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Zacks Industry Outlook Highlights: Texas Roadhouse, Domino's Pizza, Yum! Brands, Panera Bread and Darden Restaurants

TXRH DPZ YUM PNRA DRI

 ZacksTrade Now

For Immediate Release

Chicago, IL – March 14, 2012 – Today, Zacks Equity Research discusses the Restaurants Industry, including Texas Roadhouse Inc. ( (TXRH - Snapshot Report), Domino's Pizza Inc. ( (DPZ - Analyst Report), Yum! Brands ( (YUM - Analyst Report), Panera Bread Co. ( (PNRA - Analyst Report) and Darden Restaurants Inc. ( (DRI - Analyst Report).

 

A synopsis of today’s Industry Outlook is presented below. The full article can be read at   http://www.zacks.com/stock/news/71247/Restaurant+Industry+Stock+Review+-+March+2012

According to an analysis by NPD, which has a ten-year projection of foodservice trends based on aging, population growth and trend momentum, servings of breakfast sandwiches are projected to outpace the industry’s growth forecast. Annual servings per capita of breakfast sandwiches at foodservice are expected to jump from 11 in 2004 to 14 in 2019.

Non-alcoholic beverages remain a sweet spot in the U.S. eateries. According to Mintel Global Market Navigator, the US fruit juice drinks market expanded by 1% in 2011. This was an improvement on the 1.7% fall recorded in 2009 and breakeven in 2010. The market also has the ability to grow further through innovation, especially in healthier solutions. We see juicing giant Jamba geared up to leverage the trend by adding all fruits to its line-up.

There are other players like sector behemoths Starbucks venturing into the $50 billion category of healthy juices and McDonald's specializing in both frozen as well as hot beverages. McDonald's has been delivering strong comparable sales in the U.S. buoyed by its McCafe line.

We see continued sales recovery in the next few months as cold beverage provides a higher lift in comps as against hot beverage in winter.

M&A Activity

Merger and acquisition activity is also gaining momentum in the sector. The companies are looking at potential business partners to foray into different zones and unlock value. Apart from acquisitions, the companies are also divesting their slow-moving brands in order to spur growth.  For example, while Yum! Brands acquired China-based restaurant chain Little Ship, it also disposed two of its brands, Long John Silver’s and A&W, at the same time.

Currently, there are a number of stocks in the restaurant with a Zacks #1 Rank (short-term Strong Buy rating). These include Texas Roadhouse Inc. ( (TXRH - Snapshot Report). Companies with Zacks #2 Rank (short-term Buy rating) include Domino's Pizza Inc. ( (DPZ - Analyst Report), Yum! Brands ( (YUM - Analyst Report), Panera Bread Co. ( (PNRA - Analyst Report) and Darden Restaurants Inc. ( (DRI - Analyst Report).

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