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As we move into the last leg of the Q3 earnings, we note that the quarter is expected to be the first to move into the positive territory, following five back-to-back quarters of declines for the S&P 500 Index.

Coming to the broader Retail-Wholesale sector to which the restaurant industry belongs, per our latest Earnings Outlook report, 48.8% of the retailers in the S&P 500 Index have reported their quarterly numbers (as of Nov 9). Most of these are online vendors and restaurateurs.

The performance of these companies has not been alluring. A challenging sales environment in the restaurant space, which is leading to lower traffic and comps, is turning out to be a major headwind for the top line.

Lower-than-expected revenue growth has hurt the performance of some major players like Chipotle Mexican Grill, Inc. (CMG - Free Report) , Brinker International, Inc. (EAT - Free Report) , BJ’s Restaurants, Inc. (BJRI - Free Report) , YUM! Brands, Inc. (YUM - Free Report) and El Pollo Loco Holdings, Inc. (LOCO - Free Report) , to name a few.

Two restaurant companies are set to report their third-quarter 2016 numbers on Nov 11. Will these companies manage to put up a decent performance? Let’s take a look at what might be in store for them this quarter:

Zoe's Kitchen, Inc.’s (ZOES - Free Report) reported earnings last quarter were in line with the Zacks Consensus Estimate. In fact, the company met/surpassed the Zacks Consensus Estimate in all of the last four quarters, with an average beat of 41.67%.

Notably, our proven model shows that an earnings beat is uncertain for Zoe's Kitchen this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

ZOES KITCHEN Price and EPS Surprise

For the quarter, the company has an Earnings ESP of 0.00% and a Zacks Rank #4 (Sell), making it difficult to conclusively predict a beat. Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 4 cents.

Increasing labor costs along with higher store operating expenses may have continued to dent the company’s profits in the to-be-reported quarter. Furthermore, the industry’s slower traffic trend along with heavy and prolonged discounting remain potent headwinds to the top line. However, the company’s increased focus on catering, menu innovation and unit expansion could drive top-line growth (read more: Zoe's Kitchen Q3 Earnings Preview: What to Expect?).

Famous Dave’s of America, Inc. (DAVE - Free Report) recorded a positive earnings surprise of 41.67% last quarter. In fact, the company posted positive earnings surprises in three of the past four quarters, with an average negative surprise of 5.78%.

We note that Famous Dave’s is unlikely to post a beat this quarter due to the combination of its Earnings ESP of 0.00% and Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Notably, the Zacks Consensus Estimate for the quarter’s earnings is pegged at 10 cents.

FAMOUS DAVES Price and EPS Surprise

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