When Picking Where to Eat Out, Pick Over These Stocks

Erin is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

While making your Friday date night dinner plans, here’s a few stocks to chew on.

Chipotle Mexican Grill, Inc. (NYSE: CMG) announced revenue increased 23.7% to $596.7 million for the 2011 fourth quarter. Net income rose 23.7% to $57.5 million.

Comparable restaurant sales increased 11.1%. Meanwhile Chipotle’s stock continues to outperform in the “fast casual” restaurant industry over its rivals and has gained more than 10% this year so far.

For the 2011 final numbers, revenue increased 23.6% to $2.27 billion, and net income was $214.9 million, an increase of 20.1%. The company saw increased revenues from the opening of 67 new restaurants during the quarter. For the entire year, Chipotle opened 150 new restaurants to bring the total restaurant count to 1,230. For the year 2012, the company estimates 155-165 new restaurant openings.

With good numbers, great revenue, and even better food, Chipotle is a hot stock to keep your eye on.

In 2009, the Fool’s very own Alyce Lomax called Panera Bread Company (NASDAQ: PNRA) one the worst stocks. Three years later, has it improved? At the time she said, “Panera will have to deliver some awfully high growth to justify its current high multiples, and that may make it one of those doomed stocks you should avoid. Even in good times, any whiff of disappointment can send such pricey stocks crashing, and given the current ugly times, I'd say Panera will probably be a big disappointment in 2009. I simply don't think it can pull it off.” She cited impressive revenue, but unimpressive net profit as her reason, among other things.

This week Panera posted a net income of $135 million, ($4.59 per share) for 2011, up from $111 million in 2010. The company opened 112 new bakery-cafes, for a total of 1,541 bakery-cafes company-wide.

Total fiscal-year revenues of $1.8 billion were up $300 million over 2012. For the fourth quarter, Panera met expectations on revenues and beat expectations on earnings per share. Compared to the prior-year quarter, revenue improved significantly and earnings per share improved.

The company and its franchises opened 112 new bakery-cafes in fiscal year 2011. As a result, there were 1,541 bakery-cafes system-wide on Dec. 27, 2011.

The company still boasts an impressive revenue, and now, as compared to 2009, can also claim a strong and rising net income. The company is growing at a steady and controllable rate, and is expected to continue to do so. It is time to take Panera off of the doomed stocks list, and put on the “not too shabby and something to consider” list.

On the other end of the spectrum is Darden Restaurants, Inc. (NYSE: DRI), parent company to Olive Garden, Red Lobster, LongHorn Steakhouse and others.

The company's shares have risen recently an impressive nearly 12%, with a comely 3.5% dividend, closing Friday at $49.45 (52 week range of $40.69 to $53.81). For the year the stock is up 2.5%, as compared to a mere 0.73% for the past year. That’s an improvement from downright dismal to not the worst thing we’ve seen all day.

Darden has a total of 1,894 restaurants in North America, and yet cites consumers not eating out as often anymore as the problem, while the competition (Chipotle and Panera) were seeing 10-20% net profit increases. The company is aware of its problem (restaurant goers just don’t go to them anymore), and is expanding its higher-end casual dining offerings. If the rebranding works, and the economy continues to improve and restaurant goers do in fact go out, the company could improve. But if the company plays it wrong and invests in making major changes, and the customers still don’t come back, things will go downhill fast.

Darden is one company to avoid until it gives you something to sink your teeth into.

Motley Fool newsletter services recommend Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill, Darden Restaurants and Panera Bread. ErinAnnie has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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