Luby’s, Inc. (LUB), the casual dining restaurant operator, recently reported fourth-quarter 2009 results. The company reported quarterly loss of 20 cents a share compared to a loss of 13 cents reported in the prior-year quarter. The loss per share was in-line with the Zacks Consensus Estimate. Restaurant sales tumbled 14.7% year-on-year to $80.2 million, whereas Culinary Contract Services jumped 33.8% to $4 million. The rise in Culinary Contract Services was due to the operation of 15 facilities in the reported quarter compared to 10 facilities in the prior year quarter. Same-store sales fell 13.6% in the quarter -- the sharpest decline registered by the company in fiscal year 2009, due to a fall in traffic counts. Store level profit dipped more than 50.0% to $4 million, whereas store level profit margin shrank 400 basis points to 5.0%. The rise of 30 basis points in food ...

The operator of Taco Bell, Pizza Hut and KFC fast food chains -- Yum! Brands, Inc. (YUM) -- recently reported better-than-expected third-quarter 2009 results buoyed by commodity deflation, lower costs and strong performance by its China division. Yum!’s quarterly earnings of 70 cents a share (excluding special charges) comfortably surpasses the Zacks Consensus Estimate of 59 cents, and surged 21.0% year-on-year from 58 cents posted in the prior-year quarter. Lower labor (down 9.0%) and food costs (down 7.0%), slide in G&A expenses (down 9.0%), and operating profit growth in both China (up 32.0%; up 31.0% excluding FX [foreign exchange] impact) and the U.S. (up 18.0%) divisions drove the earnings. These were partially offset by a 13.0% decline in Yum! Restaurants International Division’s (YRI) operating profit and a negative impact of 2 cents a share from foreign currency translation. The strength in the China division and ...

Fitch recently revised its outlook on Darden Restaurants Inc. (DRI) to "Stable" from "Negative". The rating agency believes that the company is well positioned in the casual dining segment, which is still recuperating from the economic turmoil, plagued by rising unemployment and weak consumer spending.

The revision in outlook reflects Darden’s competitive edge and its ability to generate significant cash flow. The company’s same-store sales fell 1.4% in fiscal 2009 compared to the estimated 5.6% decline for the Knapp-Track benchmark of US comps for casual dining chains. Moreover, Darden’s cash flow from operations increased 2.2% to $783.5 million during the year.

Moderating food costs coupled with the company’s cost-control measures and synergies from its RARE Hospitality International acquisition should facilitate cash flow generation. Free cash flow totaled $138 million at the end of fiscal 2009.

Darden’s “Stable" outlook also incorporates prudent capital management and cash returns to shareholders

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Resource legend tips his hat to three soon-to-bubble sectors… The housing market has “bottomed out” says PNC… our gentle retort… Alan Knuckman with an economic indicator far superior to unemployment: chicken sales… Our panel of “whiskey shooters” on the worst-case scnerio… how to get out of Dodge if the dollar collapses… Britian now REALLY in crisis… recession, taxes cause wave of pub shutdowns…

Let’s make some trades this morning. We asked Rick Rule, a living legend here in Vancouver, what’s the next bubble market? “The Canadian market does not care about small oil and gas companies,” he told us yesterday. “Which means that small Canadian O&G companies are selling for 50-60% of net asset value. They are very, very, very cheap. They are unloved, with no finance options and no trading liquidity… and I love that. This value is free. There will be much money made in small-cap

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Bob Evans Farms, Inc. (...

V-Shaped Bottom or Second Valley? The truth can earn you 79%.  Watching economists attempt to find consensus can be like watching a burlap sack full of cats – lots of sound and apparent action, but precious little benefit.

Unfortunately, you eventually have to open the sack full of angry cats to find out how it all comes out. And then there’s that part about going to jail (or hell) because you put cats in a burlap sack.

Not that I would ever do something like that. This is really just one of those mental exercises. But I do watch economists a lot. I guess someone has to.

The One Real Question

The big argument this week: “The V-shaped bottom” versus “The Second Valley.” I guess we should open the sack a bit and see who’s winning.

Adherents to the former believe that we have seen the worst that fate (or rather our own stupidity

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Shares of Bob Evans Farms Inc. (BOBE) surged more than 15% today as fourth-quarter earnings of 69 cents topped the consensus estimate by 30 cents.

The owner of its namesake restaurants said yesterday evening that total revenue dipped 1% to $431 million.

Total same-store sales declined 3.1%, as same-store sales fell 1.6% at Bob Evans restaurants and 7.1% at Mimi's Café.

However, the company was able to reduce its labor and food costs by deploying "new labor management systems" and through "effective supply chain management."

Bob Evans also indicated that it expects fiscal 2010 sales to grow between 1.5% and 2%.

The full-year average forecast has moved lower by 3 cents over the past week to $1.80 per share. However, the better-than-expected quarterly profit could result in positive revisions from analysts over the next several weeks.

BOBE, a Zacks #3 Rank ("Hold") stock, is trading on extraordinarily high

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Companies mentioned in this report: Red Robin Gourmet Burger (RRGB), Brinker International (EAT), California Pizza Kitchen Inc. (CPKI), Denny's (DENN) and O'Charley's (CHUX).Red Robin Customer Traffic Falls SharplyRed Robin Gourmet Burger's (RRGB) customers moved to cheaper alternatives at an accelerating pace in 1Q09 -- a trend that we expected. We are maintaining our Sell recommendation.The family-friendly casual dining chain reported a 42% drop in EPS to $0.25 in 1Q09. Excluding $0.5 million to close unprofitable restaurants and $4 million to repurchase under-water stock options from its employees, EPS was unchanged from a year ago at $0.43.To stop customers from trading down to cheaper fast food alternatives, many casual dining chains are luring cash-strapped customers with promotions, a tactic Red Robin has avoided in favor of increased advertising. Three concepts of Brinker International (EAT) -- Chili's, ...

By William Patalon III
Executive Editor
Money Morning/Money Map Report

[Editor's Note: When it comes to banking or global economics, there's literally no one better than Money Morning Contributing Editor Martin Hutchinson - a former investment banker with more than a 25 years experience. Hutchinson has proven himself to be a market maven and he is currently offering investors an opportunity to make $4.201 in cash in just 12 days. You can also subscribe to Martin's new investment service, The Permanent Wealth Investor, by clicking here .]

Just days after Chrysler LLC said it would be cutting one quarter of its auto dealerships, 1,100 General Motors Corp. (NYSE: GM) dealerships have reportedly been told not to expect a relationship with the embattled U.S. carmaker after October 2010.

GM dealers targeted for separation were informed by

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Just days after Chrysler LLC said it would be cutting one quarter of its auto dealerships, 1,100 General Motors Corp. (NYSE: GM) dealerships have reportedly been told not to expect a relationship with the embattled U.S. carmaker after October 2010.

GM dealers targeted for separation were informed by letter over the weekend, Reuters reported.

The eradication of hundreds of hundreds of American auto dealerships is merely the latest development in the ongoing dismantling of the so-called U.S. “Big Three’’ – a  process that seems likely to leave Ford Motor Co. (NYSE: F) as the last American automaker standing.

“These companies are making up for now for what they have avoided doing for years, if not decades,” industry analyst John A. Casesa, managing partner of consultantcy Casesa Shapiro Group LLC, told The New York Times. “And if the

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