Restaurant sales

5 stocks to buy as restaurant sales return to normal

The restaurant industry appears to be finally getting back on its feet, with sales rebounding to pre-pandemic levels as more people dine out. In addition, people are spending more, with the new round of fiscal stimulus giving them more purchasing power.

Although retail sales declined in May, sales in bars and restaurants increased surprisingly. This is mainly because people have recently spent less on goods and more on services. Hiring has also increased in restaurants and bars.

Restaurant sales rebound

Sales at American restaurants and bars reached $ 67.3 billion in May, increasing for the third consecutive month, according to Census Bureau statistics. May’s 1.8% sales jump is the highest since January 2020, when sales reached $ 66.3 billion.

Year over year, sales increased 70.6%. Last year, in the wake of the pandemic, sales fell by more than 55% as the country was on lockdown and restaurants and other businesses had to be closed.

In addition, people started spending more on essentials, which further hampered sales in restaurants and bars. Job losses due to the pandemic have made people more careful and robbed them of their purchasing power. That said, sales have rebounded over the past three months, not only raising hopes, but also signaling that the industry is finally rebounding.

The growth in restaurant sales comes despite a decline in overall retail sales, but this is because people have recently spent more on services than on goods.

The restaurant industry on the verge of growth

People who avoided restaurants and bars for fear of contracting the COVID-19 virus are finally showing more courage and confidence to go out, thanks to the massive vaccination campaign.

Additionally, new cases of coronavirus infections are on the decline, leading the government to ease restrictions and reopen the economy faster than expected. This led people to patronize restaurants and bars, thus increasing sales again.

In addition, President Joe Biden’s new round of $ 1.9 trillion coronavirus relief aid stimulus checks has given people more purchasing power.

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.

In addition, the reopening of the restaurant industry has led to a wave of hiring. In the coming days, as more people get vaccinated and restrictions ease, business will explode.

Our choices

Given the situation, it makes sense to invest in restaurant stocks. We handpicked stocks of five restaurant players, each wearing a Zacks Rank # 1 (strong buy) or 2 (buy). You can see the full list of today’s Zacks # 1 Rank stocks here.

Bloomin Brands, Inc. BLMN is a casual catering company with a portfolio of differentiated catering 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 profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 78.3% in the past 60 days. The company sports a Zacks Rank # 1.

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

The company’s expected profit growth rate for the current year is 82.1%. Zacks’ consensus estimate for current year earnings has improved 36.6% in the past 60 days. Chuys Holdings is ranked # 1 by Zacks.

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

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 35.2% in the past 60 days. The company carries a Zacks Rank # 1.

Texas Roadhouse, Inc. TXRH is a casual, full-service restaurant chain, offering an assortment of seasoned and aged steaks hand-cut daily on site and cooked to order on open gas grills.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 35.3% in the past 60 days. The company sports a Zacks Rank # 1.

Ruths Hospitality Group, Inc. RUTH is the largest fine steakhouse in the United States, measured by the total number of company-owned and franchise-owned restaurants, with more than 150 Ruth’s Chris Steak House restaurants around the world.

The company’s expected profit growth rate for the current year is over 100%. Zacks’ consensus estimate for current year earnings has improved 82.8% in the past 60 days. The company has a Zacks Rank # 2.

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

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