For restaurant stocks, it seems like a complete reversal of fortunes. After pinching pennies and clamping down on excess spending, Americans were finally starting to open their wallets and dine out again. Profits at various restaurants – from full-scale eateries to quick-service burger joints – were seeing rising sales, customers and, ultimately, profits. And while the sector isn’t particularly known for its dividends, those were on the rise as well.
And then something bad happened.
Americans stopped spending. By a lot. And restaurant stocks were suddenly caught between a rock and a hard place. Profits have vanished and share prices have dwindled to lows not seen in years. Some analysts have even dubbed the drubbing and the future issues facing the group the “Restaurant Recession.”
Whatever you call it, it certainly isn’t good news for stocks in the sector or your portfolio. (Another sector feeling the heat is the Apartment REITs. Find out why here.)