Consumers have not been kind to the casual dining chains in
Bravo Brio Restaurant Group, Inc.
) recently lowered 2013 guidance due to the competitive market.
This Zacks Rank #5 (Strong Sell) is finding "upscale affordable" to
be a hard sell.
Bravo Brio operates two Italian restaurant brands, BRAVO! Cucina
Italiana and BRIO Tuscan Grille, in 31 states across the country.
BRIO is its bigger concept, with 56 restaurants whereas BRAVO! has
47 restaurants. It also operates one Bon Vie restaurant.
It has a big focus in its home state of Ohio as well as in Florida.
Bravo Brio markets itself as "upscale affordable" but this segment
of the restaurant market has been challenging in 2013.
Missed the Zacks Consensus in the Third Quarter
On Nov 5, Bravo Brio reported its third quarter results and missed
the Zacks Consensus for the second quarter in a row. Earnings were
$0.11 compared to the consensus of $0.14.
While revenue rose 0.4% to $96.3 million, comparable restaurant
sales dipped 4.5%.
Both chains were weak, with comparable restaurant sales down 3.7%
at BRAVO! and 5.1% at BRIO.
Margins eroded and competition picked up in several of its markets.
Guidance Lowered for 2013
Given the third quarter results and projections for the fourth
quarter, Bravo Brio lowered its EPS and revenue guidance for 2013.
Revenue is now expected in the range of $410-$413 million, down
from $414-$420 million.
Earnings are forecast to be between $0.78 to $0.81, down
significantly from the prior guidance of $0.83 to $0.89.
Bravo Brio will also open 8 restaurants in the year. It provided
preliminary guidance for 2014 of between 6 and 7 new openings.
Shares Have Fallen
Shares of Bravo Brio have fallen since the summer but even with the
sell off, the company is still trading at 20x forward estimates.
That's more expensive than the S&P 500 at 16.7x.
Investors who REALLY want to be in a restaurant stock might want to
consider alternatives to Bravo Brio like
Buffalo Wild Wings
). While it is not immune to the choosy consumer, falling chicken
wing prices are helping boost margins.
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