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Taking a bite out of economic worry

Sales at DineEquity Inc., parent of Applebee’s Neighborhood Grill and Bar, are rising at restaurants open for at least 18 months, thanks to its new Sizzling Skillet entrees starting at $8.99.

Sales at DineEquity Inc., parent of Applebee’s Neighborhood Grill and Bar, are rising at restaurants open for at least 18 months, thanks to its new Sizzling Skillet entrees starting at $8.99.

BJ’s Restaurants Inc. and The Cheesecake Factory Inc., based in Huntington Beach and Calabasas Hills, Calif., also are reporting more revenue this year, indicating consumers are eating more at casual eateries. Cheesecake’s meals, for instance, range from $5.95 to $27.95.

Restaurants, a proxy for discretionary consumer spending, have “surprised some investors with their resiliency,” said Lawrence Creatura, a Rochester, N.Y.-based fund manager at Federated Investors Inc., which oversees about $350 billion. The $160-million Federated Clover Small Value Fund he manages is planning to buy restaurant stocks, he said.

Consumers are loosening purse strings on some items more than a year after the end of a recession that cost about 8 million workers their jobs, and in spite of a 9.6 percent unemployment rate that’s near a 26-year high. A Bloomberg index that tracks 19 full-service restaurant chains has more than tripled from its November 2008 low and is near an all-time high relative to the Standard & Poor’s 500 Index.

“What I’m starting to see is stability,” said Christopher O’Donnell, president and chief executive officer of Famous Dave’s of America Inc. in Minnetonka, Minn., which owns and franchises 180 restaurants in 36 states. “I’m feeling better about consumers’ willingness to spend.”

 
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