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The U.S. restaurant industry staged a solid turnaround in 2023 and sales have since been on the rise. The uptrend continues despite rising price pressures and growing concerns over inflation.
The Commerce Department reported that sales at U.S. food and drinking places totaled $94.3 billion in April, up 5.5% year over year. Sales from February through April totaled $ 36.7 billion.
The retail sector has been struggling to bounce back from its lows, but sales at restaurants and bars have so far put up an impressive show amid price pressures.
Inflation rose in the first three months of the year but that didn’t stop Americans from eating out. The consumer price index rose 0.3% month over month in April which came in below the consensus estimate of a rise of 0.4%.
Year over year, CPI jumped 3.4%, in line with the estimates. Core CPI, which excludes the volatile food and energy prices, rose 3.6% in April on a year-over-year basis and 0.3% sequentially, both in line with estimates.
The core year-over-year CPI reading is the lowest since April 2021, while the month-over-month figure increased at its slowest pace since December.
The rise in restaurant sales is being fueled by strong consumer spending and a boost in personal income.
Also, cooling inflation has once again raised hopes that the Fed could soon start its interest rate cuts. Lower interest rates bode well for the restaurant industry as it will give consumers more spending power.
Our Picks
We have narrowed our search to four restaurant stocks such as CAVA Group, Inc. (CAVA - Free Report) , Brinker International, Inc. (EAT - Free Report) , Wingstop Inc. (WING - Free Report) and Texas Roadhouse, Inc. (TXRH - Free Report) , that have strong potential for 2024.
CAVA Group, Inc. is a category-defining Mediterranean fast-casual restaurant brand, which brings heart, health and humanity to food. CAVA is based in Washington.
CAVA Group’s expected earnings growth rate for the current year is 19.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. CAVA currently has a Zacks Rank #2.
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 the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 39.2%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the past 60 days. EAT currently sports a Zacks Rank #1.
Wingstop Inc. franchises and operates restaurants. WING operates through the Franchise segment and the Company segment. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’sexpected earnings growth rate for the current year is 36.7%. The Zacks Consensus Estimate for current-year earnings has improved 12.4% over the past 60 days. WING currently sports a Zacks Rank #1.
Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain, which offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names. Texas Roadhouse also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches.
Texas Roadhouse’s expected earnings growth rate for the current year is 31.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days. TXRH presently carries a Zacks Rank #1.
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4 Solid Restaurant Stocks to Buy on Growing Sales
The U.S. restaurant industry staged a solid turnaround in 2023 and sales have since been on the rise. The uptrend continues despite rising price pressures and growing concerns over inflation.
The Commerce Department reported that sales at U.S. food and drinking places totaled $94.3 billion in April, up 5.5% year over year. Sales from February through April totaled $ 36.7 billion.
The retail sector has been struggling to bounce back from its lows, but sales at restaurants and bars have so far put up an impressive show amid price pressures.
Inflation rose in the first three months of the year but that didn’t stop Americans from eating out. The consumer price index rose 0.3% month over month in April which came in below the consensus estimate of a rise of 0.4%.
Year over year, CPI jumped 3.4%, in line with the estimates. Core CPI, which excludes the volatile food and energy prices, rose 3.6% in April on a year-over-year basis and 0.3% sequentially, both in line with estimates.
The core year-over-year CPI reading is the lowest since April 2021, while the month-over-month figure increased at its slowest pace since December.
The rise in restaurant sales is being fueled by strong consumer spending and a boost in personal income.
Also, cooling inflation has once again raised hopes that the Fed could soon start its interest rate cuts. Lower interest rates bode well for the restaurant industry as it will give consumers more spending power.
Our Picks
We have narrowed our search to four restaurant stocks such as CAVA Group, Inc. (CAVA - Free Report) , Brinker International, Inc. (EAT - Free Report) , Wingstop Inc. (WING - Free Report) and Texas Roadhouse, Inc. (TXRH - Free Report) , that have strong potential for 2024.
These stocks have seen positive earnings estimate revisions in the last 60 days. Each of the stocks has a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CAVA Group, Inc. is a category-defining Mediterranean fast-casual restaurant brand, which brings heart, health and humanity to food. CAVA is based in Washington.
CAVA Group’s expected earnings growth rate for the current year is 19.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. CAVA currently has a Zacks Rank #2.
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 the last 40 years.
Brinker International’s expected earnings growth rate for the current year is 39.2%. The Zacks Consensus Estimate for current-year earnings has improved 6.5% over the past 60 days. EAT currently sports a Zacks Rank #1.
Wingstop Inc. franchises and operates restaurants. WING operates through the Franchise segment and the Company segment. Wingstop offers cooked-to-order, hand-sauced and tossed chicken wings.
Wingstop’sexpected earnings growth rate for the current year is 36.7%. The Zacks Consensus Estimate for current-year earnings has improved 12.4% over the past 60 days. WING currently sports a Zacks Rank #1.
Texas Roadhouse, Inc. is a full-service, casual dining restaurant chain, which offers assorted seasoned and aged steaks hand-cut daily on the premises and cooked to order over open gas-fired grills. TXRH operates restaurants under the Texas Roadhouse and Aspen Creek names. Texas Roadhouse also offers its guests a selection of ribs, fish, seafood, chicken, pork chops, pulled pork and vegetable plates, an assortment of hamburgers, salads and sandwiches.
Texas Roadhouse’s expected earnings growth rate for the current year is 31.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.9% over the past 60 days. TXRH presently carries a Zacks Rank #1.