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Fast food chain delivers Chipotle-like comps

Arby's big bet on carnivores appears to be paying off.

The fast food chain, well known for its roast beef and other meat offerings, reported same-store sales that outpaced the broader restaurant industry during the first quarter.

Arby's Meat Mountain
Source: Arby's
Arby's Meat Mountain

Comparable restaurant sales at the privately held company shot up 9.8 percent during the first quarter from about 1 percent in the year-ago period, according to Arby's. This outpaced the broader industry and is just shy of the 10.4 percent same-store sales surge Chipotle reported during the quarter.

Overall industry same-store sales grew 2.8 percent during the quarter, based on weekly sales from more than 20,000 units, making it the best quarter since the recession for the struggling industry, according to TDn2K's Black Box Intelligence.

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Arby's strong performance marks its 18th consecutive quarter of same-store sales growth. Transactions grew 3.7 percent during the period.

"It is a combination of several things," said CEO Paul Brown in a phone interview. "First, our marketing campaign is doing a much more effective job of letting people know what Arby's has."

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Beginning in August, Arby's began heavily emphasizing the wide range of meats for sale—from smoked brisket to angus steak to pepper bacon and more. Its Kings Hawaiian Fish Deluxe and Turkey Rachel limited-time offerings also both helped drive sales.

The company operates more than 3,300 restaurants worldwide. In July 2011, Wendy's, then known as Wendy's/Arby's, completed the sale of Arby's to Roark Capital Group. Arby's comps had been underperforming for several fiscal years before that.

Its heavy emphasis on meat has affected margins.

"We, like others, have seen cost of beef impact us, and it has had a little bit of negative impact on margins," Brown said, adding the company-owned stores have increased prices less than 2 percent despite a jump in beef prices.

Some relief could be on the way by late next year, Brown said.

"What we're hearing in (the) marketplace is a common belief that beef prices have peaked, and we are at if not past the peak," he said.