Casual Dining (Long the Bread Stick)

The dominant narrative lately is that Quick Service Restaurants (formerly known as, cough, "fast food"), fast casual restaurants and fine dining establishments are, for the most part, doing well. Millennials love experiences and, judging from the volume of Instas featuring Avo Toast, food = experiences. Unless, that is, we're talking about "casual dining" establishments likeRuby Tuesday, Joe's Crab Shack, and others. Why eat subpar food and sit staring at your phone when you can subscribe to Blue Apron, make food at home, and sit staring at your phone? Well, throw in some bread sticks and you just may combat that narrative. So is the story with Olive Garden (owned by Darden Restaurants Inc. ($DRI)), apparently, as the chain reported same store sales growth of 4.4% and 4th straight quarter beat. Note, however, that profits fell on higher costs. With food prices lower, we wonder whether CACs have increased...? 

Casual Dining Continue to Take a Beating $IRG

Ignite Restaurant Group (see profile below) - owner of the Joe's Crab Shack and Brick House Tavern + Tap - is the latest victim of the trends befalling the casual dining segment. That said, this story is a bit more complex than that and the bankruptcy seems to be the result of a perfect storm of poor acquisitions, poor execution and hubris. Oh, and private equity once again getting the upper hand - here, Golden Gate Capital dumping the Macaroni Grill dog before it's brand value diminished even farther than it already had. Now Kelly Investment Group is looking to buy the company for a fraction of the company's secured debt. Ouch. Notably, KIG also purchased Last Call Operating Co. (owner ofChampps and Fox & Hound) out of bankruptcy last year.