In early morning trading the markets have expressed their pleasure with O'Charley's (Ticker: CHUX) latest move. The company just completed a $105 million sale-leasebeack deal, which is designed to eliminate its longterm debt.
Shares of the restaurant operator have climbed more than 10 percent on the day.
Darden Restaurants said fiscal first-quarter sales at its Olive Garden chain fell 2.9 percent as many people are again becoming very picky with their dining dollars and looking for the best deals. The company is responding with lower-priced items and more aggressive marketing, which could well start a bit of an arms race with other chains, including local players O'Charley's and Cracker Barrel. (The latter has said it also will offer more value-priced dishes.) Such strategies also are likely to hurt the bottom line down the road, says one industry watcher.
That move likely will give a quick boost to closely watched same-restaurant sales, but it is not without risk, Lazard Capital Markets analyst Matthew DiFrisco said in a note.
"Lower-margin items could potentially cannibalize higher margin sales and require incremental staff which may pressure the labor line," DiFrisco said.
Las Vegas-based sweet treats seller Nothing Bundt Cakes will open its first Nashville-area store on White Bridge Road in a few weeks. The venture will be run by former O'Charley's CEO Jeff Warne — who left that chain in the summer of last year — and will be near Porta Via Italian Kitchen. Apparently, some of its offerings will be just short of monstrous.
Nothing Bundt Cakes stores are almost like boutiques, with giftie merchandise as well as cakes. The bundts can be ordered for various occasions, with the cakes hole serving as a handy receptacle for decor items like a bow or a flower. (There's a workplace celebration cake with the slogan "From the 'Hole' Office.") Cake sizes range from one serving to 26.
SEE ALSO: Sweet spots, our story this week on the growth and future of other dessert concepts
Amid the minor bloodbath in Nashville-area health care stocks Monday, the shares of O'Charley's stood out in a positive way, climbing some 20 percent. Granted, the move came after the stock had slid 17 percent in July and kissed the $6 mark Friday, but the heavy volume suggests there's something to StreetInsider.com's report that chart-watching investors were driving the train Monday.