I can’t seem to shake the bearish mentality!
The past three months have been kind to most restaurant stocks, especially casual dining. Clearly, I have not been bullish enough, but I keep seeing macro data points that leave me concerned that any sequential improvement in restaurant demand has been driven by easy comparisons rather than any real improvement in underlying demand. The current unemployment picture has clearly hurt the QSR names, but spared casual dining from seeing trends get any worse on a 1-year basis.
The charts below, however, keep me up at night. The consumer is still retrenching. I know everybody needs to eat, but you can eat three meals a day at MCD for less than $12. Knowing that more than 60% of casual dining meals (probably higher) are put on a credit card, the current trends in revolving credit don’t support a sustained recovery in casual dining.