EARNINGS PREVIEW: US Restaurants Look For Right Discount Mix
01 10월 2009 - 3:47AM
Dow Jones News
TAKING THE PULSE: Discounting is still the name of the game in
the restaurant sector, but some players, particularly in the
casual-dining segment, have pulled back from their best deals after
finding the increased traffic didn't make up for slimmer margins.
Fast-food chains continue to fight battles on two fronts, ramping
up both value deals and premium offerings.
COMPANIES TO WATCH:
Yum Brands Inc. (YUM) - reports Oct. 6
Wall Street Expectations: The operator of the Taco Bell, Pizza
Hut and KFC chains is expected to report earnings of 58 cents a
share on revenue of $2.79 billion, according to analysts polled by
Thomson Reuters. A year earlier, the figures were 58 cents and $2.8
billion, respectively.
Key Issues: As growth remains sluggish in the U.S., Yum has been
leaning on its international operations, but now even the formerly
fast-growing China market is a question mark. KFC has benefited
from its healthier grilled chicken and hopes to score more points
from a marketing tie-in with the National Football League.
Meanwhile, Pizza Hut has been promoting offerings as low as $5 and
Taco Bell, which contributes 60% of U.S. profits, has been getting
set to expand into international markets.
Brinker International Inc. (EAT) - reports Oct. 20
Wall Street Expectations: Analysts predict earnings of 14 cents
on revenue of $768 million. A year earlier, earnings were 23 cents
on revenue of $984.4 million, including the Macaroni Grill. Brinker
sold an 80% stake in the Italian chain in December.
Key Issues: The owner of Chili's Grill & Bar and other
chains has pulled back from its steep discounting and smaller
portions after finding they didn't goose up revenue as hoped. Wall
Street will be looking for signs that new strategies are paying
off, especially after Brinker's bleak outlook sent the sector's
stocks tumbling early last month. The company Thursday will brink
back Chili's "baby back ribs" jingle from the late 1980s in
commercials for ribs made with a new smoking process.
McDonald's Corp. (MCD) - reports Oct. 22
Wall Street Expectations: The company is projected to earn $1.10
on revenue of $6.09 billion. Year-ago earnings were $1.05 while
revenue was $6.27 billion.
Key Issues: McDonald's, one of the strongest performers during
the recession, has seen sales growth slow lately amid rising
unemployment and cutthroat competition. Still, the fast-food giant
has scored with its dollar menu, though the company is likely to
face some pressure from archrival Burger King Corp.'s (BKC)
decision to offer a $1 double cheeseburger. Some on Wall Street
wonder if the company has ceded some of the low end as it moved
upmarket with its Angus burgers and McCafe offerings.
Wendy's/Arby's Group Inc. (WEN) - reports Nov. 5
Wall Street Expectations: The company is seen posting earnings
of 6 cents on revenue of $929 million. A year earlier, the
predecessor company posted a 13-cent loss and revenue of $310.4
million in the last quarter before former Arby's parent Triarc
bought Wendy's.
Key Issues: The company's purchase of Wendy's has played out
well as that chain has consistently outperformed Arby's, which was
slower to join the discounting wars. Still, both reported
smaller-than-expected sales declines last quarter, suggesting a
turnaround may be on the way. Wendy's, encouraged by the success of
its new boneless wings, has a burgeoning pipeline of products under
development, including a premium burger coming by year's end.
Starbucks Corp. (SBUX) - reporting date to be announced
Wall Street Expectations: Analysts estimate the coffeehouse
chain will report a 21-cent profit on revenue of $2.39 billion.
Starbucks earned 1 cent a share on revenue of $2.52 billion last
year.
Key Issues: The coffee giant has been pretty successful in
getting its operations turned around, with store closures and
streamlining showing up on the bottom line over the past few
quarters. However, Starbucks is still working hard to hone its
value proposition to lure cash-strapped consumers who may be
willing to give McDonald's new coffee offerings a try. It is
running a promotion this weekend to see if customers can tell the
difference between the company's brewed coffee and its instant
variety being rolled out nationally.
(The Thomson Reuters estimate and year-ago figures may not be
comparable due to one-time items and other adjustments.)
-By Jay Miller, Dow Jones Newswires; 212-416-2355;
jay.miller@dowjones.com