Have you noticed in the last several years that there are an increasingly large number of restaurant related stocks out there? It seems that every week there is an IPO of some new hot concept stock. The reason for this influx of restaurant stocks is because Americans are increasingly choosing to eat their meals out rather than cook at home. Today’s Retail Sales report for the month of April was a perfect case in point. While overall sales were unchanged, sales at Bars and Restaurants increased 0.7%, while sales at Food and Beverage Stores declined 0.13% in what has been a continuation of a trend that has been in place for the last several years.
The chart below shows the historical share of total sales that both Bars and Restaurants and Food and Beverage Stores have accounted for. Over time, the two sectors have accounted for around one quarter of total retail sales, but as the chart below illustrates the breakdown in each sector’s share has changed dramatically. In 1993, Bars and Restaurants accounted for 9.8% of total sales while Food and Beverage Stores accounted for 18.6%. Over time, though, Bars and Restaurants have consistently seen their share rise, which as of April stood at a record 11.7% of total sales. At the same time, Food and Beverage Stores have seen their share decline to 12.8%, narrowing its share lead over Bars and Restaurants to just 1.1 percentage points, the lowest on record. So, what are you going to turn your kitchen into?