JThe U.S. restaurant industry has had a tough 2020 and 2021 with uneven sales volume as the pandemic has been an impediment to the smooth running of the industry. Even then, the restaurant industry put on an impressive show in 2021 compared to the previous year. And this year too seems to be good so far, with sales up in February.
The jump in restaurant sales in February comes despite rising costs and fears of the Omicron variant of the coronavirus. Given this scenario, actions like Dave & Buster’s Entertainment, Inc. PLAYER, BBQ Holdings, Inc. A BARBECUE, Arcos Dorados Holdings Inc. ARCO and Compass Group PLC CMPGY should perform well in the short term.
Jump in restaurant sales
The Census Bureau said last week that retail and restaurant sales increased in February. According to the report, sales at bars and restaurants in the United States rose 2.5% in February. This follows a 1% decline in January.
One of the main reasons for the decline in January was a rise in Omicron cases which saw many avoid leaving their homes. However, the scene changed in February. As cases began to dwindle, people gathered the courage to visit restaurants, leading to increased sales.
Rising costs have been a concern that has kept people from spending more. This led to a slowdown in retail sales in February. According to the Census Bureau report, retail sales rose 0.3% in February.
However, rising costs have not stopped people from spending in bars and restaurants. Additionally, restrictions have now been eased further, resulting in people spending more in restaurants.
The restaurant industry rebounds
Restaurant sales have been spotty because each time a new wave of COVID-19 arrives, footfall drops, and so do sales.
Even then, the picture was not so bleak. After taking a bad hit in 2020, sales rebounded in 2021 and since then the industry has been gradually recovering. According to a report from Toast, the all-in-one platform built for restaurants, total restaurant sales grew 41% year-over-year in 2021.
Additionally, as restrictions began to be lifted following the massive vaccination campaign, dining out resumed in 2021. Dining out increased by 70% in the fourth quarter of 2021 compared to the same period. one year earlier. On an annual basis, dining out jumped 55% in 2021.
Also, with people planning vacations this spring, travel is on the rise. As a result, restaurant sales are expected to increase in the coming months.
Given the situation, the ideal would be to invest in restaurant stocks. We shortlisted four restaurant stocks, each carrying a Zacks rank of No. 1 (Strong Buy) or 2 (Buy). You can see the full list of today’s Zacks #1 Rank stocks here.
Dave & Buster’s Entertainment, Inc. is one of North America’s leading owners and operators of high-volume venues that combine dining and entertainment for adults and families. The core concept of the PLAY channel is “Eat Drink Play and Watch”, all in one place. As part of the Eat concept, Dave & Buster’s Entertainment offers a wide variety of entrees, burgers, prime steaks and health conscious foods.
Dave & Buster’s Entertainment’s forecast earnings growth rate for the current year is over 100%. The Zacks consensus estimate for current-year earnings has improved 0.4% over the past 60 days. PLAY sports a #1 Zacks rank.
BBQ Holdings, Inc. operates and franchises barbecue restaurants and blues clubs. BBQ currently has locations and franchise locations in Minnesota, Wisconsin, Illinois, Iowa, Nebraska, Utah, Maryland and Virginia and has signed development agreements for additional franchise locations. The menu at BBQ Holdings features award-winning grilled and grilled meats, an extensive selection of unique salads, sides, sandwiches and desserts.
BBQ Holdings’ forecast earnings growth rate for the current year is 66.2%. The Zacks consensus estimate for current-year earnings has improved 25.5% over the past 60 days. BBQ sports a No. 1 Zacks rank.
Arcos Dorados Holdings Inc. operates as a franchisee of McDonald’s with its operations divided into Brazil; North Latin America division; South Latin America and Caribbean Division. ARCO also operates quick service restaurants in Latin America and the Caribbean.
Arcos Dorados’ expected profit growth rate for the current year is 54.2%. The Zacks consensus estimate for current-year earnings has improved 15.6% over the past 60 days. ARCO has a #2 Zacks rank.
Compass Group PLC provides catering and support services to its customers worldwide through its subsidiaries. CMPGY serves customers in offices and factories; schools and universities; hospitals and residences for the elderly; major sporting and cultural sites; and remote mining camps and offshore platforms. Compass Group’s foodservice segment offers services in the form of self-service restaurants, formal restaurants, take-out catering and cafes and vending machines.
Compass Group’s expected profit growth rate for the current year is 87.8%. The Zacks consensus estimate for current-year earnings has improved 4.1% over the past 60 days. CMPGY wears a #2 Zacks rank.
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Arcos Dorados Holdings Inc. (ARCO): Free Stock Analysis Report
Dave & Buster’s Entertainment, Inc. (PLAY): Free Stock Analysis Report
Compass Group PLC (CMPGY): Free Stock Analysis Report
BBQ Holdings, Inc. (BBQ): Free Stock Analysis Report
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