Three CEO’s girded for battle but only one comes out. Welcome to the ring, Sally Smith of Buffalo Wild Wings (NASDAQ:BWLD), Elizabeth Smith, Esq. of Bloomin’ Brands Inc (NASDAQ:BLMN), and Julie Stewart of DineEquity Inc (NYSE:DIN), CEO’s of three casual dining chains. OK, they’re not hairnetted lunch ladies, but top executives of companies with market caps between 1 and 2 billion armed only with spreadsheets and a dream to crush commodity costs. Let’s have a nice clean fight, ladies.
The up-and-coming contender
Bloomin’ Brands Inc (NASDAQ:BLMN) was taken public in August 2012 and ran from $11.60 to a high of $18.99 in February before it reported Q4 2012 results. Bloomin’ Brands owns Outback Steakhouse (their biggest concept), Bonefish Grill, Carrabba’s Italian Grill, and upscale concepts Fleming’s Steakhouse and Roys. Bloomin’ Brands Inc (NASDAQ:BLMN) has the highest P/E at 40.57 and still has a huge debt load it inherited from the days when it was held by Bain Capital. Bain owns a 55.45% controlling stake, by the way. But Bloomin’ has paid off $600 million of the debt overhang in 2012 and arranged for favorable debt refinancing saving $2 million in interest expense.
One interesting thing about Bloomin’ Brands Inc (NASDAQ:BLMN) is that CEO Elizabeth Smith received $24.45 million pay package compared to the $1.41 million pay package for Sally Smith at Buffalo Wild Wings (NASDAQ:BWLD) and the $2.38 million for Julia Stewart at DineEquity but $22 million of that was a retention bonus.
On that Q4 call in which they guided lower 1% from their Q3 call, they mentioned beef commodity costs were expected to rise 10-12% and would be partially offset by seafood costs. They also said they had already contracted for 72% of 2013 foodstuff purchases.
One of the big changes for Bloomin’ is rolling out lunch hours for Outback and Carrabba’s and on the Q4 Q&A it was a question that Smith replied they were very happy with the results so far. Analysts expect a robust 16.57% five year EPS growth rate.
This fighter ain’t chicken
Sally Smith, CEO atBuffalo Wild Wings (NASDAQ:BWLD) sports bar and restaurant chain, helped it grow from 35 locations to 900 (with another 105 openings planned for 2013.) and took it public. International expansion is just beginning in Canada. Smith’s rise to CEO is amazing as she was just a finance officer at the fledgling chain when the man newly hired for CEO didn’t show up. Call in Sally.
Despite being sports bars/restaurants the locations are family friendly with strong community involvement hosting Little League celebrations and such, quite different from the original wings and suds joint for college kids. Buffalo Wild Wings (NASDAQ:BWLD)also enjoys a growing lunch business which attracts local businesspeople.
Buffalo Wild Wings may be a victim of its own success. As the popularity of wings has exploded so has the cost of the commodity. Commodity costs are always an issue with this stock, but the percentage “other” menu items besides wings stands at 39%, same as wings. Smith saw the writing on the chicken wing wall a few years ago and the company has expanded the menu.
Although Buffalo Wild Wings (NASDAQ:BWLD) has no debt and a lower P/E of 27 the stock is actually down 0.66% over the last year. The short interest is very high at 26.30% and has been increasing despite analyst optimism giving the chain a 19% five year EPS growth rate When the company reported Q4 results on February 12, Smith announced they had reached a milestone of $1 billion in net revenue for 2012 and achieved a five year CAGR of 25% for revenues and 24% for net earnings. (source February investor presentation)