Geetanjali Gamel's  Instablog

Geetanjali Gamel
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I am an individual, self-taught investor with a Masters in Economics. I like playing with data and mostly focus on finding companies that are undervalued and provide good opportunities for investment, but at times will also look into high growth companies with compelling stories despite their... More
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  • Out To Dinner 0 comments
    Jan 7, 2014 12:11 AM

    The restaurant industry suffers the brunt of economic downturns when households scale back their spending on discretionary items like eating out. Alternatively a pickup in restaurant sales and traffic would suggest that consumer confidence and the employment situation is beginning to improve. Recently the National Restaurant Association released their Restaurant Performance Index that touched a five month high of 101.2 in November 2013. This was also its ninth consecutive monthly reading above 100 which indicates expansion in the underlying metrics. Additionally 57 percent of restaurant operators reported gains in same store sales over the prior year and 47 percent reported a rise in customer traffic, which is an uptick from October.

    Capital spending is also expected to continue growing as restaurant owners spend on maintenance and upgrades to attract customers. Well known casual restaurant chain Applebee's announced that it will be installing tablets in all its restaurants by the end of 2014 that will enable customers to order high-margin drinks and appetizers and pay their bill through the devices, cutting down on service wait time. Others like Buffalo Wild Wings and Chili's have also been testing the advantages of introducing tablets at their restaurants. This suggests that restaurant owners also have enough confidence in consumer demand to make investments in their businesses now.

    On the jobs front too, employment at food services and drinking places grew at a healthy pace of approximately 3.3% year-over-year on average in 2013. These appear to be positive signs of economic recovery as consumers show the ability and willingness to spend discretionary cash on restaurants.

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