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Restaurant Industry Bouncing Back to Normal: 5 Winners

·5 min read
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The restaurant industry is finally getting back on its feet, thanks to the declining number of new COVID-19 cases that has given people the confidence to go out and dine. The restaurant industry had taken a bad hit last year, when they had to temporarily shut down following the coronavirus outbreak. This saw revenues taking a massive hit for most of last year.

However, in its first sign of bouncing back, restaurant sales have finally started picking up, with people spending more in April for the second straight month. Thus, the industry finally seems to be on track for recovery.

Restaurant Sales Jump

According to the latest Mastercard SpendingPulse report, restaurant sales soared 118.8 in April on a year-over-year basis. The gap is huge because sales had come almost to a halt in April and May 2020.

However, even after the economy opened, restaurants struggled as people were scared of stepping out on fears of contracting the virus. Moreover, people didn’t have enough money to shell out at restaurants as millions lost their jobs during that time.

That said, restaurants seem to be finally getting back their lost business, with sales up 5.7% from2019. Things have started changing lately, thanks to the new round of stimulus checks from President Joe Biden’s $1.9 trillion coronavirus relief aid, which has given people more purchasing power.

Restaurant Industry Poised to Grow

While the second round of stimulus checks has given people more purchasing power, the massive vaccination drive has helped them regain the confidence to step out. Biden’s pledge to vaccinate 70% of the population by Jul 4 is likely to further add to this confidence.

According to a Restaurant Business Online article, citing a report by the National Restaurant Association, U.S. restaurants are on track for a steady recovery after declining 19.2% in 2020.

Moreover, restaurants that had fired or furloughed many of their employees during the pandemic to cut costs, have once again started hiring. According to the Department of Labor, the leisure and hospitality industry hired 331,000 heads in April, with hiring at restaurants and bars accounting for more than 50% of the massive jump. This is only likely to increase in the coming days.

Our Choices

Texas Roadhouse, Inc. TXRH 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.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 37.6% over the past 60 days. Texas Redhouse sports a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Bloomin Brands, Inc. BLMN is a casual dining restaurant company with a portfolio of differentiated restaurant concepts. It has five concepts: Outback Steakhouse, Carrabba's Italian Grill, Bonefish Grill, Fleming's Prime Steakhouse and Wine Bar and Roy's.

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 79% over the past 60 days. Bloomin Brands carries a Zacks Rank #1.

Chuys Holdings, Inc. CHUY owns and operates full-service restaurants serving a distinct menu of authentic Mexican food. The company offers a menu which includes appetizers, soups and salads, tacos, burritos, enchiladas, fajitas and combination platters.

The company’s expected earnings growth rate for the current year is 52.4%. The Zacks Consensus Estimate for current-year earnings has improved 15.3% over the past 60 days. Chuys Holdings holds a Zacks Rank #1.

Dine Brands Global, Inc. DIN is a full-service dining company. It operates and franchises restaurants under both the Applebee's Neighborhood Grill & Bar and IHOP brands. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 40.7% over the past 60 days. Dine Brandssports a Zacks Rank #1.

Starbucks Corporation SBUX is the leading roaster and retailer of specialty coffee in the world. In addition to fresh, rich-brewed coffees, Starbucks’ offerings include many complimentary food items and a selection of premium teas and other beverages, sold mainly through the company’s retail stores. 

The company’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 4.2% over the past 60 days. Starbucks has a Zacks Rank #2 (Buy).

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DINE BRANDS GLOBAL, INC. (DIN) : Free Stock Analysis Report

Starbucks Corporation (SBUX) : Free Stock Analysis Report

Texas Roadhouse, Inc. (TXRH) : Free Stock Analysis Report

Chuys Holdings, Inc. (CHUY) : Free Stock Analysis Report

Bloomin Brands, Inc. (BLMN) : Free Stock Analysis Report

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