Two notable restaurants will be serving up their financials today after the closing bell. Buffalo Wild Wings and Panera Bread Co. are both on the plate as earnings season has arrived, and earnings are being consumed.
Estimize predicts an EPS of $1.27 for Buffalo Wild Wings (BWLD), two cents higher than Wall Street. Last quarter, BWLD EPS was $1.52. For the last two quarters, however, Estimize & Wall Street have overestimated EPS. Estimize and Wall Street predict a similar revenue of $430.02B and $429.63B, respectively. These forecasts would call for a revenue decline of slightly over 2% from last quarter’s revenue of $440.59B. In six of the last eight quarters, YoY revenue growth has been 20%+.For Panera Bread Co. (PNRA), the Estimize consensus, pulling estimates from 38 different analysts, is 4 cents above the Wall Street consensus of $1.63. For the last two quarters, YoY growth has been negative. Estimize is calling for a revenue of $683.58B, above the Wall Street consensus of $681.38B and last quarter’s revenue of $648.50B. For the last four quarters, however, Estimize and Wall Street have over-predicted revenue.
In regards to the fast casual restaurant industry as a whole, consumers have more discretionary income due to an improving economy and lower gas prices and therefore have been eating out more and trading up from fast food options. Reaching customers has not been an overarching challenge for the industry. However, the main difficulty faced in the industry is controlling rising food costs when labor costs are also increasing. This dynamic should be revealed today when the two chains release their earnings, but only Buffalo Wild Wings is predicted to post earnings growth.
Buffalo Wild Wings is the fastest-growing restaurant chain in the US, and its revenue continues to grow substantially each quarter. Instead of focusing on food and menu innovation, Buffalo Wild Wings gears in on the customer experience. Each location has various TVs, and customers get to choose what they want to watch. Moreover, customers can play games such as trivia on the provided tablets. CEO Sally Smith said that there’s room for an additional 600 restaurants in North America, on top of the 487 existing restaurants.
Although the industry’s potential to grow is high, Panera Bread’s earnings potential are not as positive. Panera has not been able to attract customers as easily as similar restaurants or with as much consistency. To overcome this fallback, last year the company engaged in a new strategy, known as Panera 2.0. Under this strategy, the company created several digital services to offer online ordering as well as payment facilities. This could potentially be the catalyst that Panera needs to have positive earning growth this upcoming quarter.
While the positive prospects for these restaurants seems appetizing, tonight’s release will be very telling for the industry’s future.
(Photo Credit: Mike Mozart)