A beaten-down sector

The COVID-19 pandemic triggered one of the most challenging operating environments for the restaurant business in history. During the initial outbreak, restaurants in many regions were ordered to either shut down completely or only offer takeout. And even as the economy reopened, some restaurants still had to operate at reduced capacity.

Obviously, not all restaurants survived the pandemic. Yet those that did still have to face another challenge — spiking inflation.

Wholesale food costs have gone up substantially. Wages have risen as well. Many restaurants have increased their prices to offset higher operating costs. But consumers don’t have an unlimited budget.

According to a CNBC survey earlier this year, 53% of Americans say that they have reduced their dining out spending due to rising prices.

The good news? There are signs that the inflation pressure is easing for the restaurant industry.

Fine wine is a sweet comfort in any situation — and now it can make your investment portfolio a little more comfortable, too. Now a platform called Vinovest helps everyday buyers invest in fine wines — no sommelier certification required.

Invest Now

Making a comeback

When restaurant chain Wingstop (WING) reported Q2 earnings on July 28, it noted a decrease in food, beverage and packaging costs, which was mainly driven by an 18.8% year-over-year decline in the cost of bone-in chicken wings.

“We are in a unique position for the back half of 2022 where we are benefiting from meaningful deflation in bone-in wings, have a proven playbook, along with sales-driving levers that give us confidence in our ability to deliver on our outlook for 2022,” said Wingstop’s president and CEO Michael Skipworth.

Investors liked the news. On the day Wingstop reported earnings, its shares shot up 20%.

And that momentum has continued as Wingstop shares currently trade at $134.86 apiece.

Wingstop is not alone. Its peers, such as Cracker Barrel Old Country Store (CBRL), BJ’s Restaurants (BJRI) and Jack in the Box (JACK) have all rallied since Wingstop’s Q2 earnings release.

If this “meaningful deflation” persists, restaurant stocks might be able to see better days ahead.

Get a piece of commercial real estate

Enhance your portfolio with high-return commercial real estate

First National Realty Partners is the #1 option for accredited investors seeking superior risk-adjusted returns in the grocery-anchored necessity-based retail space.

While commercial real estate has always been reserved for a few elite investors, outperforming the S&P 500 over a 25-year period, First National Realty Partners allows you to access institutional-quality commercial real estate investments — without the leg work of finding deals yourself.

Invest with First National Realty Partners now.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.