Feb. 11, 2014, 10:34 AM
- Same-store restaurant sales fell 0.9% in January, according to a fresh forecast from Black Box Intelligence.
- The dip in sales came off of a 2.2% decline in traffic as price/mix helped to offset.
- Chains with a higher percentage of outlets in warmer states fared better during the month.
- Related stocks: CAKE, CBRL, DNKN, DPZ, DRI, EAT, JACK, PNRA, RRGB, RT, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Feb. 7, 2014, 2:31 PM
- P-E firms are paying more for large franchisees in a broad trend that could ultimately help valuations in the restaurant sector.
- The working theory is that private equity groups are bringing the multiples for franchisees back up to levels seen by brands - roughly 7X-10X EBITDA.
- If sales trends improve across the sector, the valuation rubber brand could get stretched out on publicly traded restaurants stocks.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN
Jan. 30, 2014, 2:28 PM
- Barington Capital Group wants Darden Restaurants (DRI +0.1%) to name an independent chairman as it keeps applying pressure on the restaurant operator's board.
- The plan by Darden to spin off Red Lobster is a far cry from the sweeping changes Barington and fellow stakeholder Starboard Value want to see occur.
- The firms see untapped value sitting in Darden's brands (Olive Garden LongHorn Steakhouse, Bahama Breeze, Seasons 52, The Capital Grille, Eddie V's, Yard House) and real estate.
Jan. 28, 2014, 12:57 PM
- An executive from the National Retail Federation testified before Congress today in an effort to convince the lawmakers that the Affordable Care Act should be modified.
- The group believes a full-time employee should be based on a work week of 40 hours and would like to see the heath care insurance coverage requirement be lifted to 100 employees from 50.
- Restaurant chains (MCD, BKW, DNKN, PZZA, YUM, WEN, KKD, BAGL, DRI, PLKI) operating under a franchise model have been impacted negatively by the Affordable Care Act.
Jan. 21, 2014, 2:22 PM
- Darden Restaurants (DRI -0.7%) aims to continue with its planned spin-off of Red Lobster despite renewed criticism by Starboard Value and Barrington Group.
- The company writes, "While we appreciate the views of our shareholders, we have completed a comprehensive evaluation of alternatives [...], including those suggested by Starboard and others. [...] We believe the comprehensive plan we announced in December is in the best interest of all Darden shareholders, and we are moving forward with that plan."
Jan. 21, 2014, 9:59 AM
- Joining Barrington Group in its criticism of Darden Restaurants' (DRI +0.7%) proposed spin-off of Red Lobster is Starboard Value, which in an open letter writes, "We believe a separation of Red Lobster as currently conceived could destroy substantial value" and could be "potentially even worse for shareholders than the status quo."
- Starboard believes a spin-off would create a new public entity "with a single poorly performing restaurant concept that we would expect to trade at a steep discount to Darden and other peers," damage Darden's ability to realize the value of its real estate holdings, and fails to address the underlying drivers of underperformance ("a bloated cost structure, a lack of focus on restaurant operations, and an inefficient asset base and capital structure").
- Instead, the activist "implore[s] management and the Board to delay the impending separation of Red Lobster to allow time for a broader exploration of available alternatives, as well as to provide sufficient time for communications with shareholders."
Jan. 13, 2014, 8:18 AM
- Barrington Group calls the current plan by Darden Restaurants (DRI) to create more shareholder value both incomplete and inadequate.
- In the past, the stakeholder has called for major changes at Darden - including a spinoff of assets into a REIT or more spinoffs of brands other than just Red Lobster.
- Many restaurant industry analysts think Darden's board is still on the hot seat with activist investors.
Jan. 6, 2014, 2:06 PM
- Hedgeye's Howard Penney has some strong feelings on which restaurant operators are managing themselves through the operational boom-and-bust cycles most chains endure as concepts are grown too fast.
- The research analyst thinks Starbucks (SBUX -1%) and Brinker International (EAT -1.1%) have honed in on a correct management strategy to trim capex spending and "attack" the middle of the P&L to improve EBITDA, while Darden Restaurants (DRI -2.3%) stubbornly resists the idea.
Jan. 2, 2014, 3:06 PM
- The National Restaurant Association's Restaurant Performance Index rose 0.2% M/M in November to hit a five-month of 101.2
- The research group also reported that 47% of restaurant operators saw customer traffic growth improve in November from the same period a year ago, up from the 43% which reported improvement in October.
- A majority of restaurant operators have a positive outlook on the industry and plan to spend money on capital expenditures in the next few months.
- Related stocks: CAKE, CBRL, CMG, DNKN, DPZ, DRI, EAT, JACK, MCD, PNRA, RRGB, RT, SBUX, SONC, WEN, BWLD, THI, BDL, NATH, CEC, LUB, BKW, CHUY, BLMN, PZZA, TXRH, DENN, KKD, BBRG, DFRG, BOBE, RUTH, IRG, DIN.
Dec. 27, 2013, 1:20 PM| 1 Comment
Dec. 23, 2013, 9:28 AM
- Shares of Darden Restaurants (DRI) are higher in early trading after Starboard discloses a 5.6% stake.
- Reaction: Restaurant industry analysts for the most part agree with the direction activist investors are taking in pushing Darden to do more than just spin off Red Lobster. The buzz from the company's headquarters in Orlando isn't that optimistic. Employees are reportedly "devastated" with the restaurant operator's direction and see a major brain drain as a very realistic possibility.
- DRI +2.6% premarket to $52.40.
Dec. 23, 2013, 2:11 AM
- Activist investor Starboard Value has reportedly bought a 5.6% holding in Darden Restaurants (DRI) just days after the latter said it intends to spin off its Red Lobster operations following pressure to restructure from another shareholder, Barington Capital Group.
- However, Darden's plan is not enough for Starboard, which wants the restaurant operator to create a real estate investment trust (REIT) for its property holdings, and combine its Red Lobster, Olive Garden and LongHorn Steakhouse chains into one company, and its faster-growing businesses into another.
- Starboard hasn't been in contact with Barington, whose wish list is similar but not identical to Starboard's, although it has spoken with other disgruntled shareholders.
Dec. 19, 2013, 11:59 AM| 1 Comment
Dec. 19, 2013, 9:21 AM
- Shares of Darden Restaurants (DRI) are putting in a volatile premarket session as investors digest lackluster same-restaurant sales, weak guidance, and the planned separation of Red Lobster from the mother ship.
- The quick analyst reaction to the move by the company to shed Red Lobster in order to "enhance" shareholder value leans to the skeptical side: 1) The action comes late and could only draw mild P-E interest. 2) The new DRI will be 60% Olive Garden - a chain which still needs a lot of work to be done on it to reverse momentum. The question is how? Capex spending is being cut with management tied to a healthy dividend payout.
Dec. 19, 2013, 7:59 AM| 1 Comment
Dec. 19, 2013, 7:35 AM
DRI vs. ETF Alternatives
Darden Restaurants Inc owns and operates dining restaurants. Some of its trade names are Red Lobster, Olive Garden, LongHorn Steakhouse, Bahama Breeze, Seasons 52, Eddie V's Prime Seafood, Wildfish Seafood Grille and Yard House.
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