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

Miami, FL. (February 21, 1997) -- Welcome to another week in the wonderful world of food. As amazing as the Philadelphia area Boston Markets serving baked cod over Lent, not the case at all 1100 units of Boston Chicken (NASD: BOST) but strictly Philly here, we find that investors are beginning to look kindly at restaurant stocks again. Of course the signs have been coming internally for a few weeks now. Earlier this month, when Apple South <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: APSO)") else Response.Write("(NASDAQ: APSO)") end if %> announced they were buying out Hops Grill & Bar and seafood operator McCormick & Schmick's, just as Boston Chicken agreed to team up with Harry's Farmers Market <% if gsSubBrand = "aolsnapshot" then Response.Write("(NASDAQ: HARY)") else Response.Write("(NASDAQ: HARY)") end if %> to expand their Harry's in a Hurry concept of high quality take-out, it seemed as if the industry itself was finding ample opportunities in its own sector. Then we have McDonald's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: MCD)") else Response.Write("(NYSE: MCD)") end if %> which not only bought back 13 million shares last year but has already repurchased 5.5 million shares so far this young year.

Another sign of the comfort level of the industry came when stodgy pizza and pasta chain Sbarro's <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: SBA)") else Response.Write("(NYSE: SBA)") end if %> hiked their quarterly dividend from $.23 to $.27 a share yesterday. That has the stock yielding just better than 4% yet it is only paying out half of its earnings. Yes, algebra the math to figure out how low the P/E is there, even if it is a mature tired company. Yawn all you want, the sleepy bargains are there.

THE EDIBLE EIGHT

February, you are way too short! The E8 has finally dug itself out of last month's hole with a 7.9% month-to-date gain. So while 1997 still finds the wishlist behind the major market indices, we will take an almost 8% gain over a three week period where the Nasdaq tanks 2.4% anytime. With three stocks showing double-digit gains the one lingering question is why didn't I wait a month before shorting Coca Cola <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: KO)") else Response.Write("(NYSE: KO)") end if %>? Oh, I know why, it's because I never thought it would be trading at 44 times earnings, that's why. Alas, fizz eventually goes flat, and the maker of Surge will eventually not.

1997 Returns To Date:
The Edible Eight     +2.6%
NASDAQ               +4.4%
S&P 500              +8.4%
Fidelity Sel: Food   +9.0%
IBD: Restaurants     -0.4% (as of Friday)

Until next week, Digest Foolishly,

MF Edible

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