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4 Stocks to Boost Your Portfolio as Restaurant Sales Continue to Surge
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Key Takeaways
CAKE's current-year earnings growth is expected at 20.2%, with estimates up 2.3%.
BJRI offers varied dining options, while its current-year earnings growth is expected at 4.9%.
EAT's earnings growth is expected at 22.5%, with estimates improving 6.3% in 60 days.
Surging oil prices have made goods and services costlier, pushing inflation up as tensions in the Middle East show no signs of easing. However, Americans have continued to spend aggressively on dining out, which has been helping the restaurant industry sail smoothly amid the ongoing price challenges and inflationary pressures.
Sales have been steadily growing at U.S. restaurants over the past several months, which proves that Americans are still willing to spend despite high prices.
Sales at eating and drinking places in the United States totaled $108.6 billion, up 1.2% in August after rising 0.5% in July, according to data released by the Commerce Department. Year over year, sales at U.S. restaurants rose 4.2%.
Restaurant sales totaled $820.7 billion in the first eight months of the year, suggesting that customers spent without hesitation on eating out despite inflationary pressures.
Restaurant sales are a key indicator the Federal Reserve uses to gauge the financial health of U.S. households.
Surging energy prices since the U.S.-Iran war began in late February have created significant pressure on the restaurant industry. While energy costs somewhat eased in June, they have resumed their northbound journey as the Middle East conflict intensified last month, with no clear signs of peace negotiations between the two sides.
Inflation moderated in July as oil prices eased but rose again in August. The Federal Reserve hiked interest rates by a quarter percentage point last month, which is likely to make borrowing costs higher.
Elevated prices have continued to weigh on restaurant operators as consumers become more selective with their spending and increasingly seek value. Quick-service restaurants, particularly those offering low-cost meals, have generally held up better than many other restaurant operators in the difficult environment.
With more consumers watching their budgets and seeking inexpensive dining choices, competition in the value segment has intensified. Restaurant chains are responding by rolling out additional promotions, discounts and value meal deals to draw in customers.
Still, demand for affordable dining remains solid. Many restaurant chains are increasing their marketing efforts, pursuing partnerships and introducing new menu items as they compete for customers and seek to drive repeat visits.
4 Restaurant Stocks With Upside
The Cheesecake Factory
The Cheesecake Factory Incorporated owns and operates 370 restaurants throughout the United States and Canada under brands, including The Cheesecake Factory and North Italia, Flower Child and a collection within the Fox Restaurant Concepts subsidiary. Internationally, CAKE operates 36 Cheesecake Factory restaurants under licensing agreements. It operates two bakery production facilities as well.
The Cheesecake Factory’s expected earnings growth rate for the current year is 20.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days.
BJ's Restaurants
BJ's Restaurants, Inc. owns and operates a chain of high-end casual dining restaurants in the United States. BJRI’s menu offers a wide range of dining options, including everyday lunch and dinner, special occasions and late-night business.
BJ's Restaurants’ expected earnings growth rate for the current year is 4.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days.
Brinker International, Inc.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over 40 years.
Brinker International’s expected earnings growth rate for the current year is 22.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days.
Aramark
Aramark offers food services, facilities management, uniform and career apparel to health care institutions, universities, school districts, stadiums and businesses. ARMK operates primarily in three segments: Food and Support Services North America, Food and Support Services International and Uniform and Career Apparel.
Aramark’s expected earnings growth rate for the current year is 20.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days.
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4 Stocks to Boost Your Portfolio as Restaurant Sales Continue to Surge
Key Takeaways
Surging oil prices have made goods and services costlier, pushing inflation up as tensions in the Middle East show no signs of easing. However, Americans have continued to spend aggressively on dining out, which has been helping the restaurant industry sail smoothly amid the ongoing price challenges and inflationary pressures.
Sales have been steadily growing at U.S. restaurants over the past several months, which proves that Americans are still willing to spend despite high prices.
Given this situation, it would be ideal to invest in restaurant stocks with a strong online presence. We have selected four stocks, namely, The Cheesecake Factory Incorporated (CAKE - Free Report) , BJ's Restaurants, Inc. (BJRI - Free Report) , Brinker International, Inc. (EAT - Free Report) and Aramark (ARMK - Free Report) . Each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Restaurant Sales Jump
Sales at eating and drinking places in the United States totaled $108.6 billion, up 1.2% in August after rising 0.5% in July, according to data released by the Commerce Department. Year over year, sales at U.S. restaurants rose 4.2%.
Restaurant sales totaled $820.7 billion in the first eight months of the year, suggesting that customers spent without hesitation on eating out despite inflationary pressures.
Restaurant sales are a key indicator the Federal Reserve uses to gauge the financial health of U.S. households.
Surging energy prices since the U.S.-Iran war began in late February have created significant pressure on the restaurant industry. While energy costs somewhat eased in June, they have resumed their northbound journey as the Middle East conflict intensified last month, with no clear signs of peace negotiations between the two sides.
Inflation moderated in July as oil prices eased but rose again in August. The Federal Reserve hiked interest rates by a quarter percentage point last month, which is likely to make borrowing costs higher.
Elevated prices have continued to weigh on restaurant operators as consumers become more selective with their spending and increasingly seek value. Quick-service restaurants, particularly those offering low-cost meals, have generally held up better than many other restaurant operators in the difficult environment.
With more consumers watching their budgets and seeking inexpensive dining choices, competition in the value segment has intensified. Restaurant chains are responding by rolling out additional promotions, discounts and value meal deals to draw in customers.
Still, demand for affordable dining remains solid. Many restaurant chains are increasing their marketing efforts, pursuing partnerships and introducing new menu items as they compete for customers and seek to drive repeat visits.
4 Restaurant Stocks With Upside
The Cheesecake Factory
The Cheesecake Factory Incorporated owns and operates 370 restaurants throughout the United States and Canada under brands, including The Cheesecake Factory and North Italia, Flower Child and a collection within the Fox Restaurant Concepts subsidiary. Internationally, CAKE operates 36 Cheesecake Factory restaurants under licensing agreements. It operates two bakery production facilities as well.
The Cheesecake Factory’s expected earnings growth rate for the current year is 20.2%. The Zacks Consensus Estimate for current-year earnings has improved 2.3% over the past 60 days.
BJ's Restaurants
BJ's Restaurants, Inc. owns and operates a chain of high-end casual dining restaurants in the United States. BJRI’s menu offers a wide range of dining options, including everyday lunch and dinner, special occasions and late-night business.
BJ's Restaurants’ expected earnings growth rate for the current year is 4.9%. The Zacks Consensus Estimate for current-year earnings has improved 0.9% over the past 60 days.
Brinker International, Inc.
Brinker International, Inc. primarily owns, operates, develops and franchises various restaurants under the Chili’s Grill & Bar and Maggiano’s Little Italy brands. EAT took over Chili’s, Inc., a Texas corporation, in September 1983 and completed the acquisition of Maggiano’s in August 1995. Chili’s is a preeminent leader in the bar & grill category of casual dining. The brand has been functioning for over 40 years.
Brinker International’s expected earnings growth rate for the current year is 22.5%. The Zacks Consensus Estimate for current-year earnings has improved 6.3% over the past 60 days.
Aramark
Aramark offers food services, facilities management, uniform and career apparel to health care institutions, universities, school districts, stadiums and businesses. ARMK operates primarily in three segments: Food and Support Services North America, Food and Support Services International and Uniform and Career Apparel.
Aramark’s expected earnings growth rate for the current year is 20.1%. The Zacks Consensus Estimate for current-year earnings has improved 1.3% over the past 60 days.