Chipotle Mexican Grill (CMG) and Dunkin' Donuts (DNKN) See Reaccelerated Unit Growth, Though Not at Prerecession Levels

Wall Street Transcript

67 WALL STREET, New York - March 11, 2013 - The Wall Street Transcript has just published its Restaurants, Food and Drinks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs and Equity Analysts. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Shift Toward Healthier Food Options - Emerging Market Expansion - Focus on Brand Equity - Store Sales Growth Trends - Cautious Consumer Spending

Companies include: Chipotle Mexican Grill, Inc. (CMG), McDonald's Corp. (MCD), Starbucks Corp. (SBUX), Sonic Corp. (SONC) and many more.

In the following excerpt from the Restaurants, Food and Drinks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: You mentioned, in the case of Chipotle, it having the potential to as much as triple their stores in the U.S. Overall, are the restaurant companies growing units again?

Ms. Zackfia: I want to speak specifically to my companies, because we're trying to follow growth companies. With the exception of Sonic, all of our companies have reaccelerated growth. However, I don't think we've seen any company in our coverage reaccelerate growth to prerecession levels.

Starbucks (SBUX) is back to high-single-digit global unit growth, but it's not back to where it was prerecession. Chipotle (CMG) is low-to-mid-teens restaurant growth, but not where it was prerecession. Even Dunkin' (DNKN), which is accelerating its growth of Dunkin' Donuts - prerecession it was growing 10%, 11% a year.

So I think there is more caution, more prudent behavior, right now in the restaurant space. And obviously these growth rates are all off of bigger numbers, too. I don't think any of my companies feel as if there's some sort of competitive race where they need to grow more quickly than they are. And part of the discussion is the relative dearth of new development. Real estate has gotten better, but it's not as if there are as many new retail developments going up today as there were back in 2005, 2006, and those are the easiest locations to open because it's greenfield. It's much more difficult to scout sites in existing downtown areas, in existing developments and wait for leases to turn over.

TWST: From the quarterly earnings calls that have taken place so far, have there been any highlights or themes or a tone among management comments that stand out for you?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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