Invest in fast food and upscale chains

The restaurant sector has taken some hits in recent months as consumers have abandoned certain quick-service restaurants in search of better value as many of them have raised their prices. While many stocks in this sector have declined, is it time to buy them back up?

Jim Salera, research analyst at Stephens, joins Market Domination to discuss the best ways to participate in the restaurant sector while companies in the sector are currently experiencing declines.

“I think the main thing you have to look at with restaurants is what customer the concept is aimed at. There are restaurant concepts that are aimed at upscale customers. Think of Sweetgreen (SG) and Cava (CAVA), which have done really exceptionally well this year and have been really strong stocks,” Salera says. “And then there are others that are more focused on middle- to low-income consumers or traditional fast food, or Wendy’s (WEN) or McDonald’s (MCD), which have come under a little more pressure.”

Salera believes that “Papa John’s (PZZA) is particularly attractive” because new CEO Todd Penegor brings experience from Wendy’s and has already set new goals for the company, including plans to “reinvigorate the franchisee base and position it for accelerated growth. There are also many new special offers in the channel. This is a way to achieve relative value while also maintaining a high-quality value proposition.”

Click here to watch the full episode of Market Domination for more expert insights and information on current market events.

This article was written by Nicolas Jacobino