Growing concerns about a new COVID-19 variant called omicron spooked investors last Friday, leading to a broad selloff that proved to be the market’s worst day in months.
Stocks rebounded on Monday, but not so much for restaurants. The median restaurant stock fell 2% on Monday, furthering Friday’s losses.
Investors were particularly hard on full-service restaurants. The typical full-service restaurant declined by 3%. By contrast, limited-service restaurants were down 1.4%.
Only 12 of the 45 restaurant companies that Restaurant Business tracks were up. Sweetgreen, whose stock fell as much as 6% on Friday, rebounded and closed Monday up more than 4%. The Burger King franchisee Carrols Restaurant Group closed up 1.7%. Nobody else was up much more than 1%, if that.
Investors sought safety in some big names with drive-thrus and delivery options. McDonald’s and Starbucks were largely flat. Yum Brands, the owner of KFC, Taco Bell and Pizza Hut, was up about 1%.
That said, Wall Street wasn’t exactly consistent. Domino’s stock was up nearly 1%. But stock in Papa Johns declined 2%.
Restaurant stocks had been enjoying a relatively healthy 2021 on Wall Street, thanks largely to improving profitability—despite labor concerns—and a strong sales recovery. That had led five restaurant chains to go public and three more companies to either say they plan to go public or file for offerings.
The selloff over the past two trading days has some casual dining companies in particular trading close to their 52-week lows, including Outback Steakhouse owner Bloomin’ Brands, Cheesecake Factory, Chili’s owner Brinker International, Cracker Barrel and Red Robin
The losses appear set to continue on Tuesday. Most restaurant stocks opened down sharply on continued concerns about the omicron variant.
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