Restaurant visits by parties of adults grew by 1% last year to end four consecutive declines in the category but visits with children in tow showed flat growth once again, according to tracking from the NPD Group. A tripping point for the sector has been the lack of growth in visits by parties with kids. What to watch: Analysts see increased promotional activity sneaking in on the industry's margins.
Krispy Kreme (KKD -6.9%) trades lower after reporting largely in-line Q4 results and issuing soft guidance During the company's earnings call, execs were very vocal that the current quarter is going well. Traffic count was "great" in February and the comparable store sales gain in the first week of March was up 9% despite "gas and the expiration of the payroll tax thing." (transcript)
The restaurant sector is on watch after a pre-earnings warning from Darden Restaurants (DRI) and a harsh downgrade on Wendy's (WEN) sets a negative tone. The picture being painted for 2013 is starting to get pretty consistent - margin pain and soft traffic trends. Other things to watch in 2013 for the sector: 1) The impact of higher payroll taxes. 2) The coming costs of the Affordable Care Act. 3) The push to raise the minimum wage. 4) Which chains can succeed in China and India?
Margin pain on the horizon: Restaurants could get squeezed this year from a combination of higher commodity costs and frugal consumers, according to AlixPartners. Though traffic is forecast to rise 3%, the average ticket is expected to decline 4.7% with coupons, promotions, and discounts gaining favor. Chains that are expected to ride out the expected tough environment are those that can deliver healthy food fast. Chipotle (CMG -1.8%), privately-held Subway, and Panera (PNRA -1.5%) fit the bill.
Shares of Krispy Kreme (KKD) gain 4.2% in premarket action after Jim Cramer gave the stock exposure on the Friday edition of Mad Money. The company is in the midst of a global expansion push that is at a moderate pace than its U.S. explosion of a few year ago that crippled its financials. Cramer points out that even with a recent run in share price, Krispy Kreme trades with a lighter earnings multiple than Dunkin' Brands and is growing earnings faster.
Heard during Krispy Kreme Doughnuts' (KKD) presentation at the ICR XChange Conference: 1) The firm's growth plan includes picking up the pace of expansion in the U.S. and building on momentum globally with a goal to reach an international store count of 900 by FY17. 2) Same-store sales of 6.8% expected by Q3 of FY13, repping the company's highest level in over four years. 3) Execs note that Q4 FY12 comparable-store sales were strong through week 10. (webcast)
Krispy Kreme (KKD) adopts a tax asset protection plan which it say will limit the likelihood of "unintended ownership change" under IRS rules. Under the plan, the company's net operating loss and other carryforwards could be limited for shareholders piling up more than 5% of the company's stock. (Previous: KKD on a tear in 2013)
Krispy Kreme (KKD) catches a lot of attention from investors with shares up a brisk 26% YTD driven by enthusiasm over strong sales and takeover chatter. The company's strategy now focuses on emphasizing smaller company-owned factory and satellite shops.
Krispy Kreme (KKD) and Jamba (JMBA) look like tasty takeover candidates with sales in coffee and beverage chains outpacing other restaurant sectors, according to a Bloomberg piece. Analysts think the well-known brands could fetch a cozy premium. JMBA +4.9% premarket off the M&A chatter.
Krispy Kreme's (KKD +8.9%) hot start to 2013 has helped drive its stock price to its highest level since 2007. After expanding too fast in its infancy, the company has been turning around its prospects with a more moderated growth track. Longbow is in for the long haul, coming in today with a Buy rating and $15 price target.
Krispy Kreme Doughnuts Inc is a branded retailer and wholesaler of doughnuts, complementary beverages and treats and packaged sweets. The Companys shops are operated under the trademark doughnuts such as Krispy Kreme and Original Glazed.