Dine Out on Restaurant Stocks

Forget the kitchen. We're eating out tonight. That is the message from the Census Bureau, which reports that Americans spent more this past June in "restaurants and other eating places" than they did in "supermarkets and other grocery stores." The National Restaurant Association expects sales for its industry to increase this year to $863 billion--more than double the 2000 figure. The average U.S. family now spends $6,700 a year eating out. With brick-and-mortar retailers under pressure from online merchants, restaurants are moving into empty storefronts. In Georgia, eating establishments make up 84% of planned new chain retail stores.

Although these are flush times for dining out, success for restaurants can still be elusive. The tight labor market has hit them especially hard. Some 40% of recently reported that restaurants face a difficult choice: "Let go of trusted employees or risk criminal prosecution." Plus, the rising minimum wage in many cities and states has boosted costs. In Washington, D.C., for example, the base minimum for tipped restaurant workers will rise 29% in July 2020 compared with two years earlier.