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Restaurant analysts see industry headwinds in But some believe sales could improve starting this spring Jonathan Maze 1 Jan 06, Investors sure seem to be betting on a restaurant revival come Industry stocks since the election have increased more than 13 percent.
But analysts see a disconnect between those prices and reality. To be sure, this is not an industry consensus. Some analysts see improvement starting this spring as the industry starts lapping easier comparisons and the price gap with grocers narrows.
So far, predictions for sales in are modest. Fitch Ratings believes, for instance, that restaurant sales will slow this year, growing 4 percent, versus the 5 percent last year.
NPD Group, meanwhile, expects traffic will be flat this year, with a 2-percent decline at dine-in restaurants offsetting a 1-percent increase at quick-service concepts. Cowen Analyst Andrew Charles sees three headwinds the industry will face in Continued commodity deflation that will enable grocers to keep their prices low; various consumer spending pressures and an oversupply of restaurants.
Many analysts consider the oversupply of restaurants to be a major factor in same-store sales weakness in The industry has been building units in recent years and adding jobs.
Commodity deflation is generally a good thing for the industry because lower prices for beef and other proteins can improve profitability. Yet last year that deflation enabled grocers to lower prices, and combined with rising prices at restaurants the result was the widest gap in inflation between the two major purveyors of food to consumers in years.
Senatore believes that gap was the primary reason for same-store sales weakness in Baird Analyst David Tarantino expects better industry demand, especially after the first quarter once the industry compares itself to weak sales the year before.
Tarantino believes the industry should then move through some of the headwinds that caused those problems. He also believes that tax reform under the Republican Congress and the Trump administration could provide a catalyst to generate sales this year.
Many analysts doubt that. He believes that same-store sales challenges persisted in the fourth quarter. He also believes that investments many brands are making, along with higher labor costs, could put pressure on profits. He cited high numbers from surveys on consumer confidence, coupled with weak sales at many restaurants and retailers.Consumer Trends How restaurants can better understand consumer behavior This is part of Nation Restaurant News' special coverage of the MUFSO conference, taking place Sept.
Oct. 1 at the.
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