In good times and bad, one basic luxury never went out of style – a good, old fashioned American breakfast. Americans have a love affair with breakfast. Generally it’s good, filling and cheap. The restaurant chains that cater to this demographic have been great performers. They have defied the economic downturn. I see continued gains for the sector since I love their business model and their breakfasts.
Nothing like an old country store for breakfast
Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) signifies country breakfast at its best. The company’s 621 Cracker Barrel Old Country Stores are spread across 42 states. The restaurants are located along interstates and cater to road travelers. The menu is based on traditional Southern recipes.
In the latest earnings report, the company beat estimates on both the top and bottom lines. Earnings per share came in at $1.02 whereas estimates were calling for only $0.94. Revenues came in at $640.4 million for the quarter. Revenues for next quarter are estimated to be $664.6 million.
The company also announced that they were increasing the quarterly dividend from $0.50 per share to $0.75, a 50% increase. On an annualized basis, that gives the stock a yield of 3.1%. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has tripled its dividend since 2011.
For Mother’s Day of this year, the company recorded its highest sales day in history. This really shows customer loyalty when diners are taking their mothers there for Mother’s Day. It’s a special day of the year and further supports the customer satisfaction that Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) offers its customers. No doubt many went for Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL)’s new multi-berry pancakes.
IHOP to breakfast at DineEquity Inc (NYSE:DIN)
DineEquity Inc (NYSE:DIN) owns and franchises International House of Pancakes (IHOP) and neighborhood chain Applebee’s. When it comes to breakfast, you can’t beat IHOP and their pancakes. IHOP has been serving breakfast for 55 years and its menu offers 65 different signature, made-to-order breakfast options.
For dividend investors it pays to know that the company has paid a dividend for the past two quarters. The current dividend amounts to $3 annually and a yield of 4.1%. DineEquity Inc (NYSE:DIN) has also initiated a $100 million stock buyback program. The stock is up almost 52% in the past year.
First quarter earnings came in at $1.14 per share compared to expectations of only $1.01 per share. The company is in the process of transitioning from a focus on a company-owned stores to a franchise model. Over the long-term, this should reduce earnings volatility and increase cash flow. The company has been steering funds towards remodeling its restaurants. At the end of the first quarter, the company had remodeled 54% of its restaurants. By the end of the year, that figure is expected to be 70%.