ARCO - Restaurant spending still looks solid as consumers battle through inflation

Consumers continue to spend briskly at restaurants despite higher pricing, according to the October retail sales report .

The category that includes restaurants saw a 14.1% year-over-year jump in sales during October and a 1.6% increase from the September tally. Both those growth rates were well above the broad retail sales marks.

Mastercard Spending Pulse noted earlier in the week that post-pandemic shifts in the dining out category are in play even as inflation remains a big factor. Restaurants are forecast by the firm to experience 35% year-over-year growth on Black Friday as consumers prioritize experiences and dining out with friends and family. On Wall Street, some analysts have noted that trends are improved this year for catering demand, work parties, and restaurant-based events.

Some of the restaurant stocks that are on watch for traffic trends include Flanigan's Enterprises ( BDL ), Dine Brands Global ( DIN ), BJ's Restaurants ( BJRI ), Red Robin Gourmet Burgers ( RRGB ), Brinker International ( EAT ), Darden Restaurants ( DRI ), Denny's ( DENN ), Texas Roadhouse ( TXRH ), Cheesecake Factory ( CAKE ), Shake Shack ( SHAK ), Cracker Barrel Old Country Stores ( CBRL ), Portillo's ( PTLO ), Noodles ( NDLS ), Chuy's Holdings ( CHUY ), and Bloomin' Brands ( BLMN ).

Sector watch: Earlier on Wednesday, Latin America-focused Arcos Dorados ( NYSE: ARCO ) sailed past the estimates of analysts with its Q3 earnings report, which is not a bad indicator for McDonald's ( MCD ). ARCO has the best return of any restaurant stock in 2022 with a 21.5% gain.

See Seeking Alpha Quant Ratings across the restaurant sector.

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