Comfort food isn't healthy, expensive, or suffering in this weak casual-dining climate.
The actual results do need a little clarification. The 4% gain in net sales is self-explanatory. However, the 24% spurt in earnings per share is deceptive on two counts. First, the company has swallowed a ton of shares outstanding over the past year. Net income actually rose by just 5%. However, even the 5% gain is overstated, as Bob Evans recorded a larger asset sale gain than it did a year earlier. Back that out, and the actual net income gain would be cut roughly in half.
Comps don't lie, though. In that sense, Bob Evans is also off to another good start in fiscal 2009 after a healthy May. The same can't be said for Mimi, which is a problem because the smaller casual dining chain has received the lion's share of the company's expansion attention.
Is comfort food the secret to attracting budgeting diners? Not entirely. Comps at Steak n Shake
Cracker Barrel parent CBRL Group
Breakfast specialists like Denny's
This doesn't mean that the niche will coast through the balance of the year. Rising food costs and patron resistance to absorb those gains will challenge margins. Higher fuel prices will also eat into the disposable income that would go into eating out.
Investors in any of these companies will probably want to keep an eye on DineEquity. The moment that IHOP's 21-quarter streak comes to an end will be the moment comfort food leads to indigestion.