Analyst Warns of a Restaurant Downturn and Sees Harbinger of U.S. Recession

[Purveyor]

According to one analyst, not even the Pokemon Go craze can save the restaurant industry.

During much of the recovery from the financial crisis, restaurant spending has been a retail highlight as other areas, like department stores, have struggled. According to Stifel Financial Corp. analyst Paul Westra, however, recent surveys point to the start of a serious decline.

"Today, we adopt a bearish outlook for restaurants as we confidently believe that, at a minimum, the simultaneous -150 basis points to -200bps deceleration of restaurant industry comps across all categories during the second quarter within our most recent Stifel Sales Survey reflects the start of a U.S. Restaurant Recession," Westra and his team said in a note.

This doesn't just bode ill for restaurants, but could point to trouble across the economy as a whole. A downturn in dining could be implying a U.S. recession as soon as early 2017, he said, since "restaurants have historically led the market lower during the three to six-month periods prior to the start of the prior three U.S. recessions," Westra adds.

more...

http://www.bloomberg.com/news/articles/2016-07-26/analyst-warns-of-a-restaurant-downturn-and-sees-harbinger-of-a-u-s-recession

[Qutzupalotl]

1. Something else that might be affecting the numbers:

Eating habits are changing with new findings in nutrition. A lot of restaurants can't keep up. Portion sizes are usually enormous and you often don't know what type of oils are used, etc. I know I'll never eat fast food again if I can avoid it.

A restaurant downturn could still affect the economy even if it's health-based and not pocketbook-based, since wait staff will get fewer tips and face being downsized. Less money in servers' pockets will dampen overall consumer spending. But I'll watch for other signs of a slowdown before I start to panic.

[tonyt53]

2. People are going away from chain restaurants. People are also shopping more and more online.

Chain restaurants is where they get that data. But it doesn't tell the complete story, 1Q of this year, McDonald's had a huge increase in sales. 2Q sales were down. Which quarter matters the most to foretell an economic downturn? A more telling factor is to watch how new car sales are going.

[Bill USA]

3. the wealthy owners & CEOs never get that you can't have your cake and eat it too. Incomes for most

people have shown little Real growth (Real: adjusts for inflation) since 1980. But business owners keep thinking their revenues and profits will just keep growing. When people have less and less disposable income to spend sooner or later businesses are going to see their revenue growth slow.


[font size="+1"]Baby tries a handful of dirt for a snack during the Great Depression[/font]

[Chakaconcarne]

4. I think people are growing weary of corporate chain crap food...

In my area, small restaurants are popping up everywhere and doing well.

The last time I ate at a corporate chain the portions were so huge..there was no way I could eat it...and I'm paying for that.