Restaurant Chains Are Forecasting Better Results This Year. Here's Why Investors Should Think Twice About Believing Them
It's been a tough start to the year for restaurant chains. People are scaling back on spending due to uncertain economic conditions, and restaurants aren't able to simply rely on price hikes to boost their top lines anymore. The last quarter of 2024 showed signs of weakness already, and things may deteriorate further in the months ahead. It may ultimately depend on how tariffs affect customers and businesses.Some major restaurant chains, including McDonald's (NYSE: MCD) and Chipotle Mexican Grill (NYSE: CMG), are expecting stronger numbers as the year goes on. But that's by no means a sure thing. Here's why they could be wrong, and why investors may want to exercise caution when looking at buying restaurant stocks right now.For investors, the big number to keep an eye on when it comes to restaurant stocks is not necessarily sales but comparable sales growth, which tells you how well the business has been growing organically. The comparable figure excludes the effect of new store openings and closures, so it provides more of an apples-to-apples comparison.Continue reading
It's been a tough start to the year for restaurant chains. People are scaling back on spending due to uncertain economic conditions, and restaurants aren't able to simply rely on price hikes to boost their top lines anymore. The last quarter of 2024 showed signs of weakness already, and things may deteriorate further in the months ahead. It may ultimately depend on how tariffs affect customers and businesses.
Some major restaurant chains, including McDonald's (NYSE: MCD) and Chipotle Mexican Grill (NYSE: CMG), are expecting stronger numbers as the year goes on. But that's by no means a sure thing. Here's why they could be wrong, and why investors may want to exercise caution when looking at buying restaurant stocks right now.
For investors, the big number to keep an eye on when it comes to restaurant stocks is not necessarily sales but comparable sales growth, which tells you how well the business has been growing organically. The comparable figure excludes the effect of new store openings and closures, so it provides more of an apples-to-apples comparison.
