Please ensure Javascript is enabled for purposes of website accessibility

Is Applebee's Slimming Down?

By Alyce Lomax – Updated Nov 16, 2016 at 3:28PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

November same-store sales at Applebee's improve, but signs are still slow.

Should investors be hankering for Applebee's (NASDAQ:APPB)? The casual dining chain's same-store sales managed a 4.1% increase in November, as compared with the same month last year. The company also stood firm on its earnings forecast for the year and for the fourth quarter.

It does, of course, sound like a bit of an improvement over last month. If you recall, Fool contributor Marko Djuranovic recently discussed Applebee's third-quarter earnings, which included a little ratcheting down of fourth-quarter earnings expectations. Meanwhile, company-owned, same-store sales were also slow in September and October.

On that note, systemwide sales at Applebee's for November were up 4.1% (which includes franchise restaurants), while company-owned (non-franchise) stores' sales remained a bit sluggish, up 1.9%. Guest traffic in that segment increased a mere zero to 0.5%, with a higher average check making the difference.

For now, Applebee's seems to be stuck in a lackluster phase, despite the appetite many consumers seem to have for quick-and-cheap McDonald's (NYSE:MCD). On the other end of the spectrum, maybe the luxury goods mania that's been going on in retail has given some consumers a taste for slightly swankier chains -- ever-popular Cheesecake Factory (NASDAQ:CAKE) springs to mind.

However, Applebee's malaise seems to have extended to other rivals, such as Ruby Tuesday (NYSE:RI), which recently showed signs of softness, as did long-beleaguered Darden (NYSE:DRI), which has continued to struggle with its Red Lobster chain.

Applebee's is currently trading at a forward P/E of 20, which seems pricey under the circumstances. Given the uncertainty surrounding guest traffic and same-store sales, for the time being, it seems like a better time to watch the industry carefully than to gobble up shares.

Do you enjoy cooking your meals at home? Trade culinary tips and expertise with other Fools on our Recipes/Cooking discussion board.

Alyce Lomax does not own shares of any of the companies mentioned.

None

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

McDonald's Corporation Stock Quote
McDonald's Corporation
MCD
$245.95 (-0.80%) $-1.99
Darden Restaurants, Inc. Stock Quote
Darden Restaurants, Inc.
DRI
$122.39 (-2.44%) $-3.06
The Cheesecake Factory Incorporated Stock Quote
The Cheesecake Factory Incorporated
CAKE
$28.43 (-2.44%) $0.71

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
329%
 
S&P 500 Returns
106%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/24/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.