Wall Street Chokes On Mixed Profits From Restaurants - Investors.com

Wall Street Chokes On Mixed Profits From Restaurants

op-rated restaurant operators failed to live up to rave reviews late Thursday, as weak-to-mixed results sent their shares lower.

High-end fast-food and casual sit-down chains have been strong market performers in recent weeks, despite a weak economy. Americans appear far more willing now to eat out than they were a year ago. Restaurant consumer sentiment is the best since before the recession, according to a new RBC Capital Markets survey.

"The good news is that consumer debt is coming down," said Darren Tristano, executive vice president with restaurant industry consultant Technomic. "So there will be more room on those credit cards to eat out."
Workers prepare burritos at a Chipotle Mexican Grill in New York in December. Chipotle's Q4 profit shot up 90%, but the restaurant chain's sales...

Workers prepare burritos at a Chipotle Mexican Grill in New York in December. Chipotle's Q4 profit shot up 90%, but the restaurant chain's sales... View Enlarged Image

But high unemployment, pricey gasoline and other factors are still keeping many potential customers home. Restaurants that are packed on Friday and Saturday nights for instance, are often deserted Monday through Thursday, Tristano notes.

Buffalo Bombs

Sports-bar chain Buffalo Wild Wings (BWLD) missed on the top and bottom line. Q4 sales climbed 20%, to $145 million, short of the $148.8 million analysts had expected. Earnings per share climbed 7% to 46 cents, a nickel below views. Buffalo Wild's shares tumbled 13% in late trade.

Chipotle Mexican Grill's (CMG) Q4 profit shot up 90% to 99 cents a share, smashing views by 18 cents. But the 12% sales gain to $387.5 million missed forecasts slightly. Chipotle shares sank nearly 4% after hours.

Panera Bread (PNRA) met profit estimates for a 13% gain to 95 cents a share. Revenue edged up 3% to $366.9 million, topping views. Panera shares slid 3% late.

Results were mixed for casual sit-down restaurants as well.

BJ's Restaurants (BJRI) said Q4 profit fell 8% to 12 cents a share ex items, though that beat views by a penny. Higher expenses hurt the pizza and brewery chain. Revenue rose 13.5% to $112.6 million. BJ's does not expect consumer spending on eating out to recover in 2010. Its shares gave up 4% late.

Cheesecake Factory (CAKE), known for its big portions and extensive menus, said earnings sizzled, rising 87% to 28 cents a share, ex items. But sales were essentially flat at $400.6 million, just below views. They've been little changed for five quarters. Cheesecake shares also were flat after hours.

Sit-Downs Didn't Cut Prices

Despite lukewarm results, casual sit-down restaurants such as Cheesecake and BJ's were able to weather the downturn and a sour consumer because they protected their brand image, said Stifel Nicolaus analyst Steve West.