SOURCE: Bellwether Report

Bellwether Report

June 21, 2010 08:35 ET

Restaurants Still Serving Poor Financial Dishes

JOHANNESBURG, SOUTH AFRICA--(Marketwire - June 21, 2010) - -- The sour flavoring of the 2007-2009 economic uproar has financially starved the restaurants industry which saw the number of their regulars drastically melting away. The recession took away much of the consumer confidence required to maintain an adequate level of discretionary spending, and people chose to stay home and eat those home-made dishes forfeiting dining-out plans at Longhorn Steakhouse, one of the restaurants under the Darden Restaurants Inc. (NYSE: DRI) banner, as an example. Even as the economic recovery slowly starts to thaw like a 24-pounder turkey, the persisting high number of unemployment maintains a firm restraint on growth in the restaurant industry. 

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Darden Restaurants which has been skipping quarterly meals due to the recessionary pressure is still battling hunger with same-store sales down by 2.8% at its chains. However, with summer holidays on the doorstep, industry experts believe that the restaurant which is renowned for its catering service and sumptuous lunches and dinners, might see a boost in its sales as more people come out of their stay-home shells. Another restaurant giant that has seen its domestic sales suffer throughout the economic crisis and in the first five months of 2010 is Yum! Brands Inc. (NYSE: YUM). The quick service restaurant that operates under some famous brand like KFC and Pizza Hut has nonetheless experience a surge of 8% in China for its most recent quarter and is expecting this growth to continue as the company continues to establish itself successfully in the Chinese market.   

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Whilst a few have found the secret ingredient to beat the economic odds and strive, many in the restaurants industry in the U.S. still remain at the mercy of some of the tribulations still plaguing the economy. Analysts believe that as more jobs are created and people start to find new job opportunities, restaurants will enjoy a regain in consumer confidence, until then this industry will be in torment minus a few exceptions. Register now at to have free access to this report.

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