Sobering look at restaurant economy from US News and World Report:
Restaurant Recession Could Signal Tough Times for U.S. Economy
Analysts are forecasting a "restaurant recession" in the U.S., which is bad news for America's food and drink establishments and potentially even worse news for the economy at large.
Paul Westra, a senior research analyst at Stifel Financial Corp., said in a research note Tuesday that he'd turned "decidedly bearish" on the restaurant industry, downgrading Stifel's stance on 11 different restaurant stocks, including Chipotle Mexican Grill, Panera Bread and Cheesecake Factory.
He and his colleagues now "confidently believe" that the weak restaurant consumer spending seen in the second quarter of the year "reflects the start of a U.S. restaurant recession."
"The catalyst for the current weak pre-recessionary restaurant spending trend is likely multifaceted – U.S. politics, terrorism, social unrest, global geopolitics, economic uncertainty," Westra said. "But, if history is a guide, we warn investors that restaurant-industry sales tend to be the 'canary that lays the recessionary egg.'"
Makes perfect sense - money gets tight and people do not eat out as often. Restaurants are a luxury expense, not a necessity. Indicators like this are fascinating to follow - I like the Baltic Dry index for manufacturing (here, here, here and here) - it was down below 300 in February of this year - a post Christmas slump. It is now at 679 but trending downward. Historically, it has "lived" around the 1,000 mark trending higher seasonally.
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