What happened
Shares of Zoe's Kitchen Inc. (ZOES) were up 9.2% as of 3:30 p.m. EDT Thursday after an analyst upgraded shares of the Mediterranean-themed fast-casual restaurant chain ahead of its second-quarter 2017 report.
More specifically -- and keeping in mind that Zoe's is poised to release formal quarterly results after the market close today -- Telsey Advisor Group upgraded Zoe's stock from market perform to outperform. Today's jump also follows a similar positive move yesterday, which came despite no company-specific news.
IMAGE SOURCE: ZOE'S KITCHEN
So what
Zoe's stock is still down more than 40% so far in 2017 as of this writing, given today's difficult restaurant-industry environment. This has resulted in a pair of painful quarterly reports earlier this year that included the company breaking a 28-quarter streak of positive comps. At the same time, Zoe's has implemented a number of initiatives to return to comparable-sales growth, including "back-of-the-house simplification" efforts to improve guest experience and throughput, a new menu rollout in in late June, and a new website earlier this month featuring improved online ordering capabilities.
Now what
For perspective, Zoe's latest guidance (provided in May) called for full-year 2017 revenue to be between $314 million and $322 million, and for 2017 comparable-restaurant sales to be in the range of negative 3% to flat from 2016. Zoe's also told investors to expect restaurant contribution margin for the year of between 18.3% and 19%.
Whether Zoe's reiterates or changes that guidance remains to be seen. But either way, tonight's release will provide much-needed color on whether its efforts are yielding fruit.
