Snow Didn't Put Growth on Ice at These 5 Restaurant Chains
Snowy weather doesn't put our appetites in a deep freeze, but it apparently makes people less likely to want to eat out. McDonald's (MCD) was just one of many companies to report sluggish sales at the store level during this year's first quarter, and it was also just one of the many operators to blame the weather.
%VIRTUAL-article-sponsoredlinks%Wicked snowstorms earlier this year kept customers away and forced some stores to temporarily close. It was, allegedly, what led to the third consecutive quarter of negative comparable-store sales at McDonald's.
"We don't plan around weather at McDonald's," CEO Don Thompson said during April's conference call. "We plan around customers." It's a nice quote, but at root, it still means McDonald is trying to blame the meteorologist for its troubles.
Thankfully, not all of its rivals are having the same issues. Let's go over a few restaurant operators that posted positive same-store sales during the winter quarter.
Chipotle Mexican Grill (CMG). The market darling has turned its "food with integrity" mantra, fast-moving queues and tasty burritos into the most enviable model in the industry. At a time when many restaurant concepts -- including a few fellow Mexican and fast casual rivals -- have sputtered, Chipotle came through with a 13.4 percent surge in comparable-restaurant sales. The 1,600-unit chain is making the most of its situation by expanding quickly. It expects to add another 180 to 195 new locations this year.
Arcos Dorados (ARCO). McDonald's is struggling in this country, but the burger chain is holding up better overseas. Arcos Dorados is Latin America's largest restaurant chain, with more than 2,000 McDonald's, making it the world's largest McDonald's franchisee. During the same three months that U.S. comps declined, Arcos Dorados posted a healthy 8.9 percent improvement in systemwide comparable sales. It did post a loss for the period, but at least revenue is moving in the right direction.
Buffalo Wild Wings (BWLD). Running a chain of family-friendly sports bars would seem like a good business to be in during the first quarter of the year, with the Super Bowl and March Madness drawing crowds. This year also featured the Winter Olympics, which gave it a boost. Same-store sales increased 6.6 percent at its company-owned locations and 5 percent at its franchised sports bars. Buffalo Wild Wings has been aggressive in pushing its trendy concept to potential franchisees. There are now more than 1,000 units across the country.
Chuy's Holdings (CHUY). Born in Texas, this rapidly expanding casual dining chain offers up Tex-Mex eats in a festive setting. There's an Elvis Presley shrine in every restaurant. Patrons can submit photos of their dogs that are then mounted on the wall. Most entrees sell for less than $10. Revenue climbed nearly 20 percent in its latest quarter, helped along by a 4.2 percent uptick in comps. There are just 52 of its full-service eateries, giving Chuy's plenty of upside for growth.
Cheesecake Factory (CAKE). The most successful operator in the casual dining realm is Cheesecake Factory. Its average eatery rang up $10.4 million in sales last year. This doesn't mean that Cheesecake Factory always shows up as big as its portions. Comps in its latest quarter only rose 1.2 percent. That's still positive, at least. The chain's smaller yet slightly more upscale Grand Lux concept joined McDonald's and so many casual dining operators by posting a decline in same-restaurant revenue.
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As for McDonald's, it can't keep sinking forever. Positive and negative streaks end. However, the next time that McDonald's or some other concept blames lousy weather, the shift in the Easter holiday or some other external event for a sloppy showing during the first three months of the year, feel free to rattle off the names of these five chains that held up just fine.
Motley Fool contributor Rick Munarriz owns shares of The Cheesecake Factory. The Motley Fool recommends Buffalo Wild Wings, Chipotle Mexican Grill and McDonald's. The Motley Fool owns shares of Arcos Dorados, Buffalo Wild Wings and Chipotle Mexican Grill. Try any of our newsletter services free for 30 days.
