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3 Restaurant Stocks to Gain Big With the Vaccine Rollout

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Zacks Equity Research
·4 min read
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The coronavirus pandemic wreaked havoc on the global economy in 2020. The unprecedented crisis severely impacted most of the industries, and restaurant stocks were no exception to the trend. The restaurant operators encountered a number of concerns, including dismal traffic, limited operations, store re-closures and further delays in reopening stores. It is worth mentioning that Dine-in restaurant operators were impacted the most by the outbreak.

However, restaurant industry adopted a number of strategies to keep their business afloat amid the pandemic. Although restaurant foot traffic and online reservations have declined sharply due to the pandemic, the industry has been benefiting from increase in off-premise sales, which primarily includes delivery, takeout, drive-thru, catering, meal kits and off-site options such as kiosks and food trucks.

Notably, the combination of re-engineering order and delivery process is likely to boost sales in the days ahead. Moreover, restaurant operators are focusing on driverless delivery systems to augment sales. This is expected to lower expenses substantially and ensure safety amid the pandemic.

In keeping with the social distancing protocols, the industry participants expanded seating capacity at indoor dining rooms and outdoor seating (which includes extension of patios, all weather-tents and igloos). Moreover, partitions are being installed in dining rooms to safely optimize and expand indoor seating.

Vaccine Rollout: A Much-Needed Respite

The much-awaited coronavirus vaccine, the rollout of which has begun, is likely to bring the economy back on track. Notably, pharma companies including Pfizer PFE, Moderna MRNA and AstraZeneca AZN have announced the effectiveness of their respective vaccines.

Vaccine rollout is sure to be beneficial for stocks that are dependent on complete resumption of activities. In particular, restaurants have suffered this year as the pandemic led to lockdowns and practicing of social distancing measures that halted dine-in.

Although most of the restaurant operators have reopened dinning services with safety protocols, traffic is still well below the pre-pandemic level. However, following the vaccine rollout dine-in option should become safe and traffic is likely to increase. Restaurant industry is gradually witnessing improving sales. The industry participants are also hiring, which indicates that the industry is finally gaining confidence.

3 Restaurant Stocks to Watch Out

The Cheesecake Factory Incorporated CAKE: Based in Calabasas, CA, the company operates restaurants in the United States and Canada. The company currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for 2021 earnings increased 25.4% over the past 60 days. The Zacks Consensus Estimate for 2021 earnings indicates an improvement of 236.7% from the prior year. In the past three months, shares of the company have gained 37.5%, compared with the industry’s growth of 8%.

Cheesecake Factory is committed to bolstering sales to stay afloat in the competitive environment. Notably, menu-innovation and advanced digital capabilities are the company’s primary strengths. Going forward, it intends to carry on with menu innovation by adding new Super Food items and the famous indulgences of The Cheesecake Factory.



BJ's Restaurants, Inc. BJRI: Based in Huntington Beach, CA, the company owns and operates a chain of high-end casual dining restaurants in the United States. Notably, the company has been benefiting from its off-premise business model, various strategic sales-building initiatives and enhanced loyalty program. Further, the rollout of digital check-ins, digital menus and digital payment options is likely to attract more customers. In the past three months, the company’s shares have gained 32.6%. The Zacks Consensus Estimate for 2021 earnings indicates an improvement of 116% from the prior year.The companies has a Zacks Rank #3.

Ruth's Hospitality Group, Inc. RUTH: Headquartered in Winter Park, FL, the company currently carries a Zacks Rank #2 (Buy). The company along with its subsidiaries, develops, operates, and franchises fine dining restaurants under the Ruth's Chris Steak House name in the United States. The Zacks Consensus Estimate for 2021 earnings increased 18.4% over the past 60 days. The Zacks Consensus Estimate for 2021 earnings suggests growth of 264.6% from the prior year. In the past three months, the company’s shares have gained 52.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
 
AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
BJs Restaurants, Inc. (BJRI) : Free Stock Analysis Report
 
Ruths Hospitality Group, Inc. (RUTH) : Free Stock Analysis Report
 
Moderna, Inc. (MRNA) : Free Stock Analysis Report
 
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