Restaurant stocks plunged along with the broader markets on Friday, a second day of major volatility as Wall Street grew deeply concerned about a potential global trade war.
Only Cracker Barrel (up 3%) and Noodles & Company (up 1%) managed to avoid Friday’s market turmoil, when major stock indexes declined 6%. The Dow Jones Industrial Average fell more than 2,200 points on Friday, down 5.5%. Both the Nasdaq and the S&P 500 indexes fell 6%.
The S&P 500 Restaurant Index also fell more than 6%.
Stocks plunged again on Monday morning at the opening of trading, with the Dow falling more than 1,000 points early before markets rebounded briefly before turning starkly negative again. Most restaurant stocks were down as of mid-morning.
The selloff followed a brutal market on Thursday that has hammered markets around the globe. On the week, for instance, the S&P 500 Index is down more than 9%.
Friday’s stock selloff came despite a jobs report that easily beat expectations. The economy added 228,000 jobs in March and the unemployment rate was 4.2%. Restaurants and bars added 29,800 jobs last month, ending a period of declines.
Yet U.S. Federal Reserve Chairman Jerome Powell on Friday said that the tariffs are “significantly larger than expected” and will likely “include higher inflation and slower growth.”
Thursday’s selloff, following the initial announcement, largely spared major fast-food names like McDonald’s, Yum Brands, Domino’s and Restaurant Brands International. That was not the case when all those names fell between 4% and 8%.
Yum (down 8%) was among the biggest restaurant stock decliners on Friday. Both Cava and Papa Johns were down 11%.
But for the most part, declines were broad-based, though investors punished companies they felt would be hurt most by tariffs. Dutch Bros, for instance, fell nearly 10% on Friday and is down 18% this week. Starbucks fell 7% Friday and is down 16% for the week.
Coffee companies, already dealing with rising costs for coffee, could be hit particularly hard as the U.S. grows almost none of its own coffee, meaning the chains’ primary product will be subject to steep cost increases.
But economic weakness might be the bigger threat to restaurants than tariff-related costs. And there appears to be a growing chance of that. J.P. Morgan on Friday said it now sees a 60% chance of a recession. On Thursday it had been 40%. Several major brokerages increased their outlooks for a recession this week.
UPDATE: This story has been updated to add news from the stock market Monday.
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