For Immediate Release

Chicago, IL – January 23, 2015 – Today, Zacks Equity Research discusses the Restaurants (Part 2), including Buffalo Wild Wings Inc. (BWLD-Free Report), Darden Restaurants, Inc. (DRI-Free Report), Domino's Pizza, Inc. (DPZ-Free Report), Wendy's Company (WEN-Free Report) and Bob Evans Farms, Inc. (BOBE-Free Report).
 
Industry: Restaurants (Part 2)

Link: https://www.zacks.com/commentary/37500/restaurant-stock-outlook-part-2
 
Will Restaurant Industry Positives Offset the Weaknesses?

The turnaround in the restaurant industry gives investors ample reason to be positive. An improvement in employment rate and lower gasoline prices are helping to increase consumer discretionary spending. Restaurateurs, on their part, are trying to boost sales through diverse initiatives and striving to bring the best to the table.

However, worries persist about certain patches of high interest rates, higher health care costs and still-tightened credit availability that would continue to hurt consumer spending in the U.S.

On the brighter side, there are plenty of reasons to be optimistic about the broader restaurant industry over both the short and long term. Below we have highlighted some of the positives for the restaurant industry going forward:

Improving Comps and Traffic Trends: With improving consumer sentiment, a number of restaurant companies like Buffalo Wild Wings Inc. (BWLD-Free Report), Darden Restaurants, Inc. (DRI-Free Report) and Domino's Pizza, Inc. (DPZ-Free Report) witnessed improved comps and traffic mainly in the second part of 2014. Sales initiatives coupled with economic recovery have aided improvement in these metrics.

Improving Economic Growth: An improving economic and employment picture and growing consumer confidence led to a slow but steady recovery in the second half of 2014. Better job prospects, heightened economic activities and better-than-expected GDP numbers have helped in improving the bleak economic picture to some extent.

It is generally believed that the U.S. economy should sustain the growth seen in 2014 and do even better in 2015. There are several reasons to support this optimistic outlook. Lower energy costs encourage consumer spending, while further easing of credit conditions and growing consumer and business confidence indicate faster economic growth in 2015.

Lower Gasoline Prices: Middle-income households spend the lion’s share of the total household budget on gasoline. Falling gas prices will free up a significant amount for consumers to spend next year and the middle class will benefit the most. Therefore, Americans are expected to spend more on discretionary items and dine out more often.

Sales Initiatives: Restaurants strive to improve sales by targeting higher footfall and focusing on delivering something unique. Food chains are responding in different ways to address heightened competition in a somewhat over-supplied domestic market. One of the initiatives taken by the food chains is re-imaging of stores, which has received an overwhelming response from guests. The Wendy's Company (WEN-Free Report) and Bob Evans Farms, Inc. (BOBE-Free Report) have been working along these lines.

Having stabilized their financial positions, the operators are constantly striving to add new offerings to their menu in order to cater to the ever-changing palates of customers while making food presentation better.
 
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BUFFALO WLD WNG (BWLD): Free Stock Analysis Report
 
DARDEN RESTRNT (DRI): Free Stock Analysis Report
 
DOMINOS PIZZA (DPZ): Free Stock Analysis Report
 
WENDYS CO/THE (WEN): Free Stock Analysis Report
 
BOB EVANS FARMS (BOBE): Free Stock Analysis Report
 
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