Whenever I walk into a crowded restaurant with my mother, she remarks, "This place is a gold mine."
The casual-dining restaurant chains' earnings reports this week stunk about as badly as a week-old asparagus and mushroom quesadilla with extra sour cream. The main culprit? Traffic. People just aren't showing up anymore.
Cheesecake Factory saw first-quarter traffic decline by roughly 1%, the company reported Tuesday. At Brinker (EAT), whose chains include Chili's and Romano's Macaroni Grill, traffic was down more than 5% in the quarter. IHOP (IHP) also recorded traffic declines.Many companies, as they are apt to do, blamed the lack of customers on the weather. While weather can hurt sales, especially if there are nasty storms, you rarely hear a company credit sunny comfortable days for an increase in sales. It hasn't rained in about six months where I live in South Florida, yet I don't recall any CEOs discussing abnormal strength in that market. Rising gasoline prices certainly haven't helped the restaurants' cause. However, you can't pin their woes simply on bad weather and expensive gas. After all, retail chains, which face the same headwinds, have been performing quite well lately.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV