Oh, no, not another restaurant giving a patron the finger!
If you're like me, when you first heard about a woman finding a severed chunk of a finger in a salad prepared at a franchised Applebee's
Well, as it turns out, the grossed-out diner may be in the right after all. Over the weekend, Applebee's announced that it launched an investigation and admitted that an employee in the kitchen did, in fact, lose a piece of a digit "the size of a sunflower seed" when the incident allegedly took place last year.
The woman initiated a lawsuit against the casual-dining chain last week. While this is all coming to light after March's notorious Wendy's incident that has since been mostly discredited, it did take place last year.
After the Wendy's accuser was arrested, with Wendy's threatening to go after her for the financial damages that the company suffered, it seemed unlikely that a similar lawsuit would occur unless the person thought the case would hold up in court.
Yet far away from the sensationalistic headlines, as investors it's important to see how these moves play out with the companies involved. Applebee's didn't move much on the news. In fact, the stock shed just 0.9% of its value last week. Will investors flee the stock for fear that this will be Wendy's revisited?
If so, consider it an invitation to dive on in. Wendy's isn't smarting as badly as you might think. While the shares did dip back in late March, when that particular story broke out, the stock is actually now trading 22% higher than it did the day the incident took place.
If an incident is merely a temporary setback, the market's overreaction can be used to the investor's advantage. However, the setback does have to be a temporary one. If these incidents, in concert, start spooking the hungry away from frequenting fast-food joints and casual-dining eateries, we may have a problem here.
That doesn't mean that you should run off and sell your Darden
So, sure, dismembered fingertips leave a gruesome imprint. Of course. But as long as we're too lazy to stay home and cook something lavish, casual dining will keep serving more and more diners.
Other stories you can sink your teeth into:
- Applebee's didn't sting its investors this past quarter.
- Darden isn't feeling too crabby at Red Lobster these days, either.
- Brinker is also heating things up with its Chili's chain.
Longtime Fool contributor Rick Munarriz needs to drive 7.2 miles to get to his nearest Applebee's -- but he'll do it gladly if he's hungry enough. He does not own shares in any companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.