Former Bruckmann, Rosser, Sherrill & Co. Partner Hal Rosser has left the private equity firm he co-founded to form a new firm specializing in investing in the restaurant sector. In a January 11th interview with Fortune (“Hal Rosser talks about his new firm, and why it’s always a good time to buy restaurants,” January 11, 2011, Finance.Fortune.CNN.com), Rosser states
I think it’s always a good time to invest in this sector. I think we’ve done 16 restaurant deals over the last 20 years — 13 platform companies and three add-ons — and we’ve done them in all economic cycles. For example, we did McCormick & Schmick’s just before September 11. There always are a lot of people wanting a lot of food.
Naturally, there are other points of view to consider. In fact, even the National Restaurant Association reported on January 3rd that there was a drop in same-store sales and customer traffic for restaurants during the month of November, causing the Restaurant Performance Index (RPI) to fall to 99.9—a .8 percent drop from the prior month. And only when the RPI is above 100 does it indicate expansion for the sector.
Let’s take a look at some restaurant stocks and their performance over the past year. In the chart below, we’ve included:
- Ruth’s Hospitality Group Inc (NASDAQ: RUTH) which is known for its Ruth’s Chris Steak House, Mitchell’s/Columbus Fish Market, and Mitchell’s/Cameron’s Steakhouse restaurants.
- Carrols Restaurant Group (NASDAQ: TAST) known for Burger King, Pollo Tropical, and Taco Cabana.
- McCormick And Schmick’s Seafood Restaurants Inc (NASDAQ: MSSR.
- Darden Restaurants Inc (NYSE: DRI) whose properties include Red Lobster, Olive Garden, and LongHorn Steakhouse.
Covestor models with exposure in this sector include: Precedent-Based, China & India, MergerArb, Technical Swing, and Buy and Hold Value.
*Charts and prices courtesy of Yahoo Finance.
