Restaurant sales are back to normal: 4 stocks to buy


The Delta variant of the coronavirus has been a cause for concern over the past month, but it’s not 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 could slow the recovery of the restaurant industry to some extent, but sales will still be much higher than last year. In addition, according to a report, as of September 6, the average number of new cases of COVID-19 declined for the first time since August 24.

The restaurant industry is rebounding

The restaurant industry was hit hard last year in the wake of the coronavirus outbreak as sales nearly came to a halt. Although the economy began to reopen in June, restaurants did not see a lot of footfall as several restrictions were in place. This caused people to avoid restaurants and bars.

However, things started to change with the start of the year, as vaccines began to roll out. Millions of people received their blow and started walking out of their homes with more confidence, once again driving sales in restaurants.

Since then, sales have increased in restaurants and bars. According to the NRA, annual sales of American restaurants are expected to increase 19.7% from 2020 to reach $ 789 billion this year. However, sales will still be 8.7% lower than the $ 864.3 billion reported in 2019.

It appears that despite an increase in the number of new cases of COVID-19, sales in American restaurants have not been significantly affected. In fact, the summer has so far been good for the industry. Consumer spending in restaurants jumped 32% in the second quarter of 2021 from a year ago, according to a separate report from the NPD Group. In addition, with relaxed restrictions, indoor and out-of-house dining is up 22% in the second quarter of 2021 compared to a year ago.

Restaurant sales set to grow

With millions of people vaccinated now, people are now more confident and physically visit restaurants. As of September 6, the United States had an average of 137,000 new cases of coronavirus, a 9% drop from the average 151,000 new cases two weeks ago on August 24, according to a report.

It is also the first time since June 30 that the national average of new cases has declined from the total average of the previous two weeks. Travel is also on the rise again and people are planning vacations. Thus, restaurant sales are expected to increase further in the coming months.

According to a Restaurant Business Online article, citing a report by the National Restaurant Association, restaurant sales in the United States are quickly returning to normal after falling 19.2% in 2020, which was also the strongest year. difficult for the industry.

Our choices

Given the situation, it makes sense to invest in restaurant stocks. We handpicked stocks of five restaurant players, each carrying a Zacks Rank # 2 (Buy). You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.

Jack in the Box inc. JACK operates and franchises through Jack In The Box quick service restaurants and is one of the nation’s largest burger chains. Based on the number of restaurants, the company’s top 10 markets account for almost 70% of the total system.

The company’s expected profit growth rate for the current year is 54.8%. Zacks’ consensus estimate for current year earnings has improved 6.2% in the past 60 days.

Wendy’s company WEN operates through its holding subsidiary – Wendy’s Restaurants, LLC. The fast food chain through its subsidiary operates as a franchisor of the Wendy’s catering system.

The company’s expected profit growth rate for the current year is 42.1%. Zacks’ consensus estimate for current year earnings has improved 9.5% in the past 60 days.

Yum Brands, Inc. YUM is the global leader in multi-branding, providing consumers with more choice and convenience in a single point of sale. The company currently reports in four segments – KFC (44.8% of total revenue in Q1 2020), Pizza Hut (18.6%), Taco Bell (35.9%) and Habit Burger Grill ( 0.7%).

The company’s expected profit growth rate for next year is 22.4%. Zacks’ consensus estimate for current year earnings has improved 7% over the past 60 days.

McDonald’s Company MCD is a leading fast food chain that currently operates approximately 38,000 restaurants in more than 100 countries. The company primarily operates and franchises quick service restaurants under the McDonald’s brand.

The company’s expected profit growth rate for next year is 48.6%. Zacks’ consensus estimate for current year earnings has improved 4.7% in the past 60 days.

Want the latest recommendations from Zacks Investment Research? Today you can download 7 best stocks for the next 30 days. Click to get this free report

Jack In The Box Inc. (JACK): Free Stock Analysis Report

McDonalds Corporation (MCD): Free Stock Analysis Report

Yum Brands, Inc. (YUM): Free Stock Analysis Report

The Wendys Company (WEN): Free Stock Analysis Report

To read this article on Zacks.com, click here.

Zacks investment research


Comments are closed.