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4 Juicy Restaurant Stocks to Satiate Your Hunger for Growth
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Sales at food services and eateries made a substantial recovery from Covid-19 lockdowns. Americans' appetite for dining out improved as price pressure subsided, the labor market strengthened, consumers’ confidence in their well-being improved, and supply-chain blockages began to show signs of easing, considerably reducing delivery time.
Higher food and labor costs may have been a cause of concern among restaurant operators. Still, their innovative strategies to cater to cost-sensitive customers, mining customer data, and introducing up-to-the-minute technologies helped profit margins return to normalcy. Restaurant owners have seen fright rates drop significantly while same-store sales picked up handsomely.
The broader sales at retail outlets may have declined in January, but sales at bars and restaurants advanced 0.7% last month and climbed 9.3% in the past year, per the Commerce Department. Moreover, restaurant sales are estimated to top $1 trillion this year, with nine out of 10 restaurant operators expecting sales to increase from or remain steady with a year ago, per the National Restaurant Association (NRA).
The restaurant industry has quite successfully addressed the labor shortage drawbacks. In reality, the workforce in the restaurant industry is expected to add 200,000 jobs by the end of this year, according to the NRA. Nonetheless, the current uptick in consumer outlays fueled by robust job additions and rising wages is certainly expected to benefit restaurants further.
Nonfarm payrolls increased by 353,000 in January, and continue to be above the 100,000 threshold, a tell-tale sign that hiring took place across all working-age populations, per the Bureau of Labor Statistics. Additionally, average hourly earnings improved 0.6% month over month and increased 4.5% compared to the same period last year. Thus the average wage growth is well above the pre-pandemic level of 3% to 3.5% (read more: 5 Staffing Stocks to Gain as Labor Market Remains Hot).
At the same time, merger and acquisition activities have started to pick up in the restaurant industry, indicating solid underlying strength. Thus, with things looking encouraging for restaurant operators, astute investors should place their bets on fundamentally sound restaurant stocks such as Brinker International (EAT - Free Report) , Carrols Restaurant Group (TAST - Free Report) , Potbelly (PBPB - Free Report) and CAVA Group, Inc. (CAVA - Free Report) that can make the most of the positive industry trends.
Brinker International operates, develops and franchises various restaurants under Chili’s Grill & Bar and Maggiano’s Little Italy brands. Brinker International currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 2.8% over the past 60 days. EAT’s expected earnings growth rate for the current year is 29.7%.
Carrols Restaurant is the largest BURGER KING franchisee in the United States. Carrols Restaurant currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 2.1% over the past 60 days. TAST’s expected earnings growth rate for the current year is 170%.
Potbelly is a neighborhood sandwich concept. It serves customers throughout the United States. Potbelly currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 15.4% over the past 60 days. PBPB’s expected earnings growth rate for next year is 46.7%.
CAVA Group is a category-defining Mediterranean fast-casual restaurant brand. CAVA Group currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 20% over the past 60 days. CAVA’s expected earnings growth rate for next year is 25%.
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4 Juicy Restaurant Stocks to Satiate Your Hunger for Growth
Sales at food services and eateries made a substantial recovery from Covid-19 lockdowns. Americans' appetite for dining out improved as price pressure subsided, the labor market strengthened, consumers’ confidence in their well-being improved, and supply-chain blockages began to show signs of easing, considerably reducing delivery time.
Higher food and labor costs may have been a cause of concern among restaurant operators. Still, their innovative strategies to cater to cost-sensitive customers, mining customer data, and introducing up-to-the-minute technologies helped profit margins return to normalcy. Restaurant owners have seen fright rates drop significantly while same-store sales picked up handsomely.
The broader sales at retail outlets may have declined in January, but sales at bars and restaurants advanced 0.7% last month and climbed 9.3% in the past year, per the Commerce Department. Moreover, restaurant sales are estimated to top $1 trillion this year, with nine out of 10 restaurant operators expecting sales to increase from or remain steady with a year ago, per the National Restaurant Association (NRA).
The restaurant industry has quite successfully addressed the labor shortage drawbacks. In reality, the workforce in the restaurant industry is expected to add 200,000 jobs by the end of this year, according to the NRA. Nonetheless, the current uptick in consumer outlays fueled by robust job additions and rising wages is certainly expected to benefit restaurants further.
Nonfarm payrolls increased by 353,000 in January, and continue to be above the 100,000 threshold, a tell-tale sign that hiring took place across all working-age populations, per the Bureau of Labor Statistics. Additionally, average hourly earnings improved 0.6% month over month and increased 4.5% compared to the same period last year. Thus the average wage growth is well above the pre-pandemic level of 3% to 3.5% (read more: 5 Staffing Stocks to Gain as Labor Market Remains Hot).
At the same time, merger and acquisition activities have started to pick up in the restaurant industry, indicating solid underlying strength. Thus, with things looking encouraging for restaurant operators, astute investors should place their bets on fundamentally sound restaurant stocks such as Brinker International (EAT - Free Report) , Carrols Restaurant Group (TAST - Free Report) , Potbelly (PBPB - Free Report) and CAVA Group, Inc. (CAVA - Free Report) that can make the most of the positive industry trends.
These stocks carry a Zacks Rank #1 (Strong Buy) or 2 (Buy) and a Growth Score of A or B, a combination that offers the best opportunities in the growth investing space. You can see the complete list of today’s Zacks Rank #1 stocks here.
Brinker International operates, develops and franchises various restaurants under Chili’s Grill & Bar and Maggiano’s Little Italy brands. Brinker International currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 2.8% over the past 60 days. EAT’s expected earnings growth rate for the current year is 29.7%.
Carrols Restaurant is the largest BURGER KING franchisee in the United States. Carrols Restaurant currently has a Zacks Rank #1 and a Growth Score of A. The Zacks Consensus Estimate for its current-year earnings has moved up 2.1% over the past 60 days. TAST’s expected earnings growth rate for the current year is 170%.
Potbelly is a neighborhood sandwich concept. It serves customers throughout the United States. Potbelly currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 15.4% over the past 60 days. PBPB’s expected earnings growth rate for next year is 46.7%.
CAVA Group is a category-defining Mediterranean fast-casual restaurant brand. CAVA Group currently has a Zacks Rank #2 and a Growth Score of B. The Zacks Consensus Estimate for its current-year earnings has moved up 20% over the past 60 days. CAVA’s expected earnings growth rate for next year is 25%.