It's been a busy week for restaurant stocks, so I hope you're hungry. Let's dig into a few of the earnings reports and headlines that you can cut like a knife.
1. Chew the right thing
Business may be rough at some chains, but at least their hearts are in the right place. It was a busy week for charitable drives. Yum! Brands
Not to be outdone, Chili's Grill & Bar parent Brinker International
2. Hold the green peppers and the lettuce
If hot glazed doughnuts don't do the trick, maybe something cool will. Krispy Kreme
It sounds wacky, but it makes sense. Krispy Kreme must have seen this coming decades ago when it chose its creamy moniker. I like the move. It gives consumers a new, smooth treat to come back for. I just want to know if I can go in and order my glazed doughnut a la mode.
3. Buy this, sell that
It was a mixed week for analyst ratings. JPMorgan upgraded shares of Burger King
The disparity isn't a shock. Fast food chains have been holding up well in the penny-pinching climate while their casual dining peers have had a tougher time attracting patrons. There are exceptions, of course, but analysts are simply following the consumers here. It explains why Jefferies & Co. initiated cover of swanky chophouse Morton's
4. Not so super, Sonic
The good news is that carhop magnet Sonic
The bad news is that the chain is being pressured by restaurant-level operating margins, and sees that trend continuing into fiscal 2009. Yes, quick-service chains have had an easy time winning thrifty diners, but a company can't thrive if labor costs keep rising and it can't pass on commodity cost increases to its cash-strapped customers.
5. Under its wing
Chicken wing haven Buffalo Wild Wings
It's refreshing to see companies buy back their franchise locations. Yes, franchising is a great way to grow quickly and secure high-margin royalties, but successful concepts can be milked more effectively with company-owned locations.
Check out this week's dessert specials:
Longtime Fool contributor Rick Munarriz is the rare foodie that embraces restaurant chains. He does not own shares in any of the companies in this story. He is part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.