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News You Can Chew On

By Rick Munarriz - Updated Apr 5, 2017 at 6:56PM

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Restaurant stocks are turning tables and headlines.    

There always seems to be restaurant news on the menu. As I do every week, let's take a look at some of this week's more appetizing stories.

1. Darn it, Darden
Don't you hate it when a bad dessert ruins an otherwise delicious meal?

Darden Restaurants (NYSE:DRI) posted respectable fiscal second-quarter results last night. Earnings from continuing operations clocked in at $0.44 a share, before acquisition integration costs related to last year's purchase of LongHorn and Capital Grille parent RARE Hospitality. Wall Street expected earnings to fall to $0.30 a share, compared to Darden's posted profit of $0.39 a year earlier. Comps fell by just 0.2% during the quarter, propelled by a nice bounce in November. Most of Darden's peers are doing far worse.

So where's the rancid dessert? The company is forecasting comps to weaken through the second half of the fiscal year. Income from continuing operations will also dip for all of fiscal 2009. Check, please!

2. Brinker slims down
Brinker International (NYSE:EAT) has finally completed the sale of a majority stake in Romano's Macaroni Grill. The parent company of Chili's started looking to unload its casual-dining Italian concept two summers ago. It finally found a hungry buyer four months ago.

However, we've all seen deals fall apart on the way to the finish line. If I can butcher an old expression to fit my eatery-themed needs, you don't pay the ferryman until he gets you to the other side dish.

Now the handoff is complete. Brinker will retain a 19.9% stake in the concept and use the $130 million to $135 million in proceeds to pay down its debt. 

3. Carl's Jr. earns its star
Life is better on the fast-food front. CKE Restaurants (NYSE:CKR) is beaming after a record-setting opening this past week. A new Carl's Jr. that opened in Marysville, Wash., on Dec. 9 scored $105,063 in sales during its first seven days. That's a new record for the company, which also owns and operates the Hardee's concept.

4. Everyone out of the Ark
Noah prepared for a storm by building an ark big enough to accommodate pairs of animals, as the Biblical tale goes. In the here and now, Ark Restaurants (NASDAQ:ARKR) is bracing for the economic storm by suspending its dividend.

Despite a healthy balance sheet and continuing profitability, the operator with an eclectic collection of 30 fast-food concepts and 20 restaurants and bars is apparently saving its pennies for a rainy day.

5. From sonic boom to Sonic's bust
If you thought Sonic (NASDAQ:SONC) is a great place to pull up to for a wallet-friendly meal, it's now about to get even cheaper. The fast food drive-in chain will be launching a value menu later this month.

And I thought Sonic's menu board was already one big value menu.

6. Ruby Tuesday sees red
Indigestion is never a good thing, but sometimes a company needs to take the appropriate steps to clear out its system. Ruby Tuesday (NYSE:RT) will be taking restructuring charges over the next two quarters as it unloads its underperforming properties. The company will close 40 locations during the third quarter. It is also writing down dozens of other units that will be eventually closed or sold off.

7. You go, Buffalo
The Buffalo Bills have seen their NFL season deteriorate in recent weeks, but Buffalo Wild Wings (NASDAQ:BWLD) is still a winner. I hate to give away the ending, but the chicken-wing chain is my top pick in this week's "If I Have to Buy 1 Restaurant Stock" article.

After a brutal 2008 for most restaurant stocks, let's hope that 2009 gives the industry more room to run.

Check out this week's dessert specials:

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Stocks Mentioned

Darden Restaurants, Inc. Stock Quote
Darden Restaurants, Inc.
$119.81 (3.64%) $4.21
Buffalo Wild Wings, Inc. Stock Quote
Buffalo Wild Wings, Inc.
Ruby Tuesday, Inc. Stock Quote
Ruby Tuesday, Inc.
Brinker International, Inc. Stock Quote
Brinker International, Inc.
$23.97 (1.44%) $0.34
Ark Restaurants Corp. Stock Quote
Ark Restaurants Corp.
$17.80 (10.63%) $1.71
Sonic Corp. Stock Quote
Sonic Corp.

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