Restaurant executives cautious on consumer, economy

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Despite posting increased sales and profits in the second quarter, many of the restaurant industry’s largest companies did not sound optimistic that strong trends would continue and were cautious on the economic and consumer environments for the second half of the year.

 Restaurants’ gains in sales and profits in the second quarter were all hard-won, executives said, as consumer confidence continues to waver in markets across the globe, spurring brands to take menu price increases, accelerate promotional activity and intensify their efforts to take market share from equally active competitors. Yet, certain restaurant stocks were hard hit as investors read into comments made about the remainder of the year and the unsteady state of spending, sentiment and job growth. Even restaurant chains performing well tempered comments for Wall Street.

Nation’s Restaurant News looked at five companies — BJ’s Restaurants Inc., Chipotle Mexican Grill Inc., McDonald’s Corp., Papa John’s International Inc. and Starbucks Corp. — to report the straight talk from second-quarter earnings conference calls with analysts and investors. Papa John’s stands alone in its confidence.

BJ’s Restaurant & Brewhouse

Officials said BJ’s enjoyed another quarter of gains in market share, earnings and sales because of continued unit growth and sales-driving menu strategies. Second-quarter net income rose 10 percent, while revenue increased 18 percent. The chain’s 4.4-percent gain in same-store sales included 3.2-percent hikes to menu prices and a 0.8-percent uptick in traffic.

 BJ’s announced that it will expand its test of its first television marketing campaign.

In a call with analysts, Jerry Deitchle, chief executive for BJ’s Restaurant & Brewhouse, said:

“It is not going to be easy; it is a struggle. Even for the larger consumer companies out there — and we see all the earnings releases and sales commentary of other restaurant companies that are much larger and stronger than we are, and some of the softening trends they’re seeing — it’s a toughening environment. If we could ever get a little bit of tailwind here, it would have a remarkable effect on our business — but we’re all fighting the headwinds now.”

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