US Restaurant Downturn Signals Recession

US Restaurant Downturn Signals Recession

US Restaurant Downturn Signals Recession


During much of the recovery from the US financial crisis, restaurant spending has been a retail highlight as other areas, like department stores, have struggled. However, recent surveys point to the start of a serious decline.

“Today, we adopt a bearish outlook for restaurants as we confidently believe that, at a minimum, the simultaneous -150 basis points to -200bpts deceleration of restaurant industry comps across all categories during the second quarter within our most recent Stifel Sales Survey reflects the start of a US Restaurant Recession,” The Stifel analysts team said in a note Wednesday.

This does not  just augur ill for restaurants, but could point to trouble across the economy as a whole.

A downturn in dining may well be implying a US recession as soon as early Y 2017, since “restaurants have historically led the market lower during the three to six-month periods prior to the start of the prior three US recessions.”


Analysts will get a better insight into what sales have looked like for a number of restaurants in the coming days and weeks as they report earnings.

Earnings have been gloomy so far, with Starbucks Corp (NASDAQ:SBUX). and Chipotle Mexican Grill Inc. (NYSE:CMG) both missing analyst estimates last week, and Del Frisco’s reporting a 0.7% decline in comparable restaurant sales. McDonald’s Corp. (NYSE:MCD) also reported sales growth that missed estimates.

Wednesday, the US major stock market indexes finished at: DJIA -1.58 at 18472.17, NAS Comp +29.76 at 5139.81, S&P 500 -2.60 at 2166.58

Volume: Trade was above average with about 960-M/shares exchanged on the NYSE

  • Russell 2000 +7.3% YTD
  • DJIA +6.0% YTD
  • S&P 500 +6.0% YTD
  • NAS Comp +2.6% YTD
HeffX-LTN Analysis for DIA: Overall Short Intermediate Long
Bullish (0.32) Bullish (0.35) Bullish (0.38) Bullish (0.25)
HeffX-LTN Analysis for SPY: Overall Short Intermediate Long
Neutral (0.18) Neutral (0.17) Neutral (0.23) Neutral (0.14)
HeffX-LTN Analysis for QQQ: Overall Short Intermediate Long
Bullish (0.28) Neutral (0.23) Very Bullish (0.50) Neutral (0.11)
HeffX-LTN Analysis for VXX: Overall Short Intermediate Long
Bearish (-0.32) Bearish (-0.36) Bearish (-0.33) Bearish (-0.25)

Stay tuned

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Paul Ebeling

Paul A. Ebeling, polymath, excels in diverse fields of knowledge. Pattern Recognition Analyst in Equities, Commodities and Foreign Exchange and author of “The Red Roadmaster’s Technical Report” on the US Major Market Indices™, a highly regarded, weekly financial market letter, he is also a philosopher, issuing insights on a wide range of subjects to a following of over 250,000 cohorts. An international audience of opinion makers, business leaders, and global organizations recognizes Ebeling as an expert.

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