5 Stories to Sink Your Teeth Into

• Email
• Share
• Print

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

1. Brinker isn't a sinker or a stinker
A hot restaurant stock? Shares of Brinker International (NYSE: EAT) soared 32% yesterday after the Chili's parent posted better-than-expected quarterly results.

This doesn't mean the numbers themselves were scorching hot. Revenue fell by 8% during the period, weighed down by a 5.4% slide in comps. Earnings of $0.27 a share fell just shy of the $0.31 a share Brinker rang up a year earlier. The key here is that battered investors were only expecting a profit of $0.18 a share during the fiscal second quarter.

Brinker's stock is trading at a third of where it was two years ago, so a whiff of good news may be all it needs to get the depressed shares inching higher again. Shares are trading at just 11 times this year's earnings, and that's before analysts jack up their profit targets following yesterday morning's respectable showing.

2. A half-dollar menu
McDonald's (NYSE: MCD) will report its quarterly results on Monday morning, but it did declare a $0.50 a share quarterly dividend. That's half of a Dollar Menu item! Yes, it's the same rate that the world's largest restaurant chain paid out three months ago, but it doesn't mean that investors should be worried.

McDonald's has hiked its payout every year since 1976, and that's likely to continue given the burger giant's encouraging trends. However, its last boost happened during last year's third quarter, so don't expect higher distributions until later this year.

3. Yes, we're open
Casual dining may be a lost art these days, but it doesn't mean that chains aren't opening up new restaurants. Famous Dave's of America (Nasdaq: DAVE) and Kona Grill (Nasdaq: KONA) announced new openings this week.

Sure, many of the more recent industry openings have been planned well ahead of time. Few would have figured that the economy would be in this deep a funk. It's hard to fathom casual-dining chains, on the whole, opening more restaurants than they close in 2009. For now, at least, diners should enjoy the occasional debuts.

4. Is it Olive Lobster or Red Garden?
Is no news good news these days? Darden Restaurants (NYSE: DRI) is reaffirming its fiscal 2009 sales and earnings targets. The company issued that guidance just last month, but with the parent company of Red Lobster and Olive Garden scheduled for analyst and investor meetings today, it wanted to pre-announce the non-announcement.

5. Rolling the burrito
Chipotle Mexican Grill (NYSE: CMG) (NYSE: CMG-B) is beefing up its promotional efforts.

"Our marketing strategy has not kept pace with developments in our food culture or our unique people culture,” CEO Steve Ells notes in appointing Butler, Shine, Stern & Partners as its new advertising agency.

The quick-service burrito chain has grown to more than 800 units without having to rely on massive marketing campaigns. Having a high-quality product and breakneck efficiency can do wonders for word-of-mouth testimonials. Chipotle is starting to feel the recessionary pinch, though. It has missed Wall Street earnings estimates in two of its past four quarters. Comps are off from their torrid double-digit growth pace during its successful IPO.

As long as Chipotle doesn't have to compromise quality, ramping up its marketing efforts can only help.

Check out this week's dessert specials:

• If I Have to Buy 1 Restaurant Stock in 2009
• Last week's restaurant news
• 3 More Outrageously Cheap Stocks