This Week in Food and Restaurants
by Aristotle Munarriz (MF Edible)

Miami, FL. (February 14, 1997) -- Today we celebrate everlasting love and fallen mobsters and as fate would have it, mascara or massacre, both have strong ties to restaurants. Lovers and kingpins alike are eatery stereotypes, but that is mostly a film industry which is why we start off this week's recap with Planet Hollywood <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: PHII)") else Response.Write("(NASDAQ: PHII)") end if %>.

The chain of more than fifty celluloid museums with table service has always been a big draw given the long list of celebrity shareholders who are given stock options in return for their endorsements. For all the glitz and screaming fans dying to get in at a Grand Opening, investors have been making a dash for the exits since the debut of the stock last year. The initial public offering was priced at $18, hit $32 shortly after the open and has drifted lower ever since. On Monday the stock hit $13 3/8 and has been picking up northward steam ever since. You see, as successful as the flagship chain has been they are running out of large metropolitan areas to build new restaurants. This has put a lot of emphasis on new ventures which luckily the company has plenty. But while Official All-Star Cafe is proving the namesake original proud, other associations have not proven as fruitful.

The company is set to embark on a chain of Marvel Mania comic book themed restaurants with Ron Perlman's financially troubled Marvel Entertainment <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MRV)") else Response.Write("(NYSE: MRV)") end if %> as a backer. Then there was a lucrative casino deal with ITT <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: ITT)") else Response.Write("(NYSE: ITT)") end if %> which hit a snag earlier this month when Hilton <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: HLT)") else Response.Write("(NYSE: HLT)") end if %> made an unsolicited takeover bid and noted that they would scrap all future ITT projects, including the pair of Planet Hollywood casinos which were slated over the next two years.

A few days can make a world of difference as the ITT-Hilton deal hit some snags of it's own, Smith Barney and Montgomery Securities chimed in with "Buy" ratings and the company announced earnings of $.13 a share for their fourth quarter. It was in line with estimates but the company then put investors at ease when they said the company is comfortable with 1997 estimates for $.70 a share (vs. the $.47 they earned last year). So a 30% dead cat bounce over the last three trading days may be an apt Hollywood phrase on the eve of the opening weekend for That Darn Cat.

THE EDIBLE EIGHT

Why does this month have to be so short? Last February the E8 rose 3.9% and halfway through this kind month we are now up 5.6%. That wipes out our January deficit and finds us up a yawn-inspiring 0.3%. That pales the stock market tear this year that finds our benchmarks up as much as 9.5% but we are now ahead of the IBD: Retail Restaurants Index which is still showing a marginal loss for the year.

This month we find Rock Bottom Restaurants <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: BREW)") else Response.Write("(NASDAQ: BREW)") end if %> and Garden Fresh (LTUS) with double-digit percentage gains. There was some insider buying by a pair of Garden Fresh directors over the last few months while was filed just yesterday and the show of confidence internally is weighing on investors externally. The stock is up 36% since we first took notice back in June. Apparently, others have as well since then. We have two minor losers so far this month, Grist Mill <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: GRST)") else Response.Write("(NASDAQ: GRST)") end if %> is down $ 1/8 and our short play on Coca Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>, part market hedge, part ridiculous valuation, has continued to defy gravity as the blue chips pushed the Dow past 4000 and Coke is up 5% this month (so we are down 5% on that position).

1997 Returns To Date:
The Edible Eight      +0.3%
NASDAQ                +6.2%
S&P 500               +9.5%
Fidelity Sel: Food    +6.9%
IBD: Restaurants      -0.5% (as of Wednesday)

Until next week, Digest Foolishly,

MF Edible

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