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    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

How bearish can you be on a particular sector? As far as we’re concerned, we’re as bearish as can be on casual dining. The consensus is far too bullish on top-line trends and earnings season is suggesting that companies are in worse shape than previously thought. Anemic real wage growth is just one of many macroeconomic headwinds involved with casual dining.

The Restaurant Value Spread is suggesting that inflation at restaurants is outstripping inflation at grocery stores and may have an adverse impact on same-restaurant sales growth this year. As you can see in the chart below, things are heading lower and lower; clearly Street estimates are overdue for a revision.

Casual Dining Downturn  - casual dining RVS