I probably wasn't the only one who got a chuckle out of seeing carnivore havens like Outback Steakhouse
While those trends may be changing (Smith & Wollensky posted a small dip in August comps after a string of hot months, and Outback warned earlier this summer), poor Bob Evans Farms
Bob Evans has produced a series of disappointing quarterly reports. Between the weaker sales at the restaurant level and the fact that the chain is hog-tied to rising pork prices, nothing seems to be going right for the company. Last night it posted a 4.6% slide in comps at its namesake restaurant. That is made even more troubling by the fact that menu prices have actually risen by 2.4% over the past year to try to offset some of its rising food costs.
That combination is bad no matter how you look at it. Either the average check has risen in sync with the price hike and Bob Evans is attracting 7% fewer customers, or its patrons are still strolling in but holding back on tacking on margin-enhancing upsell items in order to save some money.
The one saving grace here is that the company is sticking to its fiscal second-quarter target of earning $0.40 a share. That's welcome news, because if Bob Evans can be milked as a cash cow, it can help grow the Mimi's Cafe concept it acquired over the summer before the popular chain had a chance to go public.
Last month Mimi's had a 2.9% uptick in same-unit sales. While it may seem surprising that a more upscale bistro concept with a good selection of pastas and doughy sandwiches on the menu is trumping the Bob Evans meat feasts in an Atkins-approved world, set the irony aside for a moment and grasp the momentum. Bob Evans has been a sleepy chain, but Mimi's has gone from 60 locations to 82 over the past two years, and it may simply be just a matter of time before Bob Evans earmarks more of its cash flow to expand Mimi's beyond its monthly openings.
One has to be realistic -- 82 stores won't amount to much in the company's empire of 562 namesake eateries. Still, Mimi's seems to be a forgotten entity, as the stock has been marked down to just 15 times this year's profit guidance. As it grows faster than the flagship concept, the market may come to appreciate Bob Evans as a diversified chain operator like rivals Darden
Longtime Fool contributor Rick Munarriz thinks that the Bob Evans restaurants look really cool from the outside, though he's never been exactly wowed from the inside. He does not own shares in any of the companies mentioned in this story.