The Delta variant of COVID-19 has been a cause of concern for the past couple of months but that hasn’t dented the confidence of people much. As the economy continues to reopen, people are confidently stepping out of their homes.
This has seen the restaurant industry gradually getting back on its feet, with sales growing. And with the holiday season around the corner, people are likely to plan vacations and eat out, which is further likely to help the restaurant industry.
Restaurant Sales Grow in September
The U.S. Census Bureau reported on Oct 15 that retail sales grew 0.7% in September. Spending rose almost across all sections, with restaurant sales growing 0.3% month over month in September. On a year-over-year basis, spending at food and drinking establishments jumped 29.5%.
The monthly rise might not to be big given that many are still reeling under fears of the Delta variant of the virus. However, the industry seems on track for a steady recovery from the bad hit it took last year. That said, sales of food and beverages increased 0.7% month over month.
With millions vaccinated,restaurants are once again attracting footfall. In fact, despite a surge in COVID-19 cases during summer, sales skyrocketed. 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. The third quarter too is likely to be impressive given that cases started declining during this period and the government also eased restrictions further.
Restaurant Industry Poised to Grow
According to a report from the National Restaurant Association (NRA) issued last month, the Delta variant could slow down the restaurant industry’s recovery to some extent but will still be higher than last year. The report mentions that annual sales at U.S. restaurants are expected to increase 19.7% from 2020 to $789 billion this year.
According to a
Restaurant Business Online article, citing a report by the NRA, restaurant sales in the United States are bouncing back to normal after falling 19.2% last year, which was also the most challenging year for the industry.
Also, travel is on the rise with people planning vacations ahead of the holiday season. Thus, restaurant sales are likely to get a further boost in the coming months.
Given the situation, it would be ideal to invest in restaurant stocks. We have shortlisted five restaurant stocks, each carrying a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see
the complete list of today’s Zacks #1 Rank stocks here. Denny’s Corporation ( DENN Quick Quote DENN - Free Report) is one of the largest restaurant companies, operating moderatelypriced restaurants: Denny's, Hardee's, Quincy's, El Pollo Loco, Coco's and Carrows.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings as improved 4% over the past 60 days. Denny’s Corporation sports a Zacks Rank #1.
Darden Restaurants, Inc. ( DRI Quick Quote DRI - Free Report) is one of the largest casual dining restaurant operators worldwide. The company has operations in the United States and Canada with more than 1,700 restaurants.
The company’s expected earnings growth rate for next year is 76.6%. The Zacks Consensus Estimate for current-year earnings improved 2.3% over the past 60 days. Darden Restaurants has a Zacks Rank #2.
Papa John’s International, Inc. ( PZZA Quick Quote PZZA - Free Report) operates and franchises pizza delivery and carryout restaurants in the United States and other specific international markets. Its dine-in and delivery restaurants operate under the brand name Papa John’s.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 0.6% over the past 60 days. It has a Zacks Rank #2.
Dave & Buster's Entertainment, Inc. ( PLAY Quick Quote PLAY - Free Report) is a leading owner and operator of high-volume venues in North America that combine dining and entertainment for both adults and families.
The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings improved 46.7% over the past 60 days. It has a Zacks Rank #2.