Investors Risk Over-Ordering Restaurant Stocks

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A dark winter for the dining industry hasn’t scared off stockholders in restaurant chains. WSJheard explains. WSJWhatsNow

A dark winter for the dining industry hasn’t scared off stockholders in restaurant chains. But a roaring spring is needed to validate that faith.as the fall has progressed. Comparable sales fell about 22% from a year earlier at its Olive Garden locations for the week ending Nov. 8; the decline accelerated to about 33% for the week ending Dec. 13.

Tougher coronavirus restrictions help explain the falloff: 92% of company restaurants had at least some permitted dining room capacity for the entire week in early November and that figure has dipped to about 75%. For the fiscal third quarter, which ends in February, Darden expects a total revenue drop of 30 to 35% from a year earlier.

Wall Street didn’t flinch at the news, however: shares were flat in morning trading and aren’t far from record highs. Brinker International shares hardly budged after the Chili’s owner reported a similar decline in weekly sales on Wednesday and are up about 30% so far this year. The apparent nonchalance has a strong rationale: Darden has a long record of growth and profitability, and expects to eke out a small profit even during a time of crisis. The company plans to grow its restaurant count in the fiscal year ending in May, and has reinstated its dividend. Markets are forward-looking by nature, and are well aware that vaccines are on the way and the pandemic may wind down in 2021.

 

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heard They should still do ok Dine in biz lost much but take out and deliveries increased RT : A dark winter for the dining industry hasn’t scared off stockholders in restaurant chains. heard explains. WSJWhatsNow

heard Many mentions of “dark winter”. From reporters on CNBC and Fox Business to Biden himself. Now WJS.. 👀

heard I could take some of my second stimulus with Olive Garden bread sticks dipped in garlic butter!

heard Worshipping The LORD in Holiness and Righteousness is a must for all Mankind.

heard Did returns that seemed unusually steady and defied statistically plausible outcomes scare investors from Bernie Madoffs Ponzi scheme? So why would people be afraid of restaurants with no diners? As long as the stocks go up, the restaurants are obviously going to be mint.

heard Government tyranny destroys the private sector. Always

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