Indigestion at Bob Evans?

The story is no doubt getting old for Bob Evans Farms (NASDAQ:BOBE) investors: The company's shares fell yesterday following the announcement that fiscal Q1 (ended July 3) net profits came in lower than they were a year ago as disappointing same-store sales and rising ingredient costs conspired to hurt the bottom line even as average menu prices ticked up slightly year over year.

This isn't a new phenomenon. Many, but not all, casual dining chains are suffering these days: Nathan Slaughter wrote up Brinker's (NYSE:EAT) scaled-back expectations yesterday, for example. Fast-foodies McDonald's (NYSE:MCD) and Wendy's (NYSE:WEN) have produced more upbeat reports in recent months, and it may be that the impact rising meat costs are having on pricing -- I was recently sticker-shocked away from a much-anticipated rack of ribs at a local BBQ joint -- is driving eaters downmarket.

Whatever's happening, this story has taken its toll on Bob Evans investors. Over the last 12 months the company's shares have underperformed the S&P 500 and, over the last six, undone six months of gains. With management scaling back its fiscal 2005 earnings projections -- even as it hopes new marketing twists will boost same-store sales -- the prognosis seems unlikely to change in the near term.

It's not as though there's no hope in breakfast: Certainly IHOP (NYSE:IHP) doesn't see it that way. And in its June acquisition of Mimi's Cafe, Bob Evans has positioned itself for further growth with a casual chow concept that stands to really help the company diversify its revenue base. (The fact that it's profitable and growing doesn't hurt.)

It looks like the kind of story that can't help but get on track eventually -- the company is still profitable and well-branded and historically generates handy cash flows. Figuring out the timing, however, is the tricky part. With the company's shares commanding a multiple of 15 times next year's high-end EPS estimate -- which represents a significant pullback from fiscal 2004 numbers -- it's hardly a no-brainer.

Fool contributor Dave Marino-Nachison doesn't own any of the companies in this story.