5 Restaurant Stocks That Could Keep Winning Big In 2019

After surviving the seven-quarter comps slump, the U.S. restaurant industry made a comeback in the fourth quarter of 2017. Ever since, the industry has been showing slow yet steady recovery. In fact, except for a slight dip in May, the industry reported positive comps in every month since March 2018.

According to TDn2K’s The Restaurant Industry Snapshot, growth has been strong for the industry so far this year and the top-line momentum is likely to continue in 2019. Comps grew 1.1% in the month of November, marking the sixth consecutive month of positive sales growth.

Although traffic has been a concern, the industry’s top line is supported by strong growth in to-go and other forms of off-premise sales. So far this year, to-go sales grew 9% year over year.

Notably, year to date, shares of the Zacks Retail – Restaurants industry have rallied 8.1%, outperforming the sector’s growth of 3.7%.Meanwhile, the S&P 500’s saw a decline of 0.8%.

Will the Momentum Continue in 2019?

Per an article by Foodservice, the industry is likely to hit $825 billion in 2018, representing 4% year-over-year growth. The coming year is also likely to witness sales recovery in the industry, per Joel Naroff, TDn2K economist and president of Naroff Economic Advisors.

Notably, the industry’s growth is expected to be supported by increased consumer spending and restaurateurs’ focus on digital innovation. According to an article by Restaurant Business, the fast-casual restaurant space is likely to record sales growth of 8.3% in 2019 versus 8% this year. Casual dining is expected to experience a 3.4% gain in sales next year, up from this year’s 3.2%. Fine-dining restaurants will also see a 5.2% rise, compared with 5% growth forecast for 2018.

Factors Likely to Support Growth

The primary growth of restaurateurs in 2019 is likely to stem from a growing clout of digital and delivery sales. With the ever-growing presence of Internet and smartphones, analysts expect 25% of all restaurant sales to be generated from digital ordering and delivery over the next four years, per a report by Forbes.

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