NEW YORK —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
For 2008, the market-weighted Nation’s Restaurant News Stock Index fell 18.4 percent, compared with a decrease of 32.7 percent for the Dow Jones industrial average and a 37.6-percent slide for the S&P 500. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
The NRN Index includes all 61 publicly traded restaurant companies, and the health of heavyweight McDonald’s Corp. no doubt kept the index from dipping even further. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
From the first week of 2008 until the last, just six restaurant stocks posted increases in their respective stock prices. Those companies were: Buffalo Wild Wings Inc., CEC Entertainment Inc., Darden Restaurants Inc., McDonald’s, P.F. Chang’s China Bistro Inc. and Panera Bread Co. Five stocks finished the year down more than 80 percent and under $1, including Grill Concepts Inc., Diedrich Coffee Inc., Granite City Food & Brewery Ltd., Così Inc. and Jamba Inc. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
The sector’s aggregate market capitalization fell 12.2 percent during 2008 to $122.13 billion. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
“The reasons for the weak performance echo like a broken record: weak consumer confidence and spending, too many restaurant competitors, and volatile operating cost trends,” Bob Derrington, restaurant securities analyst at Morgan Keegan & Co. Inc. said in a note to clients dated Jan. 5. “The combination of those factors has weakened restaurant sales, drained operating margins and left many chains potentially poised to close a record number of locations in the coming year.” —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
He added: “But behind every storm lurks a rainbow, a pot of gold and the hope for a better day.… With some headwinds easing and the upcoming induction of a new presidential administration, we see reasons for some optimism, especially in the second half of 2009.” —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
Those reasons include improved consumer spending driven by lower gas and energy prices, reduced industry supply from closed locations and slowed development plans, lower commodity costs, and a possible economic recovery from any government stimulus plan, Derrington said. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
Restaurant stocks already rallied into the new year, with a December gain of 10.4 percent, following declines of 10.3 percent in October and 5.1 percent in November. The NRN Stock Index followed the general market in an optimistic upswing on the first day of trading for 2009. The index increased 2.6 percent Jan. 2, while the Dow and the S&P 500 rose 2.9 percent and 3.2 percent, respectively. The Dow reversed its four-week losing streak and closed above 9,000 for the first time in nearly two months. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
“Near-term investor sentiment has shifted favorably and [restaurant] stocks have rebounded sharply from depressed levels,” said analyst Joe Buckley at Banc of America Securities LLC, referring to the December rally. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
Analysts have cautioned investors that a full rebound for the industry still is not expected until the second half of 2009. As an industry that typically recovers quickly from depressed levels during recessions, investors often take stock positions ahead of a turnaround in hopes of realizing higher returns. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
The market’s bright performance in December occurred despite more signs of economic weakness. December’s Consumer Confidence Index, as measured by The Conference Board, fell to 38 in a 100-point scale. The result marked the lowest monthly reading since the index was created in 1967. The Consumer Confidence Survey is based on a representative sample of 5,000 households in the United States. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
In addition, the Standard & Poor’s/Case-Shiller housing index, which tracks the price of a single-family home in 20 cities, fell by 18 percent in October, the latest month of data. The report, released last month, shows that home prices began to deteriorate in May 2007, but that this latest monthly drop was the largest since the 20-city index was created in 2000. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
The first full week of trading in 2009 will digest the Labor Department’s December unemployment report, which according to reports is expected to show an unemployment rate of 7 percent, up from the 6.7 percent reported in November. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.
This month, restaurant earnings reports are expected from Sonic Corp., Ruby Tuesday Inc., Brinker International Inc., McDonald’s, Starbucks Corp. and Burger King Holdings Inc. —Restaurant stocks finished 2008 with some of the weakest performances that industry veterans can recall. The new year, however, has started with a bang, and many point to the sector’s pending upturn once an economic recovery begins.