There always seems to be restaurant news on the menu. As we do every week, let's take a look at some of this week's more appetizing stories.
1. Chip off the old Chipotle
Shares of Chipotle Mexican Grill
Comps rose 3.5%. Sure, it was the result of menu hikes -- and not customer traffic -- but it's hard to fathom a company that draws heavily from the corporate lunch crowd to hold up well in this environment. Chipotle is clearly holding up better than most of its quick-service rivals.
2. That's just wild, Buffalo
Buffalo Wild Wings
If that doesn't impress you in this crummy climate for restaurant stocks, nothing will. This is why I named Buffalo Wild Wings the one eatery stock to buy in 2009 two months ago.
3. And now the bad news
Enjoy the Chipotle and Buffalo Wild Wings reports. The rest of the week's earnings reports are harder to digest.
(NASDAQ:CAKE)is posting lower revenue and earnings in the fourth quarter. The hub of bountiful portions and its Tolstoy-esque menu has had its bottom line slips before, but did you think we would see the day when the iconic Cheesecake Factory slumps on the top line, too?
(NASDAQ:PFCB)is scaling back its 2009 expansion plans, serving up an uninspiring quarterly report with comps falling sharply at both its namesake and Pei Wei concepts.
- As expected, Bob Evans
(NASDAQ:BOBE)posted a charge-laden loss in its fiscal third quarter. The company would have turned a profit if it wasn't for a goodwill impairment hit on its Mimi's Cafe chain, but revenue still fell during the period.
4. Making dough rise
Okay, let's close with some better news. BJ's Restaurants
Comps fell 0.7% during the quarter, so BJ's isn't necessarily holding up as well as Chipotle and Buffalo Wild Wings on that front. However, drumming up just 0.7% fewer sales at the individual unit level -- after a 4.9% increase in comps a year earlier -- is still impressive in this environment.
So, what's working in this space? Chipotle's premium burritos prove that you don't need a Dollar Menu to succeed in quick-service. Buffalo Wild Wings shows that a throwback sports bar concept with kid menus, a ton of televisions, and brisk carryout business can succeed if it's run well. BJ's is a beacon in the otherwise moribund casual-dining niche.
These three stocks may not be recession-resistant. They will obviously feel the pain if the industry continues to get slammed. The key here is that the worse the economy gets, the more likely that weaker rivals will get zapped. It will make already solid companies great investments when the economy does bounce back.
Check out this week's dessert specials:
Chipotle Class B shares and Buffalo Wild Wings are Motley Fool Hidden Gems recommendations. Chipotle Mexican Grill is a Motley Fool Rule Breakers selection. The Fool owns shares of Chipotle Class B and Buffalo Wild Wings. Try any of our Foolish newsletters today, free for 30 days.
Longtime Fool contributor Rick Munarriz is the rare foodie who embraces restaurant chains. He does not own shares in any of the companies in this story, save for Cheesecake Factory. 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.