Out Fox The $treet

Chuy's Holdings ( NASDAQ: CHUY     ) stock launched out of the IPO gate due to the excitement over the potential for the Southwest regional chain to expand nationally. The Austin, Texas-based Tex-Mex chain only operates 48 full-service restaurants and recently expanded into the Carolinas and Ohio. In the past month, the stock has faced selling pressure after the third-quarter earnings report showed declining margins. However, other successful restaurant chains have had periods of weakness followed by huge returns. Fellow Mexican chain Chipotle Mexican Grill ( NYSE: CMG     ) and industry leader Darden Restaurants ( NYSE: DRI     )  share another theme: strong restaurant-level margins while maintaining restaurant growth. Is the recent margin decline a blip for Chuy's due to absorption of all the new restaurant growth or has the company bitten off more than it can chew? Read the full article here . Disclosure: No positions m...

On Thursday night, Darden Restaurants, Inc. (DRI) announced a $585M cash transaction to buy Yard House USA. Is this a signal that growth at Darden restaurant mainstays such as Olive Garden and Red Lobster has peaked? Darden Restaurants, the world's largest full-service restaurant company, owns and operates nearly 2,000 restaurants that generate $8.0 billion in annual sales. The company is headquartered in Orlando, Florida, and employs 180,000 people. The restaurant brands include Red Lobster, Olive Garden, LongHorn Steakhouse, The Capital Grille, Bahama Breeze, Seasons 52, and Eddie V's. In reaction, the stock declined a little over 1% in after hours. The market appears mixed on the deal so far. Read the full article at Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details. 

The fast casual dining sector has been on fire this year basically picking up where it has been ever since the March 2009 bottom. The three leading stocks of Buffalo Wild Wings (BWLD) , Chipotle Mexican Grill (CMG) , and Panera Bread (PNRA) have had virtually no pause in the rally for the last three years. Not even the market downturns in 2010 and 2011 could pull them down. Though continuing to grow fast all these stocks face steep valuations and at some point the wall of large numbers will hit them. Chipotle already has a market cap over $11B and annual sales above $2.2B. As an example, Darden Restaurants (DRI) with its main restaurants of Olive Garden and Red Lobster has succumbed to much lower multiples even though operating several successful chains. The company will approach $8B in fiscal 2012 revenue, but only has a market cap of $6.4B. Read the full article on Seeking Alpha. Disclosure: No positions mentioned. Please review the disclaimer page for more details.  ...