Recent surprises in weaker home sales, new jobless claims (not including last week’s number) and declining consumer confidence have not been of any consequence to restaurant stock performance. Along with retail sales in general, restaurant sales trends (primarily casual dining) continue to make sequential improvement. Sales trends have improved across the board, but growth has been most evident in the chains that are better positioned competitively and appeal to higher end consumers.
The nearly two year decline in consumer credit has been a big contributor to lower customer counts in the casual dining sector. The Government data posted on Friday suggest that the bulk of the contraction in credit is behind us. While significant credit expansion is not likely any time in the immediate future, the current numbers are indicating that sales trends could be stabilizing.
A trend worth watching…