I wrote a message a couple of week ago on this board ... and it disappeared! Anyway, I basically said that restaurant stocks are dead money this year. I have been following restaurant stocks for the past 20 years, and they have put two kids through Catholic grade school, Catholic high school, and finally college. That said, I just don't see how restaurants can do it in the next year or two. We are facing what I feel is a "perfect storm" situation for them:
* Wages just got whacked 2%, which people are just realizing now
* Minimum wage went up in several states (hits restaurants hard)
* Food costs have gone up significantly in 2012
My wife and I are doing well, but even we are looking at our budget and the first thing we're cutting out is extra trips to the restaurant. It's much cheaper to eat at home. I just don't see how restaurants, especially those that report same-store sales comps, are going to look good as an investment this year, and possibly into 2014. I'm sure there will be a few exceptions, but the category as a whole is dead money to me, and I'm staying away.
WSJ - Great to hear from you. I think some chains may continue to do well - the new ones, young ones, yet really to be discovered. A few meet that criteria. PNRA no longer fits that description as it did 15 years ago.
Check out Leapfrog sometime, LF. They make durable, educational tablets for kids - profitable, growing revenues and earnings, no debt, a wonderful product for kids. Likely acquisition bait as well.
Hope you're doing well - and cheers to the PNRA veterans!
Great to hear from you. Wow, we've been on this board, what, 12 years? How are things in St. Louis? I haven't been there for a long, long time. I no longer travel for my job (got sick of it) so I'm flying much less - like once a year, if that!
I agree with you, there will be a couple new category restaurants that will buck the trend, but why fight the trend? This is one of the easiest calls I have ever made. The evidence is all over the place, all you have to do is look.
From "The New Market Wizards", one of my favorite investment quotes, by James Rogers:
“I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.”
Right now, I'm doing very little. Just waiting to go pick up some money lying in a corner.