jepittman

Consumers Show Little Appetite for Restaurants

Restaurants will not escape the slowdown in the economy. However people must eat somewhere and when the economy stabilizes and again begins to grow one of the very first things consumers will do is go out to eat. Restaurants are an early cycle sector. The recession is over one year old. It will not require evidence of a recovery for restaurant stocks to begin to appreciate. All that is necessary is conclusive evidence that an economic trough is at hand.

One good way to participate is Sysco, the nationwide premier restaurant supplier. Think of your favorite private restaurant and chances are they have an account with Sysco. As baby boomers age, going out to eat with family will not be sacrificed. With Sysco you do not have to guess which restaurant chain has the best model. Own the supplier and you participate. Sysco consistently earns 30% ROE and yields 4% at recent prices. Honest, shareholder friendly management and NO shenenigans.

Disclosure: Owner of Sysco shares since 1995