Ms. Collier: The lowlights were the fact that as the year progressed the same- store sales trends continued to deteriorate a bit, particularly as we went into the fall. In the summer months, same-store sales were certainly weak. It started around May and continued through the summer months. Then they took another leg down in September. Companies like Ruby Tuesday (RT), fairly large public companies, started reporting same-stores sales down about 10%, which is one of the lowest numbers I have seen in my history of following the space. The consumer environment certainly became more difficult with subprime issues, gasoline prices and things like that. The highlights for the group in 2007 were few and far between. Early in the year, January and February, gift card sales I recall were very strong. I believe that they are going to be up significantly again in 2008. Generally with high gasoline prices, subprime and higher input costs relating to food and labor, it has been a very difficult environment.
TWST: David, what is your view in hindsight here for 2007?
Mr. Tarantino: 2007 was clearly a mixed bag and generally negative for most
operators. The highlights were mainly concentrated in the quick service
restaurant space with McDonald's (MCD) and Yum! (YUM) doing well, but that was
largely offset by the very tough trends that Lynne mentioned in the casual
dining space.
We think that the consumer environment was the main culprit, as gas prices and a
tough housing market weighed on spending, especially as the year progressed.
Also, in addition to a really tough consumer spending environment, we saw a
hefty amount of cost inflation on the labor and commodities side. That led to
some tough results for the casual dining space in general.
Tickers included in this excerpt: BJRI, BKC, BOBE, BWLD, CAKE, CMG, CPKI, DRI, EAT, MCD, PEET, PFCB, PNRA, RRGB, RT, TXRH, YUM
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