3 Restaurant Stocks to Avoid as Vaccine Mandates Gain Momentum
StockNews
Published Aug 18, 2021 01:06PM ET
Updated Aug 18, 2021 02:30PM ET
3 Restaurant Stocks to Avoid as Vaccine Mandates Gain Momentum
The rapid spread of the COVID-19 Delta variant has the potential to erase the restaurant industry’s gains over the past year amid a decelerating vaccine rollout and increasing calls for vaccine mandates by private companies and local authorities by the Biden administration. Thus, we think fundamentally weak restaurant stocks The Cheesecake Factory (NASDAQ:CAKE), Dave & Buster’s Entertainment (PLAY), and FAT Brands (FAT) are best avoided now. Read on.The restaurant industry is expected to be hard hit by the Biden Administration’s increasing “encouragement” of private industry and local governments to mandate proof of COVID-19 vaccination to eat indoors at restaurants, which was triggered by the resurgence of COVID-19 cases. New York City, San Francisco, and California have already mandated proof of immunization to eat indoors. The policy is expected to gain wider traction, creating a host of new challenges for restaurant operators. Many restaurant owners are worried that their businesses might not be able to handle another blow. Furthermore, with the rising cost of food lowering the restaurant chains’ profit margins, lower foot traffic could spell significant losses.
U.S. consumer sentiment declined to pandemic-era lows recently amid the rapid spread of the COVID-19 Delta variant. The consumer sentiment index fell 11 points to 70.2 in August, its lowest reading since December 2011. Moreover, the index missed analysts’ 80.1 target by a large margin.
Given this backdrop, we believe fundamentally weak restaurant stocks The Cheesecake Factory Incorporated (CAKE), Dave & Buster’s Entertainment, Inc. (PLAY), and FAT Brands Inc. (FAT) are best avoided now.
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