So what if you make a hiring mistake? Here’s how to beat analysis paralysis.
By April Joyner | Nov 1, 2011

Any job seeker knows from experience how much first impressions matter. In fact, they probably matter too much. A single interview, after all, rarely uncovers enough information to determine whether someone would be a good employee. To compensate for this shortcoming, many entrepreneurs follow the adage to hire slowly, fire fast. But hiring too slowly can be just as counterproductive as making a snap judgment, especially when entrepreneurs tack additional steps onto the interview process without clear objectives in mind.

Gary Jaffe, CEO of The Booksource, a St. Louis-based distributor of schoolbooks with 135 employees, made that mistake last fall when he began looking for a new sales director. The search ended up taking five months—two months longer than the contract period for the recruiter he enlisted. Each candidate was required to go through two personality assessments and about four hours’ worth of interviews, meeting with each of the company’s three managers. After sitting in on each interview, Jaffe privately questioned the candidates he found promising. His impressions of candidates would often start out positive but deteriorate as the interviews dragged on. “In the first two hours, I would have absolutely hired this person,” says Jaffe. “By lunch, he was questionable.”

There are many reasons entrepreneurs prolong the hiring process. For starters, adding employees at a small company is tricky. “Once you insert a new person into the mix, you change the team’s dynamics completely,” says Lanny Goodman, CEO of Management Technologies, an Albuquerque-based firm that trains entrepreneurs in management techniques. Previous hiring mistakes can also cause entrepreneurs to drag their feet: Because they second-guess their opinions, entrepreneurs add extra rounds of interviews and assessments.

That was the case for Jaffe. After firing two of the company’s executives, he had begun to doubt his ability to make good hiring decisions. “It’s so frustrating when you get it wrong,” says Jaffe. “It takes so much effort to fit this person, and you say, ‘Why is this not working?’ ” He was determined to get it right this time.

One of the most promising applicants for the sales director position was referred by a trusted source. Jaffe’s father, Sandy, who founded The Booksource and had been its CEO, had met the candidate in a business mentoring group. But despite the family recommendation, personality tests, and rounds of interviews, Jaffe was still unsure. So he invited the candidate out to dinner. After an evening of polite small talk and Southwestern cuisine, Jaffe finally made an offer.

But even after all that, Jaffe is again trying to fill the position. Less than three weeks after the sales director joined the company, Jaffe fired him.

No matter how many times you interview candidates, there’s no way to accurately predict how well they will perform. Entrepreneurs who drag out the hiring process put off the ultimate test of a candidate: time on the job. Plus, as the months pass and pressure mounts to fill critical positions, entrepreneurs sometimes find themselves making the same hasty decisions they sought to avoid in the first place.
Treatment:

Set clear objectives for each stage of the interview process. Make sure follow-up interviews aren’t rehashing the same discussions from previous meetings.

Limit the number of people evaluating candidates. It’s wise to seek a second opinion, but involving more than two or three other managers can make it difficult to get a clear assessment.

Trust your instincts. As the hiring process drags on, you are more likely to ignore red flags.

Hooters is suing rival competitor Twin Peaks for damages it feels were caused when the Vice President of Hooters resigned and took a position at Twin Peaks. Although the concepts are very similar and Hooters has 400+ stores verses Twin Peaks 15 stores- The two should be able to coexist just like Coke/Pepsi, Ford/Chevy, and McDonald’s/Burger King have done for decades.

If you’re a professional searching for your next opportunity in today’s aggressive job market, you’ve probably found that the task of marketing yourself on your resume is unlike any other.

How do you sum up a long, storied career in just a few paragraphs? What is the best way to differentiate yourself on paper–and to get employers to see your value?

Standing out among the pack requires an intense emphasis on your natural leadership abilities, the impact you have on your employer’s business, the feedback you get from colleagues, and the hard skills that you bring to the table.

This information comprises what is known as a “personal brand,” and it has become the cornerstone of a successful professional resume in the employment arena.

Here are 5 insider tips that can help bring out your personal brand–and get your resume to open more doors for you:

1 – Hone Your Message.

Many resumes contain too much detail, which is quite understandable given the long tenure that some candidates possess.

However, it’s asking a lot of hiring authorities to wade through more than 2 or 3 pages of information.

My recommendation? Sharpen the intensity of your branding message by zeroing in on your top 3-5 main qualifiers, including success stories and keywords that back these up.

In addition, focus on one career goal and skill set at a time. This may mean that you will create one resume targeting a role in Operations, and another that describes your skills for a Sales position.

2 – Don’t Bury the Lead.

As we used to say in journalism, get your critical information all up front and ready for the reader to absorb.

Just started a high-level MBA program? Get it on the front page. Held roles of increasing scope that lead to your destination as Sales Manager? Make it obvious.

Don’t bury this type of key information on page 2 of your resume. The top half of the first page is prime “resume real estate,” and your main qualifications deserve center stage here.

In addition, many job hunters benefit from a branding statement, which is a short sentence that serves as a marketing tagline. You can develop this sentence by jotting down some ideas on what you bring to the table, and how you achieve it.

A great branding tagline will tap into the heart of what you offer, such as these examples culled from the front-page position on professional resumes:

“Operations Leader Who Leverages Business Competencies to Create Profitable Ventures with Exceptional ROI”

“Account Executive Delivering Revenue Growth Through Strategic Relationship Building”

3 – Tell Your Whole Story.
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Most job hunters are able to spout figures and facts about their achievements, but it’s the story behind these accomplishments that will add weight to the resume.

Consider looking at your results in light of the C-A-R (Challenge-Action-Result) strategy, which asks you to describe the situation you faced at work (Challenge), what you did when faced with it (Action), and of course, the outcome (Result) that occurred.

The C-A-R formula is popular for a reason–these anecdotes can also form the basis for success stories that you can also use as a basis for your next interview.

4 – Carefully Format Your Presentation.

When creating a resume, it’s important to differentiate yourself from both your direct competition, plus distinguish yourself from lower-level applicants–and this means that it is best to make your document DIFFERENT from all the others.

Searching the Internet for professional resume samples will show you that there are many choices for font, format, and graphics that give flair to a resume presentation.

Above all, refrain from using the classic Microsoft Word template for your resume. Doing so will make your qualifications blend in rather than stand out, and lay the foundation for poor results.

5 – Use Those Glowing References.

Got testimonials? If so, you’re in good shape, as these form a key part of a successful personal brand.

Better yet, including this information on your resume will allow you to back up the stories you’ve told about your achievements.

Many professionals are able to use a quote or letter of reference as a striking addition to their resume, especially when it reflects what they’ve already noted about their skills and competencies.

If you don’t have access to this information, be sure to seek out colleagues, supervisors, customers, and even suppliers as a source of positive feedback. Then, take a shorter version of the most powerful testimonial to use as an endorsement.
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As an example, a COO targeting a lateral move might be able to include a quote such as “Ted’s resourcefulness and ingenuity are without equal. I have witnessed his ability to grow a startup into a maturing business and develop a multimillion-dollar venture in a difficult economic environment,” from a corporate officer onto the resume–thereby verifying performance from a key reference source.

In summary, there ARE effective ways to develop a masterpiece resume. It’s important to ensure that hiring authorities can quickly cut to the heart of your qualifications–and consider you for prime opportunities that closely match your talents.

Listen. Is that your phone not ringing? And after sending out 100 resumes, each of them four pages long, powder puffed, enveloped in coral green and sealed with a wax stamp? Maybe it’s time to take stock of that all-important document, and make sure it’s not stumbling around out there with its figurative foot in its mouth. Here’s 10 kisses of death, classic mistakes made in writing a job resume that have been known to keep phones from ringing.

1) Missing Contact Information

You’d be surprised how many people leave off their phone number on a job resume, or ignore the opportunity to include an email address in the heading. And on that latter point, make sure your email address is stable, long term, and professional sounding. Skip the one you use with your friends, PartyGirl@loadsofun.com, and opt instead for something that won’t raise eyebrows.

2) Too Long

If your job resume is over two pages, you’d better be a world-class CEO with instant name recognition. Then again, if you meet that description, you can get by with a single page, can’t you? Regardless of your real or imagined worth to a company, limit your job resume to two pages max, one page ideally. With regards to all the valuable ‘stuff’ you’re leaving off the job resume, be happy you’ll have something to talk about during the interview.

3) Over The Top Design

Ignore your impulse to write a white-text job resume on black paper, or include a scratch-and-sniff perfume spot on the page. Limit your font selection to one or two. Use the traditional and popular New Times Roman if you prefer lettering with a serif, or consider Arial, Helvetica or Verdana if you want a clean, more modern san serif font. Go easy on the bold and the underlining. And limit your paper selection to white or beige with a weight of 22 or 24 lb. Black type.

4) Misspellings; Poor Grammar

Nothing signals inattention to detail like a misspelled word on a resume. The job resume, the one document on which you intend to present yourself to your ideal company, and you’ve misspelled achievemints. Well, you won’t be adding to your list of achievemints with that company.

5) A Photo on a Job Resume

Never, never, never include a photo on your job resume–unless you’re applying for a job in Germany, or as a fashion model. U.S. companies outside of the modeling industry will trash your resume immediately to avoid any future accusations that they might have discriminated in a hiring decision.

6) Personal Information Not Relevant To The Job

You may be the Friday Night Dart Champion at Willie’s Bar, but leave it off the job resume. Likewise don’t mention your marital status, number of children if any, social security number, height and weight, hobbies, and sports–unless you’re an avid golfer applying to Titleist.

7) Missing Dates, Missing Employment Information

The hiring official doesn’t like to be left guessing how you acquired your superhuman talents, or where you acquired them, or when. If he is left guessing, you’ll be left guessing why you never get a response.

Hard To Read

Long, dense paragraphs are tough slogging. Make use of bulleted points. Don’t crowd your information. Weed out extraneous details and know what employers are looking for–which leads to the next point.

Weasel words are adjectives or action verbs that sound impressive as you’re typing them (extraordinary communication skills, vitally participated in conference XYZ, demonstrated ability to extricate donut from bag with minimal disturbance to icing) but to the trained eye (i.e., the eye of the hiring official) they are indicative of a desperate fellow scrapping the bottom of the barrel for anything positive to say about his time spent at Acme Wingnuts.

BONUS

11) Functional Resume

Many hiring officials have come to associate the functional format with a candidate seeking to hide some aspect of his work history. And for good reason–many are trying to do just that; hiding gaps in their work history, hiding too many jobs in too short of time.

While it can still be an effective resume, know that choosing a functional format will send up a red flag in the eyes of many employers, something your resume will have to overcome from the get go.

Sit in front of laptop. Lie on couch. Eat pickles for lunch. Back to laptop.

Feel sorry for self. Feel sick of self. Tear hair out in frustration. And … back to couch.

If this is your 9-to-5 routine, you’re probably like 14 million other Americans: unemployed. And in addition to the frustration of looking for work, you might find yourself feeling a little lonely.

Sure, you chat with friends online all day. And you may have a family or significant other who comes home in the evening. But good old fashioned, face-to-face contact with another human being before dinner? Kind of rare these days.

In running my unemployment blog, I’ve received plenty of emails from readers. And although many of them were lighthearted in nature, a number of them were quite the opposite. One of the saddest read: “You’re the first person I’ve spoken to in days.”

Unemployment can make a recluse out of even the most social of butterflies. After all, you want to spend as much time as possible looking for work. And where do you look for work? Online. And where do you go online? At home.

But spending too much time alone can be detrimental, not just to your emotional well-being, but to your job search too! Staying connected with the rest of the world is not a luxury. It’s a necessity!

Work from a coffee shop.
Find a coffee shop with WiFi in your neighborhood (even better if it’s free WiFi!). Grab your laptop and go. You may not be striking up conversations with fellow coffee shop patrons, but it’s nice to be in the presence of other human beings. It’s also nice to have a change of scenery; one that doesn’t include Oprah on mute and swag from your previous employer.

Team up with other jobseekers.
Chances are, you know others who are unemployed. Instead of each working alone in your respective homes, why not team up? Agree to meet at someone’s house, and look for jobs together. After all, misery loves company. Not only will you have others to talk to who are in the same situation, you might just find that your jobless friends make good leads. You never know who might know of a job that isn’t quite right for them, but fits you perfectly.

Go to networking events.
Whatever your industry, there are probably relevant networking or trade association events taking place locally. Not only will you keep abreast of changes in your field, you’ll get to rub elbows with living, breathing, hiring members of the work force. We all know that spending hours and hours online every day is not the most efficient way to get hired. The majority of job seekers find work through a contact. You need to get out there and network!

Get a (night) life!
Spending eight dollars on an Apple Martini may be the furthest thing from your mind right now. And rightly so. But maintaining and growing your social network (and we don’t mean Facebook) can be a valuable part of your job search. And you don’t have to spend exorbitant amounts of money (or borrow cash from friends) to go out. Especially right now, there are plenty of extended happy hours and recession specials.

Volunteer
I’ve said this before and I’ll say it again: You can’t spend all day, every day, looking for work. Volunteering a couple of days a week will give you something else to do, a fresh perspective and a chance to spend time with others who share your passion for a cause. And depending on the type of volunteer work you choose, it may even help keep your career on track (and your resumé strong). I know a laid-off writer who started volunteering in the communications department of a non-profit agency. She says it’s keeping her busy, helping her develop her writing skills, and preventing her from sticking her head in an oven. Not bad for a dozen or so hours a week, which would have otherwise been spent obsessively surfing the web.

August 9, 2011 | By Ron Ruggless

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U.S. commercial restaurants closed at a faster rate than new openings, creating a two-year pattern of decline, according to the latest restaurant census released Tuesday by The NPD Group.

The Port Washington, N.Y.-based research firm found U.S. restaurant unit counts declined by 2 percent, or 9,450 restaurants, between April 1, 2010, and March 31, 2011, compared with the same time frame a year earlier.
Independent restaurants comprised most of the decline, with 8,650 closures, NPD said. Chain restaurant unit counts remained relatively stable.
“The decline in independent units is the steepest we’ve seen since NPD began conducting the ‘Spring ReCount’ census in 2001,” said Greg Starzynski, NPD’s director of product development-foodservice. The census is conducted each spring and fall.
“A volatile economy, frugal consumers and a lack of financial backing have made it a difficult business environment for independent restaurants,” Starzynski added.

In the most recent ReCount census, NPD found the total number of restaurants fell to 574,050 from 583,500 in the previous-year period.

However, the NPD CREST study, which tracks consumer usage of commercial and non-commercial foodservice outlets, found that for the year ended May 2011, visits to U.S. restaurants held stable compared with the previous year, when visits were down 3 percent.
The CREST study also found consumer spending at restaurants improved by 2 percent for the year ended May 2011, compared with the same period a year ago, when dollars were down by 1 percent.
According to NPD’s ReCount census, the number of quick-service restaurants declined by 1 percent, or 3,495 units. Full-service restaurant units, which include casual-dining, mid-scale and fine-dining restaurants, fell by 2 percent, or 5,965 units, from the Spring 2010 ReCount census.
By comparison, the total number of domestic restaurants fell about 1 percent, or by 5,551 outlets, to 579,102 locations in NPD’s Fall 2010 ReCount.
And in the Spring 2010 ReCount, the number of restaurants fell by 5,204 units, a 1-percent decline from the total number of eateries recorded a year prior, NPD said.

While unit counts were down through March of this year, NPD said restaurant traffic trends were improving.

By Dee Adams

If you’ve ever dreamed about starting your own business, you are not alone. There were almost 9 million self-employed workers in 2010, according to statistics compiled by Challenger, Gray, & Christmas. Each year, a percentage of the workforce trades in their 9-5 jobs for the entrepreneurial life, but some workers start a sideline business to supplement their salaries.

Business startup cuts across all socio-economic groups; from managers, executives, and professionals to blue collar workers. Success stories include:
•A Harvard graduate with a degree in mathematics and economics who left management consulting to pursue her passion for desserts. She started a bakery and Café, and began writing cookbooks.
•A Ph.D. in political science from University of Chicago who opened a motorcycle repair shop. He wrote a book about the value of working with one’s hands.
• A web designer and consultant fired from her job because of her personal blogging. She built a lucrative home-based empire with her mommy blog.
•A firefighter who invented better fire safety equipment for the consumer and industrial marketplace, and created a multimillion-dollar venture.

But, for many other would-be entrepreneurs finding the right startup is challenging.

Many issues may cloud the process, and certain questions asked and answered in the pre-planning stage can pinpoint conflicts and problems, and their solutions.

Here are several important questions:

Do you know how many aptitudes you possess?
Aptitudes are inborn natural talents and should not be confused with acquired skills. Each person has an average of six innate skills, some unused and some hidden.

While a percentage of the population may be able to determine their own aptitudes by self-assessment, most people are not aware of their full potential, according to writer Margaret Broadley. Over a 40 year period, Broadley documented the work of the Johnson O’Connor Research Foundation, a nonprofit organization specializing in the scientific research of human abilities.

What are your least favorite skills?
Create a checklist of work tasks that you dislike and have trouble executing.

What feels more comfortable, introverted or extroverted personality traits?
Make a checklist of your actual patterns of behavior in work and social interactions, not what you believe your traits are.

Note: Some people adapt their personalities in order to fit into social or working situations and may have an opposite personality from the traits that they often exhibit.

What is your motivation for choosing self-employment?
Using a single sentence, describe why you want to be your own boss.

What is your history with money?
Your money history includes your family’s relationship with financial issues, the messages you learned as a child, and your pattern of behavior and attitude toward money as an adult, which may be reflected in your current credit history.

Summarize your answer in two or three short sentences.

Socio-economic factors, like the state of the economy, the ability to borrow money, or to easily relocate have an impact on the number of people who pursue entrepreneurship each year, but many aspiring entrepreneurs ignore national economic trends in pursuit of their dreams. Those who succeed keep their risks low, and instinctively review their personal development homework beforehand.

What other issues are standing in your way?

By Natalie Grigson and Melissa Reese

“…I am not unemployed, I’m on sabbatical.”
“Hey, don’t get religious on me, okay?”

So say Ross and Joey in one of my favorite episodes of Friends. I’m not going to lie, that episode was how I actually learned what the word “sabbatical” means. It’s not that I am sheltered, uneducated, or not a dictionary-reading, word fanatic (because I am), it’s just that words like “sabbatical” weren’t used so often when that episode first aired.

This was in 1998, and oh what a difference thirteen years can make. Now it seems like everywhere I turn, someone is talking about how they are going through a “developmental retreat,” or they are “temporarily unemployed,” or, yes, “on sabbatical.” Of course these all are pretty little euphemisms for one thing: being in between jobs.

Whether you’ve recently been laid off or you’ve been “on sabbatical” for several weeks or even months, being in between jobs is nothing to be ashamed of. I mean, everyone is doing it, right? And with these eight simple time and money management tips, being in between jobs is nothing to be afraid of either. In fact, it might even be a good thing.

By Zachary Roth | The Lookout

The economy added slightly more jobs than expected in July, though not enough to ease mounting concern that a double-dip recession could soon take hold.

The Labor Department said employers added 117,000 jobs last month. Analysts had said that anything above 100,000 would be good news.

The awful numbers for June and May were revised slightly upward, to gains of 56,000 and 46,000 respectively.

Still, a day after the market plummeted amid concerns over slow economic growth and Europe’s debt crises, the news will likely do little to ease the concerns of investors or give hope to those out of work. Most economists believe the economy needs to add around 250,000 jobs a month just to keep pace with the rate of growth in the workforce.

The overall unemployment rate ticked down slightly, to 9.1 percent from 9.2 percent, but that was in part because of people who gave up looking for work after growing discouraged, and who are therefore no longer counted in the statistics.

Zacks Equity Research, On Thursday July 28, 2011, 4:10 pm EDT

The restaurant industry is finally showing improvements and seems poised for long-term growth. Riding on the back of a slowly reviving U.S. economy and the consequent rise in comparable-store sales, restaurant operators have managed to post improved results in recent months. We expect restaurant companies to continue delivering better numbers in the upcoming quarter over the year-earlier period.

In second quarter 2011, most big names in the industry outperformed the Zacks Consensus estimates. More good news came from the NPD foodservice market research report, which stated that annual visits to restaurants are expected to increase by 8% over the next ten years.

A recent survey by the National Restaurant Association revealed that the Restaurant Performance Index (RPI), measuring the health and outlook on the U.S. restaurant industry, was 99.9 in May, down 1.0% from April. The slowdown in May was temporary.

For the first time in six months, the RPI stood below 100 in the month. The RPI run-rate in the last six months connotes improvements in same-store sales and customer traffic.

The Current Situation Index, which measures comparable-store sales, traffic counts, labor costs and capital expenditures in the restaurant industry was 99.2 in May, down 1.1% from April. The Expectations Index, which measures restaurant operators’ six-month outlook on the above indicators, stood at 100.6, down from 101.5 in the prior month. Restaurant operators’ capital spending plans are also on the rise, reaffirming their optimistic outlook on the industry.

Going Forward

Looking ahead, we see solid top-line trends. We believe well-positioned companies will drive above-average traffic trends and enjoy pricing power, leading to same-store sales increases in 2011. The economy is continuing to improve, albeit at a modestly lower rate, but a sluggish labor market, over-supply of restaurants in the industry, higher gasoline prices and food cost inflation may weigh on industry profitability.

Restaurants have been trying to win back cash-conscious guests by revamping promotions, offering discounts and focusing on value-for-meal menus. However, the tendency to offer discounts has been moderating. We remain cautiously optimistic over the near-to-medium term, with consumers continuing to look for value, distinct dining experiences, as well as convenience and enhanced menu deals in a gradually improving economic backdrop.

Drivers of the Restaurant Industry

The U.S. restaurant industry consists of Quick Service Restaurants (QSR), Midscale Restaurants, Casual Dining, Non-Commercial and Fine Dining/Upscale restaurants.

In the midst of what is considered to be a moderate recovery, there are three potential drivers of net income growth for the restaurant industry: unit expansion, same-store sales, cost-containment efforts and marketing tools.

Unit Expansion: Emerging from a lackluster economy, most of the companies have accelerated their pace of restaurant openings. With the expected recovery in consumer confidence, companies are turning back to unit expansion, though not aggressively.

BJ’s Restaurants Inc. (NasdaqGS: BJRI – News) plans to open 12 to 13 restaurants in fiscal 2011 compared with 10 restaurants in fiscal 2010. In the long run, there still exists room to open at least 300 outlets. Chipotle Mexican Grill Inc. (NYSE: CMG – News) plans to open 135–145 new restaurants in 2011, maintaining a growth rate of 13%.

In fact, the companies are set to explore international markets. While Chipotle is primarily concentrating on European countries including U.K., Germany and France, Buffalo Wild Wings Inc. (NasdaqGS: BWLD – News) will expand its overseas footprint by opening more than 50 company-owned and franchised restaurants in Canada over the next 5 years. Another restaurant, P.F. Chang’s China Bistro Inc. (NasdaqGS: PFCB – News) has also eyed the Canadian market.

Darden Restaurants Inc. (NYSE: DRI – News) announced a formal area development agreement with Americana Group to spread its operations in the Middle East. Several food chains including Denny’s Corp. (NasdaqCM: DENN), Pollo Tropical of Carrols Restaurant (NasdaqGM: TAST – News) and Starbucks Corporation (NasdaqGS: SBUX – News) intend to tap the fast-growing Indian market.

McDonald’s Corp. (NYSE: MCD – News) and Yum! Brands Inc. (NYSE: YUM – News) already have considerable coverage in India. Companies like Yum! Brands and McDonald’s are aggressively expanding in China to capitalize on the fast-paced economic growth in Asia.

Same-Store Sales: The second driver consists of menu price increases and traffic counts. Restaurant operators reported positive same-store sales and customer traffic growth in recent months. Growth in menu price has accelerated, as per figures from the Bureau of Labor Statistics.

Cost-Containment Efforts: Some cost cuts have been achieved through integrated information systems, including point-of-sale, automated kitchen display, labor-scheduling and theoretical food cost systems.

Marketing Tools: Social media as a marketing tool has created ripples in the industry. As per National Restaurant Association, 8 out of 10 operators support the view that social media will become an important marketing tool in the future. Hence, they are likely to incorporate Facebook, online review sites, Twitter and blogs into their marketing mix over the next two years.

OPPORTUNITIES

With the economic outlook improving, the fortunes of a number of industry players have turned around. These companies promise long-term growth opportunities:

Buffalo Wild Wings (NasdaqGS: BWLD – News) offers investors one of the strongest growth stories in this space. Buffalo Wild Wings had also been able to consistently deliver positive comps during the height of market turmoil.

With consistent earnings and a healthy balance sheet, McDonald’s (NYSE: MCD – News) provides relative safety and moderate growth opportunities in the current scenario, as well as exposure to faster-growing international markets. McDonald’s U.S. comparable-store sales have been showing continued uptrend since the last few months on strong sales of beverage as well as core menu products.

Boasting a unique position in the hyper-competitive bar and grill segment, yet another stock, BJ’s Restaurants (NasdaqGS: BJRI – News) offers investors a strong growth story with a viable business strategy and debt-free balance sheet. The company delivered impressive second quarter results in terms of earnings per share and same-store sales growth.

Improved Californian Market

The core California market, which was badly hit by the recession resulted in a high rate of unemployment and weak consumer confidence, has started to turn around. We see plenty of growth opportunities in the California and Texas markets. BJ’s Restaurants and Red Robin Gourmet Burgers Inc. (NasdaqGS: RRGB – News) are expanding rapidly in California.

Job Growth in the Sector

The restaurant industry is the major contributor to job growth in the U.S. According to the National Restaurant Association, Texas and Florida will likely show the strongest job growth over the next 10 years.

Remodels and Menu Innovations Remain Key to Success

Additionally, restaurants are accessing different means to plug the problems of heightened competition in a somewhat over-supplied domestic market. Companies continue to reduce their energy consumption and are remodeling their restaurants to give an up-market feel. They are rolling out new, smaller prototypes to augment the perception of value and drive traffic thereby reducing construction and occupancy costs to enhance returns on capital.

While Darden has embarked on an extensive remodeling plan for its core brands like Olive Garden and Red Lobster to spur their same-store sales, Chipotle Mexican Grill is introducing typical Southeast Asian cuisine coupled with naturally raised food, for which it is well known.

The introduction of small plates or individual appetizers by several chains such as California Pizza Kitchen, BJ’s Restaurants and Buffalo Wild Wings has already tasted success. Limited Time Offers are also on the rise following the success of Buffalo Wild Wings and Red Robin Gourmet Burgers.

Franchise-Driven Business Model

Most of the companies are transforming to more a franchise-centric model to reduce the volatility in earnings and increase cash flow generation. However, Panera Bread Co. (NasdaqGS: PNRA – News) is slightly more inclined toward company-owned unit openings, which speaks to the company’s fundamental strength and makes us optimistic on the stock.

Breakfast Menus a Key Driver

Breakfast has accounted for nearly 60% of the U.S. restaurant industry and remains a key driver of traffic growth in recent years. Over the past five years, morning meal traffic has increased at an average rate of 2% per year, while lunch visits were flat, and supper traffic declined 2% per year on average.

We can thereby conclude that growth potential remains mainly in the QSR markets. Leveraging the trend, The Wendy’s Company (NYSE: WEN – News) has expedited its breakfast menu in different markets. The company targets to have about 1,000 restaurants serving its new breakfast by the end of this year.

According to an analysis by NPD, which has a ten-year projection of foodservice trends based on aging, population growth and trend momentum, servings of breakfast sandwiches are projected to outpace the industry’s growth forecast. Annual servings per capita of breakfast sandwiches at foodservice are expected to jump from 11 in 2004 to 14 in 2019.

Currently, there are a number of stocks in the restaurant industry universe with a Zacks #2 Rank (short-term Buy rating). These include BJ’s Restaurants, Buffalo Wild Wings, Chipotle, Darden, McDonald’s.

WEAKNESSES

Higher Food and Gasoline Prices

Food costs account for about one-third of restaurant sales. Wholesale food prices have been on the rise this year. Prices of corn, wheat, coffee and other commodities have also trended up, mainly due to a decline in the U.S. and Russian production prospects, compelling many restaurants to raise prices on some of their products.

The companies are expecting industry-wide increases in commodity and energy costs for fiscal 2012 as well. Dairy and beef prices witnessed a steep rise on a year-over-year basis.

With more expensive food and a spike in gasoline prices, people will have less disposable income and will prefer to dine at home. In our opinion, most of the restaurants will try to safeguard their margins by passing the cost increases to consumers. While big and established chains like McDonald’s, Yum! and Starbucks will survive the price increases due to their broad customer base and larger economies of scale, smaller chains will feel the heat of rising commodity costs.

Steep Competition and Promotional Offers

Competition among casual dining restaurants is expected to remain fierce with respect to price, service, location and concept in order to drive traffic. The environment is still value-sensitive. High discount rates applied to menu prices in order to battle difficult economic conditions are resulting in price wars among competitor companies.

Hence, the failure of any promotional offer will put pressure on the company’s same-restaurant sales growth. Dishes featured in the Olive Garden promotion from February to May failed to be accretive to Darden’s growth, for instance.

Shutdown of Regional Restaurant Chains

A large number of independent U.S. restaurant units fell victims to the downturn, while chain restaurants did relatively better. Large national chains, which attract mainly higher-income visitors, are performing better than regional restaurants as upscale-customers are recovering faster than the lower-income group.

Lag in Traffic Growth Barring Fast Casual Restaurants

According to a recent NPD foodservice market research report, visits to the leading fast casual restaurant chains grew 17% over the last three years while the rest of the industry experienced its steepest traffic declines. However, fast casual unit availability increased 12% since 2007.

Visits to the leading fast casual restaurant chains like Chipotle and Panera were up 6% for the year ending December 2010 versus a year ago. This compares with a 1% decline in total industry visits for the same time period.

Given the lack of overall earnings catalysts, it is difficult to be enthusiastic about a number of restaurant stocks. There are still quite a few names that lack the earnings catalysts of their better positioned peers. These include Brinker International Inc. (NYSE: EAT – News), Yum!, The Cheesecake Factory Inc. (NasdaqGS: CAKE – News), Einstein Noah Restaurant Group Inc. (NasdaqGM: BAGL – News) and Domino’s Pizza Inc. (NYSE: DPZ – News), all of which retain the Zacks #3 Rank (short-term Hold). Jamba Inc. (NasdaqGM: JMBA – News) and Denny’s (NasdaqCM: DENN) retain the Zacks #4 Rank (short-term Sell).

Conclusion

The restaurant industry is not immune to uncertainties in the macro economy. Companies appear to be in a good position to take advantage of an improved economy as evident from their capital budgets. Easy comparisons from the prior year will likely place this year’s performance in a favorable light.

On the consumer front, while they were previously struggling