Bloomin Brands Inc

Darden Restaurants Inc. (DRI) has jumped since the Wall Street Journal mentioned that Barington Capital Group took a 2.8% stake, calling on Darden to split in two.

In 1Q16, Texas Roadhouse posted EPS of $0.5. This was lower than analysts’ estimate of $0.54. The adjusted EPS was above analysts’ estimate at $0.55.

Why higher gasoline prices can reduce people’s leftover spending at restaurants, which will negatively affect restaurant sales.

Bloomin’ Brands’ revenue was affected by as much as 0.7% due to price increases for beef and seafood. A restaurant can do little when facing rising prices

As of September 20, 2014, year-to-date (or YTD) returns for Bloomin’ Brands (BLMN) was -30.7%.

As of November 2014, Bloomin’ Brands’ (BLMN) year-to-date (or YTD) return was -7.6%. BLMN operates casual dining restaurants. It competes with companies like EAT and TXRH.

It was a tough 4Q15 for casual dining restaurants, as the minimum wage for workers went up. In this series, we’ll look at what caused these stocks to underperform in 4Q15 and most of 1Q16.

McDonald’s (MCD) competition includes large international and national food chains as well as regional and local retailers of food products.

Casual-dining restaurants Casual-dining restaurants have a relaxed, casual ambiance with a lot of seating. They offer full table service and may also have a wine menu or full bar service. The menu is higher-priced than fast-food restaurants. Olive Garden, under the umbrella of Darden Restaurants (DRI), for example, has a price range of $10 to $20 for […]

The NRA’s Current Situation Index for same-store sales stood at 105.2 in December 2014—compared to 103.5 in November.

The Current Situations Index is based on indicators’ past trends—same-store sales, traffic, capital expenditure, and labor. It has been at levels above 100 since March 2014.

According to the NRA (National Restaurant Association), 72% of operators reported a gain in same-store sales over this period, and 11% reported a decline.

The eroding middle market Darden’s core brands—Olive Garden, Red Lobster, and LongHorn Steakhouse—face a macro shift in an ever-widening spread in US average income. The graph below shows the difference in household income between the second highest 20% and the second lowest 20% income earnings. The difference is divided by the average income of the […]

E-commerce represented approximately 1% of total sales in fiscal 2013, 4% in fiscal year 2014, 9% in the first quarter of fiscal 2015, and 9.7% in the second quarter of fiscal 2015.

The company “saw improvement in net sales trends over the course of the quarter as inventory levels recovered and the fall flooring season began.” But the shares are down 49% in the year to date.

CymaBay Therapeutics is a clinical-stage biopharmaceutical company formerly known as Metabolex. It develops therapies to treat metabolic and rare diseases with high unmet need.

Using the company’s partnerships and experience in ophthalmology, it plans to expand into a disease indication with a larger market. The company says it expects to place a new product candidate for this large market opportunity into development some time in 2015.

Restaurant industry breakdown The first thing investors should do before making an investment is understand the company’s industry, business, and strategy. We can broadly break the restaurant industry down into the limited-service and full-service sectors. Full-service restaurants are establishments where customers receive their meals at their table, receive table waiting services, and generally pay at […]

Darden announced at the end of July that chairman and CEO Clarence Otis will step down by the end of the year or when a replacement is found. Starboard CEO Jeffrey Smith said in a statement that Otis’ retirement was long overdue and that “It’s surprising to us that it took this long.”

Starboard said it believed that the market price of Darden significantly understated the value of the company’s businesses and real estate assets. It added that its operating margins were well below its peers.

Today, Deutsche Bank initiated coverage of Bloomin’ Brands (BLMN) with a “buy” rating and a 12-month price target of $24.

In the third quarter of fiscal 2019, Darden Restaurants (DRI) posted adjusted EPS of $1.80, outperforming analysts’ EPS expectation of $1.75.

Darden Restaurants (DRI) posted its results for the third quarter of fiscal 2019 on March 21.

At 9:45 AM EST on March 21, Darden was trading at $114.56, which represents a rise of 5.5% from the previous day’s closing price.

At the end of the second quarter of fiscal 2019, Darden Restaurants (DRI) operated 1,762 restaurants.

Darden Restaurants (DRI) posted its earnings for the second quarter of fiscal 2019 on December 18.

On June 7, SunTrust Robinson Humphrey upgraded Darden Restaurants (DRI) from “hold” to “buy” and raised its price target from $104 to $110.

Darden Restaurants (DRI) posted its fiscal 3Q18 earnings before the market opened on March 22.

In fiscal 1Q18, Darden Restaurants (DRI) posted EPS (earnings per share) of $0.95. However, removing one-time expenses, its adjusted EPS was $0.99.

Investors expect the devastation caused by Hurricane Harvey and Hurricane Irma in Texas and Florida to lower Darden’s sales in fiscal 1Q18.

In fiscal 4Q17, Darden posted adjusted EPS (earnings per share) of $1.18 on revenues of $1.9 billion.

On June 21, 2017, Darden was trading at a PE multiple of 20x, as compared to 17.8x before the announcement of its fiscal 3Q17 earnings.

As of September 27, 2016, Darden Restaurants was trading at $61.5. This price may already have priced in the estimates we’ve discussed in this series.

Analysts expect Darden to pay dividends of $0.55 in fiscal 1Q17 at a payout ratio of 67.1%. For fiscal 2017, Darden is expected to pay dividends of $2.2.

Darden has beaten analysts’ earnings per share estimates in the last four quarters. Usually, when earnings beat analysts’ estimates, a share’s price rises.

Analysts are expecting Darden Restaurants (DRI) to post systemwide same-store sales growth of 1.6% in fiscal 1Q17 compared to 3.4% in fiscal 1Q16.

Texas Roadhouse (TXRH) reported its 2Q16 results on August 1 after the Market closed. TXRH posted revenue of $508.8 million and adjusted earnings per share of $0.47.

In fiscal 4Q16, Darden Restaurants (DRI) reported an EBIT (earnings before interest and tax) margin of 10.3% compared with 10.1% in fiscal 4Q15.

On a comparable calendar basis, in fiscal 4Q16, Darden Restaurants (DRI) reported overall same-store sales growth of 2.6% against analysts’ estimate of 2.8%.

After fiscal 4Q16 results, Darden Restaurants’ (DRI) management has revised its same-store sales growth guidance for fiscal 2017 to the range of 1%–2% as compared to earlier estimates of 1%–3%.

Darden Restaurants (DRI) paid dividends of $0.55 per share in first two quarters of its fiscal 2016, and in fiscal 3Q16 it paid a dividend of $0.53.

Having discussed Darden’s estimated revenue, sources of revenue, and estimated EBIT margins, let’s now discuss analysts’ and management’s guidance.

With EPS growth of 21.4%, The Cheesecake Factory (CAKE) beat our other four companies in 1Q16. EPS growth was driven mainly by share repurchases of more than $100 million.

In 1Q16, only one of the five casual dining restaurant companies in our series posted a rise in EBIT margins compared to 1Q15.

To have more control and implement their initiatives faster, casual dining restaurants are focused more on adding company-owned restaurants than franchised restaurants.

Casual dining restaurants didn’t have a good 1Q16. The five companies in our series posted a median same-store sales growth of -1.5% compared to 4.2% in 1Q15.

Revenue growth drives earnings and, in turn, raises investor confidence. In 1Q16, casual dining restaurant companies in our series posted a median revenue growth of 6.9%.

The rise in EPS estimates for the next four quarters has prompted analysts to increase their price target for TXRH for the next 12 months to $45.1 from their earlier estimate of $44.8.

The Cheesecake Factory has positioned itself as an upscale casual dining concept that focuses on providing a distinctive, high-quality dining experience.

From 2011 to 2015, Buffalo Wild Wings’ (BWLD) revenues increased from $784 million to $1.8 billion—a rise of over 131%.

Buffalo Wild Wings is competing in the highly competitive restaurant business, wherein innovation is a must to keep up with the changing needs of customers.

Buffalo Wild Wings is a casual dining restaurant and sports bar headquartered in Minneapolis. Founded in 1982, the company is also known as BW3.

Cracker Barrel Old Country Store (CBRL) has a market cap of $3.49 billion. Its YTD performance was stable. It was in a trading range until the earnings report.

The ADP employment report tracks 23 million US employees across 400,000 businesses in the US. The report only takes into account private payrolls.

China’s same-store sales growth was -12% in 1Q15—compared to 9% growth a year ago. This directly impacted the division’s revenue growth. It fell 8.9% YoY.

Brinker International’s 2014 unit growth included opening ten Chill’s in the United States. Two were opened by franchise.

The average check at Chili’s in 2014 was $14.31, lower than its main peers. Maggiano’s average check was $26.72, the highest among its peers.

Bloomin’ Brands International segment contributed about 13% of total 2014 revenue, including all company-owned and franchise restaurants outside the US.

With ~80% of revenues coming from Olive Garden and LongHorn Steakhouse, Darden focuses heavily on expanding the restaurant units of these two brands.

Fleming’s Prime Steakhouse & Wine Bar is a full-service “upscale” casual dining restaurant, according to the company.

Bonefish Grill is the third most important brand for Bloomin’ Brands (BLMN), contributing 14% of the company’s revenue.

Like Outback Steakhouse, Carrabba’s Italian Grill is also a full-service casual restaurant, but it primarily serves Italian cuisine.

Outback Steakhouse is a full-service casual restaurant primarily serving steaks. The ambiance is set up to match “Australian décor.”

A restaurant must be cautious when raising its menu prices, as this may lead to losing price-sensitive customers. But price increases aren’t uncommon.

In this series, you’ll learn about Bloomin’ Brands’ financial performance, revenue, competition, latest earnings, and stock performance over the years.

In 2014, Olive Garden contributed about 58% to Darden’s revenues as of fiscal 2014. Olive Garden gained importance after Darden sold Red Lobster in 2014.

About 58% of Darden’s fiscal 2014 revenue came from Olive Garden, followed by 22% from LongHorn Steakhouse, and ~20% from Specialty Restaurant Group.

The Current Situation Index suggests that the industry is healthy. Restaurants have been incurring capital expenditures to advance their operations.

Yum! Brands (YUM) earns revenue from the company-operated and franchise stores. Wall Street analysts estimate $3,943 million in revenue.

Wall Street analysts estimate $506 million for Wendy’s revenues, which sequentially is 1% down from 3Q14 revenues of $512.5 million and a 14% decline.

The prices of poultry, meat, dairy, seafood, and produce remained stable in November and December. So EAT may report moderated food costs.

McDonald’s (MCD) has been struggling to grow its revenue. To turn the situation around, management noted specific initiatives.

As the Millenial Generation enters the labor force and gets jobs and increased purchasing power, they are highly critical of the restaurant industry.

In addition to the factors we’ve discussed, regulations can also affect the company’s profits. Let’s look at some of the regulations that apply to TXRH.

Between operating income and net income, the company incurs two expenses that affect its profitability: income tax expense and interest expense.

The company increased its menu prices by 1.5% in early December of 2013, and in 2012, it increased menu prices by 2.2%.

We saw Texas Roadhouse’s (TXRH) revenues and year-over-year revenue growth. A fraction of those revenues comes from royalties and fees from franchises.

In the last part of this series, we briefly covered Texas Roadhouse’s (TXRH) steak-focused menu. Let’s look at it in more detail in this article.

In this overview of Texas Roadhouse, we’ll look at the company’s financial performance, value drivers, competition, unit growth, and other key information.

With the exception of Red Lobster, the company noted that it has been successful at increasing relevance to these more financially secure and younger consumers.

High advertising expenses Darden’s high advertising expenses as a percent of sales support the view that the company isn’t ready to switch to a much lower average check and higher guest traffic. Barington Capital Group did mention Darden’s high SG&A (selling, general, and administrative) expenses were a cost category the company could work on cutting. […]

Average revenue per square foot To get a better picture of Darden’s business, we further looked into casual dining restaurants’ average revenue per square foot—the square feet of restaurants across primarily the United States and their guest traffic. This will help us decide whether Darden’s Olive Garden and Red Lobster brands should pick up a […]