carry the torch by itself again.

The most encouraging comments came from CEO Mednansky. He mentioned that the company hired Tango Analytics, an outside consulting firm that consists of experts in real-estate models for restaurants, to weigh in on Del Frisco's domestic market potential. The firm concluded that its "findings point to the possibility of developing in excess of 170 Del Frisco's Grilles over time across a diversity of settings based upon minimum average unit volumes of approximately $5.2 million."

That's an over 325% upside in locations alone. At least Del Frisco appears to be nowhere near the point of saturation. That's good for the company and good for shareholders, but it's not much of a threat to a company like Bloomin' Brands. Bloomin' Brands' Outback concept alone has nearly 1,000 locations and it is growing.

During the conference call, Mednansky stated, "The pipeline for 2015 to 2017 is already taking shape and we look forward to sharing with you the details on these sites once the leases are all finalized ... There is no shortage of developers interested in bringing our concepts to their sites based on our favorable demographics and prestige that we provide."

My takeaway is that I'd wait on the sidelines for now until Del Frisco shares more details on the finalized leases and its expansion plans with us, especially in terms of how the restaurant concept mix will go. The Double Eagle brand could become a driving force for future growth with the right plans instead of a crutch for the weaker concepts like it currently seems to be. 

Soon, no more using plastic to pay for steak
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Nickey Friedman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers