Denny’s Corporation (DENN), Cracker Barrel Old Country Store, Inc. (CBRL): One Restaurant Company to Consider, Two to Avoid

Denny’s is trying hard to increase its brand exposure. And current moves have the potential to be effective. On the other hand, this would still be a risky investment due to fierce competition.

Weak consumer + increased competition = no problem

Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has been mostly unfazed by industry conditions. Revenue and earnings have consistently improved over the past three years. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) even managed to deliver big profits in 2008/2009.

Unlike most restaurant chains, Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) has seen increased traffic. The company’s highly strategic locations are a major catalyst. Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) also has seasonal offerings (keeps menu fresh), a kid’s menu, a dessert menu, and a retail store. The latter gives Cracker Barrel somewhat of a historical feel, as though it’s an attraction opposed to just a restaurant. This brilliant brand imaging has led to consistent success. And that success should continue, especially considering management recently raised its 2013 comps guidance to 2.5% from 2%, and its 2013 adjusted EPS guidance to $4.75-$4.85 from $4.60-$4.80.

Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) currently yields 2.90%, and based on the company’s quality debt management, the dividend looks to be sustainable. It’s also possible that the dividend will continue to grow. To add to the optimism of this story, Cracker Barrel has beat expectations over the last four quarters.

Conclusion

DineEquity and Denny’s Corporation (NASDAQ:DENN) are making moves to increase revenue, but the effectiveness of these moves is still in question. Cracker Barrel offers the most unique dining experience and most strategic locations of the three. This has allowed Cracker Barrel to defy the odds. It’s also these types of unique restaurant chains that will be capable of growing in a saturated industry. Needless to say, Cracker Barrel looks to be the best long-term investment going forward.

The article One Restaurant Company to Consider, Two to Avoid originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Cracker Barrel Old Country Store (NASDAQ:CBRL). Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.