Wall Street Transcript Interview with Nicole Miller Regan, Managing Director and Senior Research Analyst at Piper Jaffray: Brand Equity Surfaces as the Main Restaurant Differentiator

Wall Street Transcript

67 WALL STREET, New York - March 12, 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: Starbucks Corp. (SBUX), McDonald's Corp. (MCD), Chipotle Mexican Grill, Inc. (CMG), Panera Bread Co. (PNRA) 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: Who is growing their unit count right now?

Ms. Regan: Growth companies are the smaller casual diners like Bravo Brio (BBRG), Del Frisco's (DFRG) and Ignite (IRG), which is Joe's Crab Shack. Chipotle (CMG) still is a growth company, despite it being over 1,000 stores.

TWST: Are they targeting particular types of markets or demographics?

Ms. Regan: I think that depends on where the companies are in their own life cycle. The casual diners that are small are still going from regional to national, and they're probably backfilling markets as well. Chipotle, which isn't like the limited service arena, will ultimately have more stores; it has really hit almost every major market, and so it's less about new markets and more about backfilling developing markets.

TWST: Are there any other important trends to note, whether it be consumer preference or other industry developments?

Ms. Regan: There are a couple of things we're looking at thematically. We did coin 2012 as the "year of the restaurant," which was meant to reflect the beginning of a favorable cycle for restaurants. As we look into 2013, we call it the "second course," and say that trends are still favorable in terms of less supply and more demand.

I forgot to add earlier, if you look back over the past decade, the constituents of publicly traded restaurant stocks is about 30% smaller, and that's because of the preceding M&A cycle, and so not only are there fewer growth stocks, there are fewer restaurant stocks as well, so that's one thing that we look at. And then, we talked about the blurring of the lines...

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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