3 Restaurant Stocks That Are on Fire

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Buffalo Wild WingsThe news is still mixed on the economic front, but we're apparently not refraining from eating our way through the lull.

Panera Bread (PNRA) and Buffalo Wild Wings (BWLD) posted better-than-expected quarterly profits this week, and Chipotle Mexican Grill (CMG) came through with a blowout quarter last week.

These are three of the restaurant industry's growth darlings, daring to expand during the darkest recessionary stretches and now cashing in. They have taken advantage of retreating weaklings to lock up choice real estate locations.

If they were holding up just fine when times were tight, how do you think these speedsters will fare when unemployment rates drop and discretionary incomes rise to the point where eating out isn't a budgetary battle?

Making Serious Dough

Panera is a fast-growing chain of 1,562 bakery-cafes that serve freshly baked sandwiches and doughy treats alongside signature soups and salads. The "fast casual" pioneer had a strong quarter to discuss on Tuesday night.

Revenue rose 18% during the first three months of the year, powered by expansion and a welcome 7.5% gain in cafe-level sales. Panera typically works in slight annual price increases to offset inflation costs, but it's also experiencing an uptick in traffic. Panera's profitability grew by a better-than-expected 28%, and that means that the company has grown its bottom line by at least 20% in eight of the past nine quarters.

These Wings Can Fly

Buffalo Wild Wings also landed ahead of where analysts were parked.

The chains of family-friendly sports bars known for its arsenal of sports-blasting TVs, cheap brews, and saucy chicken wings delivered a 38% pop in sales growth. Earnings climbed 21% to $0.98 a share, ahead of the $0.95 that analysts were betting on.

Despite the escalating cost of chicken wings, Buffalo Wild Wings is comfortable in projecting its net income to grow by 20% this year.

Guac and Roll

Chipotle has gone where no other non-fast food burrito roller has gone before. The company's popular burritos and cilantro rice bowls have turned Chipotle into a cult favorite. Yes, the queues are long at your local Chipotle, but the assembly lines work swiftly in piecing together the "food with integrity" comestibles.

Chipotle's blowout quarter featured a 26% spike in revenue. Comps at the 1,262 quick-service chain soared an impressive 12.7%. Improving margins resulted in a 35% surge on the bottom line.

Order Up

The good news for investors and diners is that these chains are showing no sign of slowing down. Panera plans to add as many as 120 cafes this year, while Chipotle is looking to add between 155 and 165 new locations.

The market's hungry for good news, and these three chains are serving it up.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Buffalo Wild Wings, Panera Bread, and Chipotle Mexican Grill. Motley Fool newsletter services have recommended buying shares of Panera Bread, Chipotle Mexican Grill, and Buffalo Wild Wings; writing covered calls on Buffalo Wild Wings and creating a bear put spread position in Chipotle Mexican Grill.


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7 Comments

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STEVE

We have a Paneras & Buffalo Wings in town & they are both booming with big crowds & long lines .
I think they are good, especially Buffalo Wings, but I hate to wait long time.

April 27 2012 at 1:23 AM Report abuse rate up rate down Reply
petpetdonna

They opened a Buffalo Wild Wings in my city three years ago. I ate there for the first time today. The food was pathetic. I will never eat there again.

April 27 2012 at 12:11 AM Report abuse rate up rate down Reply
skin2wynn

Chipotle - over priced burrito and you'll leave hungry. Buffalo Wild Wings - nothing special. Panera is good but pushing the price envelope.

April 26 2012 at 9:51 PM Report abuse -1 rate up rate down Reply
vlady1000

Chipotle an Panera have good food. Buffalo Wild Wings are terrible.

April 26 2012 at 9:07 PM Report abuse -1 rate up rate down Reply
sonny

Aren't these all self serve? Appears to be the way to go.

April 26 2012 at 6:17 PM Report abuse -1 rate up rate down Reply
1 reply to sonny's comment
petpetdonna

You don't get out much do you?

April 27 2012 at 12:11 AM Report abuse rate up rate down Reply
jskemp4you

Once again we see those moronic words "better-than-expected". Why do you (AOL) continue to print this crap as if it has real meaning. By now I would have hoped that you knew how this charade works, but apparently not.

April 26 2012 at 3:07 PM Report abuse rate up rate down Reply