On “Wednesdays with Wedbush” on Benzinga’s PreMarket Prep Plus, Nick Setyan, a managing director of research who covers the restaurant sector for the firm, joined the broadcast.
Restaurants Before And After The Pandemic: Despite the initial shock of the lockdowns and limited access to restaurants, Seytan said he was thrilled that sales volumes at many restaurants held steady or increased during the pandemic.
In addition, with lower expenses — fewer employees and less restaurant maintenance — margins actually improved during this turbulent period. With many restaurant owners learning to adapt on the fly to operate more efficiently and economically, the implications when coming out of the pandemic were a boon to the bottom line.
Regional Restaurant Preferences: “We have a bifurcated restaurant world now, company-owned concepts and franchise concepts, mostly in the QSR space,” Setyan told Benzinga.
With the franchise concept, the franchisor does not have to worry as much about margins, as they just get a take from the bottom-line. At this time, the steady increase in sales has offset the increased costs for the franchisees, and they are prospering as well.
With respect to a regional bias, Setyan said: “At first, the south and southeast were outperforming, but over the last few months, things have evened out.”
Setyan’s Favorite Company-Owned Restaurant: Setyan’s favorite of all the others is the Cheesecake Factory (NASDAQ:CAKE).
The company “is still trading at a pre-Covid [level] and they are comping 10% better than in 2019 and sales are up 10% with the company’s dining rooms only operating at 85%-90% capacity.”
Also, each store is doing about $3 million in business off-premise.
However, the main reason he likes the company is a few new concept restaurants in the pipeline over the next three to five years. Back in October 2019, the company closed the acquisitions of North Italia and Fox Restaurant Concepts, including Flower Child.
North Italia turns a modern lens on Italian cooking in the upscale, casual-dining segment. All dishes are handmade from scratch daily. The concept currently has over 20 locations in 10 states and Washington, D.C.
FRC was founded by Sam Fox, a 10-time James Beard Award semifinalist for Restaurateur of the Year and New York Times bestselling cookbook author. Each restaurant is individually designed to provide guests with a one-of-a-kind dining experience that will leave a lasting impression.
The full discussion with Nick Setyan can be found here:
For more information on PreMarket Prep Plus go to premarketprep.com.