Barclays on U.S. Restaurants: Burgers & Brew; 1Q11 Restaurant Preview

Barclays on U.S. Restaurants: Burgers & Brew; 1Q11 Restaurant Preview

Barclays analyst said, "...Based on improving comps and return to pricing (for those with 'pricing power'), we're comfortable with consensus low-teen 2011 EPS growth, with a modest 2H acceleration...Our more mature casual dining & QSRs experienced in-line stock performance in 1Q11 (both up ~5%, similar to the S&P), albeit well short of the 20%+ return for the specialty/ fast casual segment. In contrast, all segments were strong outperformers in 2010 (up 46% vs the S&P up 13%), with specialty/fast casual leading the pack, followed by casual dining, and then QSR. We continue to believe casual dining is best positioned as we move through 2011, with Brinker (NYSE: EAT) offering the greatest risk/reward (on improving comps & margin driving initiatives), while Darden (NYSE: DRI) & Texas Roadhouse (Nasdaq: TXRH) are relative outperformers due to fundamental strength."

"In QSR, McDonald's (NYSE: MCD) continues to report industry-leading fundamentals (despite recent underperformance on slowing US comps & thus far unfounded caution on European austerity measures) while Wendy's (NYSE: WEN) offers greater risk/reward. Our specialty/fast casual concepts (i.e. Chipolte Mexican (NYSE: CMG), Panera (Nasdaq: PNRA), Starbucks (Nasdaq: SBUX)) continue to report the strongest fundamentals (5-10% comps), though we believe such is fully reflected in valuation and therefore vulnerable to a modest deceleration. Of our Equal Weight rated stocks, we believe Cheesecake Factory (Nasdaq: CAKE) & YUM! Brands (NYSE: YUM) offer the greatest near-term outperformance potential."

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