Is It Too Late to Sell Shake Shack, Cheesecake Factory, and Habit Restaurants?

It's not easy running a restaurant these days -- and it's not easy being an investor in most eatery stocks, either. Shares of Shake Shack (NYSE: SHAK), The Cheesecake Factory (NASDAQ: CAKE), and Habit Restaurants (NASDAQ: HABT) have suffered double-digit percentage declines this year, and at least one Wall Street pro thinks that things won't be getting better anytime soon.

Nick Setyan at Wedbush downgraded the three restaurant stocks on Tuesday, going from outperform to neutral on all three investments. He sees negative pressures on comparable sales continuing to weigh on the performance of casual-dining and fast-casual concepts. His concerns aren't materially different from those of other worrywarts who have been talking up this so-called restaurant recession. Setyan feels that the widening gap between menu prices, which are inching higher, and supermarket food prices, which have held relatively steady, will keep driving the hungry away from eating out. There's also the consumer trend away from physical retail shopping, leaving a mark on eateries near shopping malls or in strip malls. He also sees the income of wealthier households plateauing, a factor also nibbling at consumer demand.

Image source: Habit Restaurants.

Source: Fool.com