Why These Restaurant Stocks Jumped on Wednesday
Shares of Denny's (NASDAQ: DENN), Ruth's Hospitality Group (NASDAQ: RUTH), and Dine Brands Global (NYSE: DIN), various restaurant chains, all jumped today after positive sales data and trends from Cheesecake Factory and Red Robin Gourmet Burgers pushed the sector higher. At the close on Wednesday, Denny's was up 11.9%, Ruth's was up 8.8%, and Dine Brands was up 9.5%.
The broader restaurant industry was feeling some relief Wednesday after Cheesecake Factory and Red Robin released business updates that emphasized dine-in crowds were rebounding. Management announced that Cheesecake Factory restaurants have generated roughly 75% of prior-year sales levels, driven by an increase in off-premise sales and its rebounding dine-in business that is operating under local capacity restrictions. Roughly 25% of Cheesecake Factory restaurants have reopened dining rooms with limited capacity, and management hopes that roughly 65% of dining rooms will be reopened by mid-June.
Red Robin is a step ahead in terms of reopening its stores. Management expects to have 270 dining rooms operating with limited capacity by June 7, which is roughly 65% of the company's restaurants. One encouraging takeaway from Red Robin's data was that it recorded five sequential weeks of sales improvement through May 24. A great sign for investors is that management noticed restaurants that opened up dining with limited capacity are still generating meaningful off-premise sales. That suggests that as restaurants fully rebound, chains that developed strong off-premise deals could take market share and incremental sales from restaurants that didn't (or couldn't) develop off-premise sales.
Source Fool.com