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Retail sales unexpectedly declined in November but restaurant sales saw an impressive jump as people continued to spend more at eateries. The Fed’s has interest rate hikes to fight soaring inflation impacted retail sales. However, people spent aggressively at bars and restaurants.
Although inflation is still at multi-year highs, prices have somewhat cooled lately, indicating that inflation has been slowing. This has also been helping sales at restaurants. Given this scenario, stocks like McDonald's Corporation (MCD - Free Report) , Wingstop Inc. (WING - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) are likely to benefit in the near term.
Restaurant Sales Growing
Sales at bars and restaurants in the United States increased 0.9% in November after jumping 1.6% in October. The figure is definitely impressive given that the growth in sales comes despite sky-high commodity prices.
High prices have been impacting retail sales, which declined sharply in November. Retail sales dropped 0.6%, more than double the expectations of a 0.3% drop and the steepest decline in the past five months. Retail sales did, however, increase 6.5% year over year in November.
Consumer spending has been constrained due to rising commodity prices, which is hurting the retail sector. The restaurant industry has nevertheless managed to put up a great performance, with revenues increasing practically every month.
People have been eating out more frequently ever since the COVID-induced lockdown ended and the economy reopened. Thus, it is hardly surprising that sales at pubs and restaurants have been steadily increasing.
The retail industry was one of the worst affected by the coronavirus pandemic in 2020, with restaurant sales taking a massive hit. After that, sales started to increase once again, but the recovery was unstable because COVID-related restrictions were still in place and millions of people were reluctant to interact confidently in social settings.
Things finally started changing in 2022 and the industry began to ostensibly show indications of revival. Sales have now returned to their pre-pandemic levels and are expected to increase going forward.
Still Challenges Aplenty
During normal times, customers typically spend more on services than on goods. Due to the lack of options, this altered during the epidemic, with people spending more on goods than services.
However, things are once again back to normal and people have started spending more on services. Restaurants are the only services category included in retail sales.
Rising prices though remain a concern. Restaurant owners are working extremely hard to overcome the challenges, especially rising costs. Restaurants are strongly focusing on digital innovation, trying to boost sales, and putting cost-cutting measures into place, which is aiding in the revival of the sector.
Digital innovation is now a crucial component in increasing sales because of the Internet's increasing significance. Delivery services and online platforms are commonly used by large restaurant chains, which has increased revenues.
Also, the restaurant industry has been adding a lot of jobs. In December, the leisure and hospitality sector added 67,000 jobs, according to the most recent Labor Department data.
Our Choices
Given this situation, it would be ideal to invest in these four restaurant stocks.
McDonald's Corporation is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. MCD mainly operates and franchises quick-service restaurants (QSRs) under the McDonald’s brand. Nearly 93% of McDonald’s Corporation’s restaurants worldwide are owned and operated by independent local businessmen as well as women.
McDonald's Corporation’s expected earnings growth rate for the current year is 7%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 90 days. MCD presently carries a Zacks Rank #2.
Wingstop Inc. franchises and operates restaurants. WING’s operating segment consists of the Franchise and Company segments. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’s expected earnings growth rate for the current year is 23%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 90 days. WING currently carries a Zacks Rank #2.
Darden Restaurants, Inc. is one of the largest casual dining restaurant operators worldwide. DRI has operations in the United States and Canada with more than 1,700 restaurants.
Darden Restaurants’ expected earnings growth rate for the current year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 90 days. DRI currently has a Zacks Rank #2.
Domino's Pizza, Inc., which delivers pizzas under the Domino’s Pizza brand, is a top player in the Quick-Service Restaurant or QSR Pizza category. Through its subsidiaries, DPZ operates as a pizza delivery company in the United States and internationally, with 18,800 locations in more than 90 markets.
Domino's Pizza’s expected earnings growth rate for next year is 17.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. DPZ currently has a Zacks Rank #2.
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4 Solid Stocks to Buy on Soaring Restaurant Sales
Retail sales unexpectedly declined in November but restaurant sales saw an impressive jump as people continued to spend more at eateries. The Fed’s has interest rate hikes to fight soaring inflation impacted retail sales. However, people spent aggressively at bars and restaurants.
Although inflation is still at multi-year highs, prices have somewhat cooled lately, indicating that inflation has been slowing. This has also been helping sales at restaurants. Given this scenario, stocks like McDonald's Corporation (MCD - Free Report) , Wingstop Inc. (WING - Free Report) , Darden Restaurants, Inc. (DRI - Free Report) and Domino's Pizza, Inc. (DPZ - Free Report) are likely to benefit in the near term.
Restaurant Sales Growing
Sales at bars and restaurants in the United States increased 0.9% in November after jumping 1.6% in October. The figure is definitely impressive given that the growth in sales comes despite sky-high commodity prices.
High prices have been impacting retail sales, which declined sharply in November. Retail sales dropped 0.6%, more than double the expectations of a 0.3% drop and the steepest decline in the past five months. Retail sales did, however, increase 6.5% year over year in November.
Consumer spending has been constrained due to rising commodity prices, which is hurting the retail sector. The restaurant industry has nevertheless managed to put up a great performance, with revenues increasing practically every month.
People have been eating out more frequently ever since the COVID-induced lockdown ended and the economy reopened. Thus, it is hardly surprising that sales at pubs and restaurants have been steadily increasing.
The retail industry was one of the worst affected by the coronavirus pandemic in 2020, with restaurant sales taking a massive hit. After that, sales started to increase once again, but the recovery was unstable because COVID-related restrictions were still in place and millions of people were reluctant to interact confidently in social settings.
Things finally started changing in 2022 and the industry began to ostensibly show indications of revival. Sales have now returned to their pre-pandemic levels and are expected to increase going forward.
Still Challenges Aplenty
During normal times, customers typically spend more on services than on goods. Due to the lack of options, this altered during the epidemic, with people spending more on goods than services.
However, things are once again back to normal and people have started spending more on services. Restaurants are the only services category included in retail sales.
Rising prices though remain a concern. Restaurant owners are working extremely hard to overcome the challenges, especially rising costs. Restaurants are strongly focusing on digital innovation, trying to boost sales, and putting cost-cutting measures into place, which is aiding in the revival of the sector.
Digital innovation is now a crucial component in increasing sales because of the Internet's increasing significance. Delivery services and online platforms are commonly used by large restaurant chains, which has increased revenues.
Also, the restaurant industry has been adding a lot of jobs. In December, the leisure and hospitality sector added 67,000 jobs, according to the most recent Labor Department data.
Our Choices
Given this situation, it would be ideal to invest in these four restaurant stocks.
McDonald's Corporation is a leading fast-food chain that currently operates more than 39,000 restaurants in more than 100 countries. MCD mainly operates and franchises quick-service restaurants (QSRs) under the McDonald’s brand. Nearly 93% of McDonald’s Corporation’s restaurants worldwide are owned and operated by independent local businessmen as well as women.
McDonald's Corporation’s expected earnings growth rate for the current year is 7%. The Zacks Consensus Estimate for current-year earnings has improved 1.1% over the past 90 days. MCD presently carries a Zacks Rank #2.
Wingstop Inc. franchises and operates restaurants. WING’s operating segment consists of the Franchise and Company segments. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’s expected earnings growth rate for the current year is 23%. The Zacks Consensus Estimate for current-year earnings has improved 5.7% over the past 90 days. WING currently carries a Zacks Rank #2.
Darden Restaurants, Inc. is one of the largest casual dining restaurant operators worldwide. DRI has operations in the United States and Canada with more than 1,700 restaurants.
Darden Restaurants’ expected earnings growth rate for the current year is 10.5%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 90 days. DRI currently has a Zacks Rank #2.
Domino's Pizza, Inc., which delivers pizzas under the Domino’s Pizza brand, is a top player in the Quick-Service Restaurant or QSR Pizza category. Through its subsidiaries, DPZ operates as a pizza delivery company in the United States and internationally, with 18,800 locations in more than 90 markets.
Domino's Pizza’s expected earnings growth rate for next year is 17.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days. DPZ currently has a Zacks Rank #2.