I'm a sucker for small restaurant stocks. In many ways, if your aim is true, you wind up with the next Outback Steakhouse (NYSE:OSI) or P.F. Chang's (NASDAQ:PFCB). However, in many other cases, these obscure eateries aren't bent on dotting the landscape with their restaurants. Their expansion is slow, yet calculated. It may be boring for Wall Street's go-go crowd, but it puts food on the table if they do it right.
That's why I have to smile when I see some of the companies that I was first looking at when I joined up with the Fool to cover restaurant stocks back in 1995 still going strong. You may not be all that familiar with the likes of Max & Erma's (NASDAQ:MAXE), Champps (NASDAQ:CMPP), or Elmer's (NASDAQ:ELMS) unless you happen to live in the regions they serve. These chains aren't going to challenge McDonald's (NYSE:MCD) and their billions served. They each have no more than a few dozen locations.
However, long-term shareholders probably can't complain much; all three outfits have seen their stock price appreciate significantly over the last 10 years. Elmer's may not be with us much longer as a public company, as earlier this month it announced that it was going to be taken private.
This nostalgic road leads us to last night's earnings report from Champps. The company closed out its fiscal year growing revenues by 17%. That's certainly not too shabby in this carefree arena. While earnings may appear to have taken a dive -- from $1.28 a share last year to just $0.38 in 2004 -- the 2003 showing was spiked by a huge tax benefit that propped up the bottom line by $0.94 a share. Operating profits actually improved significantly, and the company expects that trend to continue here in fiscal 2005.
But you've probably already forgotten all about Champps by now. Even the extra p in the moniker may seem strange to you at this point.
That's fine. These small yet steady eateries will keep toiling away without you. Just remember what will happen 10 years from now when it's time to draw new charts. They're likely to still be around in the casual dining space. Well, except for Elmer's -- as a public company, anyway.
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Longtime Fool contributor Rick Munarriz loves to patronize the mom-and-pop eateries. He does not own shares in any of the companies mentioned in this story.
