Baird sees more risks for casual dining restaurants in 2023

Cheesecake Factory

17/03/2023 11:07

** Baird takes a conservative valuation assumption for most
discretionary sub-segments of its coverage, specifically casual
dining restaurants and coffee/beverage cos
    ** Brokerage says potential softness in casual dining
industry sales exiting Q1 and entering Q2 could create "some
investor anxiety about the fundamental outlook for this more
discretionary segment of the industry"
    ** Baird adds heightened volatility in financial markets has
elevated risk of slowdown in sales for causal dining and
coffee/beverage cos
    ** Notes proprietary casual dining traffic model, used to
gauge discretionary spending for restaurants, points to traffic
down 4% to 5% in balance of 2023
    ** Brokerage cuts PT on Starbucks Corp  SBUX.O  to $105 from
$110 and on restaurant chain operators Darden Restaurants
 DRI.N  to $148 from $150 and Cheesecake Factory  CAKE.O  to $35
from $39
    ** Baird also lowers PT on steakhouse chain Texas Roadhouse
 TXRH.O  to $105 from $108 and beverage co Dutch Bros  BROS.N 
to $32 from $36
    ** Up to Thursday's close, stocks of SBUX, DRI and TXRH had
risen between ~15% and 31.3% in past 12 months, while CAKE fell
5.1% and BROS dropped ~42% in the same period
    

 (Reporting by Granth Vanaik in Bengaluru)
 ((Granth.Vanaik@thomsonreuters.com; Twitter: https://twitter.com/Vanaik_Granth))