Stifel's West noted "most casual dining concepts are expected to report flat-to-positive same-store-sales comps, but the low single-digit gains compared with mid-single digit declines for the third quarter during the past 2 to 4 years further supports our view that consumers will only gradually trickle back to casual dining."
Stifel's West believed a number of restaurant sector names were "currently priced for a 'beat and raise' scenario, but our expectations for continued stagnant (at best) comp growth and cost inflation could lead to a rotation out of higher beta names to higher yield with international exposure." He also said the gap between casual dining chains and quick service (QSR), or fast food, chains remained narrower than in 2009, with easier comparisons at those in the casual space which should provide year-over-year growth. Consumers will continue to keep a firm check on discretionary spending, and when they do decide to spend money on luxuries like eating out they turn to lower price points, said Samadi. "Fast food restaurants will benefit as the economy improves, unemployment rates decline and consumers begin to spend money again on luxuries like eating out." Here then is a look at some of the biggest names in the sector, and what investors should be thinking about as the earnings season wraps up.