After more than two years of slow sales and anemic guest traffic for restaurant operators, Wall Street analysts say a recovery in consumer spending may finally be here.
“We officially declare that ‘the restaurant consumer recovery’ began in March 2010,” said Cowen &Co. analyst Paul Westra in an analyst note this week.
Westra said same-store sales appear to be rising at restaurant chains, a phenomenon he witnessed in 2003 as the industry came out of a recession. Following a gain in same-store sales in May 2003, restaurant stocks jumped 45 percent over the next year.
In particular, Westra said “polished casual-dining” chains like Darden Restaurants Inc., which owns the Olive Garden and Red Lobster, are likely to benefit from baby boomers’ preference for dining in “high-end” environments. He said chains that can capitalize on those preferences could take diners away from “mass-casual” competitors as the economy improves.
RBC Capital Markets analyst Larry Miller agreed that a recovery may be imminent, if not already in progress.
