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Restaurant Sales Getting Back to Normal: 4 Stocks to Buy
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The Delta variant of the coronavirus has been a cause of concern over the past month but that isn’t affecting restaurant sales much. After a tumultuous year of sales, the industry is finally getting back on its feet.
According to the National Restaurant Association (NRA), the Delta variant might slow down the recovery of the restaurant industry to some extent but sales will still be a lot higher than last year. Also, according to a report, as of Sep 6, the average new COVID-19 cases have declined for the first time since Aug 24.
Restaurant Industry Bouncing Back
The restaurant industry was badly hit last year following the coronavirus outbreak, with sales coming to almost a standstill. Although the economy started reopening in June, restaurants didn’t witness much footfall as several restrictions were in place. This made people avoid restaurants and bars.
However, things started changing with the turn of the year, as vaccines started getting rolled out. Millions got their jab and started stepping out of their homes more confidently, thus once again driving sales at restaurants.
Since then, sales have been on the rise at restaurants and bars. According to NRA, annual sales at U.S. restaurants are projected to rise 19.7% from 2020 to $789 billion this year. However, sales will still be 8.7% lower than the $864.3 billion reported in 2019.
It seems that despite a surge in new COVID-19 cases, sales at U.S. restaurants haven’t been impacted much. In fact, summer has so far been good for the industry. Consumer spending at restaurants jumped 32% in the second quarter of 2021 compared to a year ago, according to a separate report from the NPD Group. Moreover, with restrictions eased, indoor or off-premises dining soared 22% in the second quarter of 2021 compared to a year ago.
Restaurant Sales Poised to Grow
With millions vaccinated now, people are now more confident and physically visiting restaurants. According to a report, as of Sep 6, the United States is averaging 137,000 fresh cases of coronavirus, marking a 9% decline from 151,000 new average cases two weeks ago on Aug 24.
This is also the first time since Jun 30 that the national average of new cases has declined from the total average of the previous two weeks. Traveling too is on the rise once again and people are planning holidays. Thus, restaurant sales are likely to get a further boost in the coming months.
According to a Restaurant Business Online article, citing a report by the National Restaurant Association, U.S. restaurant sales are fast bouncing back to normal after declining 19.2% in 2020, which was also the most challenging year for the industry.
Jack In The Box Inc. (JACK - Free Report) operates and franchises through Jack In The Box quick-service restaurants, and is one of the nation’s largest hamburger chains. Based on the number of restaurants, the company’s top 10 markets comprise nearly 70% of the total system.
The company’s expected earnings growth rate for the current year is 54.8%. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the past 60 days.
The Wendy’s Company (WEN - Free Report) operates through its subsidiary holding company — Wendy’s Restaurants, LLC. The fast-food chain through its subsidiary operates as a franchisor of the Wendy's restaurant system.
The company’s expected earnings growth rate for the current year is 42.1%. The Zacks Consensus Estimate for current-year earnings has improved 9.5% over the past 60 days.
Yum Brands, Inc. (YUM - Free Report) is the global leader in multi-branding and offers consumers more choice and convenience at one outlet. The company presently reports through four segments – KFC (44.8% of total revenues in first-quarter 2020), Pizza Hut (18.6%), Taco Bell (35.9%) and Habit Burger Grill (0.7%).
The company’s expected earnings growth rate for next year is 22.4%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days.
McDonald’s Corporation (MCD - Free Report) is a leading fast-food chain that currently operates roughly 38,000 restaurants in more than 100 countries. The company mainly operates and franchises quick-service restaurants under the McDonald’s brand.
The company’s expected earnings growth rate for next year is 48.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days.
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Restaurant Sales Getting Back to Normal: 4 Stocks to Buy
The Delta variant of the coronavirus has been a cause of concern over the past month but that isn’t affecting restaurant sales much. After a tumultuous year of sales, the industry is finally getting back on its feet.
According to the National Restaurant Association (NRA), the Delta variant might slow down the recovery of the restaurant industry to some extent but sales will still be a lot higher than last year. Also, according to a report, as of Sep 6, the average new COVID-19 cases have declined for the first time since Aug 24.
Restaurant Industry Bouncing Back
The restaurant industry was badly hit last year following the coronavirus outbreak, with sales coming to almost a standstill. Although the economy started reopening in June, restaurants didn’t witness much footfall as several restrictions were in place. This made people avoid restaurants and bars.
However, things started changing with the turn of the year, as vaccines started getting rolled out. Millions got their jab and started stepping out of their homes more confidently, thus once again driving sales at restaurants.
Since then, sales have been on the rise at restaurants and bars. According to NRA, annual sales at U.S. restaurants are projected to rise 19.7% from 2020 to $789 billion this year. However, sales will still be 8.7% lower than the $864.3 billion reported in 2019.
It seems that despite a surge in new COVID-19 cases, sales at U.S. restaurants haven’t been impacted much. In fact, summer has so far been good for the industry. Consumer spending at restaurants jumped 32% in the second quarter of 2021 compared to a year ago, according to a separate report from the NPD Group. Moreover, with restrictions eased, indoor or off-premises dining soared 22% in the second quarter of 2021 compared to a year ago.
Restaurant Sales Poised to Grow
With millions vaccinated now, people are now more confident and physically visiting restaurants. According to a report, as of Sep 6, the United States is averaging 137,000 fresh cases of coronavirus, marking a 9% decline from 151,000 new average cases two weeks ago on Aug 24.
This is also the first time since Jun 30 that the national average of new cases has declined from the total average of the previous two weeks. Traveling too is on the rise once again and people are planning holidays. Thus, restaurant sales are likely to get a further boost in the coming months.
According to a Restaurant Business Online article, citing a report by the National Restaurant Association, U.S. restaurant sales are fast bouncing back to normal after declining 19.2% in 2020, which was also the most challenging year for the industry.
Our Choices
Given the situation, it makes good sense to invest in restaurant stocks. We have handpicked stocks of five restaurant players, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Jack In The Box Inc. (JACK - Free Report) operates and franchises through Jack In The Box quick-service restaurants, and is one of the nation’s largest hamburger chains. Based on the number of restaurants, the company’s top 10 markets comprise nearly 70% of the total system.
The company’s expected earnings growth rate for the current year is 54.8%. The Zacks Consensus Estimate for current-year earnings has improved 6.2% over the past 60 days.
The Wendy’s Company (WEN - Free Report) operates through its subsidiary holding company — Wendy’s Restaurants, LLC. The fast-food chain through its subsidiary operates as a franchisor of the Wendy's restaurant system.
The company’s expected earnings growth rate for the current year is 42.1%. The Zacks Consensus Estimate for current-year earnings has improved 9.5% over the past 60 days.
Yum Brands, Inc. (YUM - Free Report) is the global leader in multi-branding and offers consumers more choice and convenience at one outlet. The company presently reports through four segments – KFC (44.8% of total revenues in first-quarter 2020), Pizza Hut (18.6%), Taco Bell (35.9%) and Habit Burger Grill (0.7%).
The company’s expected earnings growth rate for next year is 22.4%. The Zacks Consensus Estimate for current-year earnings has improved 7% over the past 60 days.
McDonald’s Corporation (MCD - Free Report) is a leading fast-food chain that currently operates roughly 38,000 restaurants in more than 100 countries. The company mainly operates and franchises quick-service restaurants under the McDonald’s brand.
The company’s expected earnings growth rate for next year is 48.6%. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days.