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Five analysts and top management from eighteen sector firms examine the Restaurants sector in this 90 - page Special Focus - Restaurants Issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info586.htm.

TWST: Janice, what impact did the events of September 11 have on this group? Also, how have restaurants with a large presence at airports, on highways, and at travel destinations fared over the past nine months?

Ms. Meyer: Early on, the impact of 9/11 hurt just about all players. Customer traffic slowed from the already lackluster rates that a softer economy had driven. But the dining patterns changed as well with less frequency seen during the week, but weekend business strengthening. That pattern continued for about two months after 9/11, but for the most part has since normalized. Some of the restaurants that continue to suffer are the ones in airports. One of the companies that we follow, AFC Enterprises (AFCE), has a small division called Cinnabon, which everyone knows from their airport travel. Though this division is only about 10% of the total company, it operates roughly 20% of its stores in airports. Initially, customer traffic fell about 10%, but now it is running less negative, though still soft at 7%-8% declines.

TWST: Janice, you told us earlier that you’re still recommending Brinker, Tricon and P.F. Chang’s. Have you added other names?

Ms. Meyer: Yes, we have added Wendy’s (NYSE:WEN) since we last spoke. That stock has done well, rising almost 30% since we recommended it earlier this year, driven by accelerating same-store sales. Same-store sales growth last year was about 2%. Right now it’s averaging 6%. There are two main things driving the gains. One is a benefit from increased national media spending, which we talked about earlier. That is raising their visibility and boosting their core business. But the other factor is the rollout of a new line of salads. That has added strong incremental sales over and above what the media has driven in the base business. This has combined to drive higher returns, as sales and profits have grown with little new capital investment. Looking forward, I do not think the stock is going to rise another 30% this year, but the strong sales and the earnings visibility, combined with a very clean and understandable business, should continue to make Wendy’s a good stock.

TWST: Janice, what are your expectations with respect to M&A activity in 2002 and 2003? Have any of the companies announced intentions?

Ms. Meyer: The next year or two are apt to be years of digestion and nurturing. We just saw Wendy’s buy Baja Fresh. Most of the companies we follow that have been looking for acquisitions now have a stable of concepts. That would include McDonald’s (MCD), Outback, Brinker, Yum! Brands and Darden. The goal over the next year or two is to decide which concept works the best and then prepare for rollout. That does not mean there will be no M&A activity in the next year or so. If there were something terrific for sale, there would be bidders for it, but I don’t think there are too many companies aggressively looking right now for acquisitions.

This special report includes:

1) Special Focus - Restaurants - In an in-depth (13,200 words) Analyst Roundtable, Andrew M. Barish, a Managing Director, Senior Restaurant Analyst for Banc of America Securities, Joseph T. Buckley, a Senior Managing Director of Bear, Stearns & Co., Bryan C. Elliot, a Senior Vice President at Raymond James & Associates, Dennis I. Forst, a Managing Director at McDonald Investments, Inc. , Janice L. Meyer, a Managing Director at Credit Suisse First Boston Equity Research Group, examine the outlook for the sector and share specific stock recommendations.

2) CEO interviews (average 2,500 words). Top management of 18 - sector firms examine the outlook for their firm and the sector.