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U.S. Restaurants on Track for Steady Recovery: 5 Winners

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The U.S. restaurant industry’s recovery is likely to pace up as the government further relaxes restrictions. One of the biggest news for restaurant owners came in the form of relaxations on outdoor mask usage for fully vaccinated people.

This will give people more confidence to visit restaurants as many were still skeptical about visiting eateries since the pandemic is far from over. Also, restaurant sales grew in April, according to the Commerce Department, which is an indication that the industry is fast getting back on its feet.

Restaurant Sales Rise

Although retail sales came in flat in April according to the Commerce Department, sales at restaurants and bars grew for the month. The Commerce Department said on May 14 that sales at restaurants and bars grew 3% in April.

The massive $1.9 trillion stimulus package saw $600 checks reaching millions of Americans, who spent more at restaurants after staying confined to their homes for months. This is also the second consecutive month of sales growth at restaurants and bars, which proves that the stimulus checks are helping people to go back to their normal lives.

Restaurant Sales Poised to Grow

Apart from the second round of stimulus checks, the vaccination drive has also ramped up, boosting people’s confidence. Biden’s pledge to vaccinate 70% of the population by Jul 4 is likely to further add to this confidence.

Moreover, last week the Biden administration announced that fully vaccinated people no longer need to wear masks outdoors. Restaurants had been struggling since March 2020 as sitting capacity indoors had to be drastically cut due to social distancing restrictions.

Following the announcement on relaxation of mask rules, the U.S. National Restaurant Association has now decided to remove a rule from its operating guidance that fully vaccinated people need to wear masks indoors.

According to a Restaurant Business Online article, citing a report by the National Restaurant Association, U.S. restaurants are on track for a steady recovery after declining 19.2% in 2020, which was also the most challenging year for the industry.

Our Choices

Ruths Hospitality Group, Inc. is the largest fine dining steakhouse company in the United States as measured by the total number of company-owned and franchisee-owned restaurants, with over 150 Ruth's Chris Steak House locations worldwide.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 41.4% over the past 60 days. Ruth’s Hospitality sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bloomin Brands, Inc. (BLMN - Free Report) is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. It has five concepts: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse and Wine Bar and Roy's.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 79% over the past 60 days. Bloomin Brands carries a Zacks Rank #1.

Texas Roadhouse, Inc. (TXRH - Free Report) is a full-service, casual dining restaurant chain, which offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 37.6% over the past 60 days. Texas Redhouse sports a Zacks Rank #1.

Dine Brands Global, Inc. (DIN - Free Report) is a full-service dining company. It operates and franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 40.7% over the past 60 days. Dine Brandssports a Zacks Rank #1.

Chuys Holdings, Inc. (CHUY - Free Report) owns and operates full-service restaurants serving a distinct menu of authentic Mexican food. The company offers a menu that includes appetizers, soups and salads, tacos, burritos, enchiladas, fajitas and combination platters.

The company’s expected earnings growth rate for the current year is 52.4%. The Zacks Consensus Estimate for current-year earnings has improved 15.3% over the past 60 days. Chuys Holdings holds a Zacks Rank #1.

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