Restaurant Research LLC
January 2013 Wrap-Up
2013 got off to a good start with restaurant stocks outperforming the broader market during January with our RR Stock Average increasing +6.3% y/y vs. a +5.3% increase for the S&P 500 Index. January's restaurant stock strength was broad based with only 2 companies out of 30 losing ground (YUM! and Ruby Tuesday). In any case, restaurant stocks (or the broader market for that matter) are unlikely to keep-up this pace of increase (which equates to an annualized growth rate of +60% to +70%) especially when considering that there is no material economic improvement to point to. Sure, the employment picture improved slightly with the BLS's non-farm employment number increasing +1.6% y/y during January while gas prices continue to ease. However, commodity costs are less than cooperative with no relief in sight. Also, the sunset of payroll tax relief can't help the industry much. We note that last month's major corporate announcements (on the following 2 pages) mostly point to a very competitive environment with the key players working hard at value while also trying to distinguish themselves at the high-end. Notably, DelaGet's traffic data (page 4) shows an improvement in QSR during the month with a less positive story for sit-down restaurants. While that may be, DelaGet shows that absolute traffic levels are down about -5% from their historical averages for both segments. In conclusion, restaurant operators should take-away that while industry fundamentals are stable (not great), investors in their brands certainly saw something about the future that got them excited last month.
Contact Phil Mangieri at (203) 938-4703 or pmangieri@ChainRestaurantData.com with questions or comments.
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