Casual Dining Woes: People Too Cheap To Eat Out (BWLD, PNRA, TXRH, RRGB, CAKE, PFCB, EAT, DRI, CMG)

Buffalo Wild Wings Inc. (NASDAQ: BWLD) is the biggest problem child of the casual dining chain stocks today.  The company tanked last night when it said that its Q1 profit rose 24% to $0.58 EPS on revenue of $152.3 million; Thomson Reuters had estimates of $0.57 EPS and revenue of $154.4 million. The problem is same-store sales that puts its forecast of 20% earnings growth at risk.  The quarter’s same-store sales rose only 0.1% and only 0.7% at franchised restaurants.  The problem is that both classes saw drops of roughly 3.7% at company-owned stores and fell 2.4% at franchise stores so far in April.  If you look at the prior growth of 20%, the implied earnings comes to about $2.04 EPS for the fiscal-year.  Thomson Reuters is looking for $2.06 EPS.  Its shares are down 18.4% at $41.61.

Panera Bread Co. (NASDAQ: PNRA) is the other problem child, just to a lesser extent.
Earnings were $0.82 EPS, matching estimates. Revenues gained by 14% to $364.2 million and same-store sales rose 10% for company sites and 9.2% at franchise stores.  While Panera reiterated guidance, the slowing of growth was too much for a growth stock to handle.  The company sees next quarter of $0.81 to $0.83 EPS on 8.5% to 9.5% in same-store sales; and it reiterated a 2010 expected range of $3.40 to $3.44 EPS with a 6.5% to 7.5% gain in same-store sales.  The quarterly estimate from Thomson Reuters is $0.84 EPS next quarter and the annual estimate is $3.52 EPS.  Panera shares are down 6% at $81.00.

Texas Roadhouse Inc. (NASDAQ: TXRH) and Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB) are different in that they are ‘bar-b-q’ and burger chains, but both are growth chains and are marketing to the same customers.  Texas Roadhouse is down 7.8% at $14.32 and Red Robin is down 6% at $24.13.

The Cheesecake Factory Incorporated (NASDAQ: CAKE) and PF Chang’s China Bistro Inc. (NASDAQ: PFCB) may be a tad higher up the casual dining food chain with slightly higher average ticket items, but they are getting hit today as well.  Cheesecake is down 6% at $27.77 and PF Chang’s is down 5.8% at $43.73.

Two other casual dining behemoths are down with the sector, although as they are mature they are down less than the higher-beta growth chains: Darden Restaurants, Inc. (NYSE: DRI) and Brinker International Inc. (NYSE: EAT).

Darden Restaurants Inc. (NYSE: DRI)  has Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, and Seasons 52.  Because it has more than 1,700 locations, its stock is down “only” 2.1% at $46.01.  Brinker International Inc. (NYSE: EAT) is down worse than Darden, but is off “only” 3.8% at $18.88.  It has almost 1,700 chains among its Chili’s Grill & Bar, On The Border Mexican Grill & Cantina, and Maggiano’s Little Italy chains.

Chipotle Mexican Grill, Inc. (NYSE: CMG) is down as collateral damage and is meant for reference only.  It is after a lower per-person ticket and is the old McMex play.  This stock also rose almost $20.00 after earnings and guidance were better than expected just last week.  Its stock is down 2.3% mid-day at $135.83.

There are many issues that explain this.  Some will say that it is a more competitive environment.  Some already have.  But at the end of the day, this is a huge disappointment when you consider that we are supposed to be in the midst of a recovery and when people are finally getting hired back to actual paying jobs.  This is a notion that Americans are still hanging on to value and thriftiness, and for longer than what many analysts and economists (and company executives) have been thinking.

JON C. OGG