NEW YORK ( TheStreet) -- The restaurant business is notorious for many things; among them long hours, thin margins, huge sensitivity to both labor and input costs, and being prone to changing consumer tastes. Rising commodity costs, which worry me in general at this point, can wreak havoc.Success among publicly traded restaurant names is often fleeting, save for a handful that have had true staying power throughout the years. McDonald's (MCD - Get Report) is perhaps the greatest success story, with its long storied history and net profit margins in the 20% range, which makes it look more like a pharmaceutical name than a restaurant. I can still order the same things from the McDonald's menu that I did as a child; although the company has added much to the menu over the years, the basics are still the same.
As a value investor, I'm not wired for the growth stories, or the high multiples that come along with great expectations. I am wired to look for the down and out names that are ignored by the market, exhibit some characteristics that suggest a potential turnaround, and are mispriced (in my opinion, anyway.) While it is a dangerous game to buy down and out restaurant names, I've had some success the past several years with names like Denny's (DENN), Cracker Barrel (CBRL) and Krispy Kreme (KKD). I've also had disappointment with Wendy's (WEN).