Wall Street Transcript Interview with Nick Setyan, Senior Equity Analyst at Wedbush Securities: Fast Casual Restaurants Best Positioned to Outperform with Low Average Checks
67 WALL STREET, New York - March 19, 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), Panera Bread Co. (PNRA), Buffalo Wild Wings Inc. (BWLD), Krispy Kreme Doughnuts Inc. (KKD), BJ's Restaurants Inc. (BJRI), McDonald's Corp. (MCD), Carrols Restaurant Group, Inc. (TAST) 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: Among the different restaurant segments - QSR, fast casuals, etc. - are any of them faring better in today's environment, and if so, why?
Mr. Setyan: Casual diners are faring the worst. The quick casual category is faring the best. The reason is because of the affordable nature of the average ticket. If you don't want to sit down and pay a higher price along with a tip, you can get a very similar quality offering at a Chipotle (CMG) or Panera Bread (PNRA) or similar brands. If there is any kind of a trade down, the QSR category benefits as well, but restaurants within the quick-casual category are probably the best positioned to outperform within this environment, followed by QSR and lastly casual diners.
TWST: So affordability is really what's resonating most with consumers these days?
Mr. Setyan: Absolutely. That is, I think, the key metric when we think about who is best positioned to outperform in this kind of environment.
TWST: Some of those names like Chipotle and Panera, which you mentioned, also seem to have a healthier slant. Is that a trend that you see playing out in the business?
Mr. Setyan: Healthier is definitely better as more of a marketing technique, I think, but when we think about who is best positioned, again it really has to do with average ticket. For example, Buffalo Wild Wings (BWLD) - we can't really categorize wings as healthy by any measure of the imagination, yet they are, in my opinion, the best positioned casual diner, and they tend to outperform in any kind of a macro headwind environment because, again, their average check is the lowest in casual dining today.
TWST: You mentioned that you have four stocks rated "outperform." What are your top picks right now? Tell us a little bit about them and why.
Mr. Setyan: Of the small caps, I very much like...
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.
