Restaurant sales on track for Q4 but face headwinds in 2023 - Baird
Thomas Barwick

Restaurant comparable sales rose 3.5-4.0% in November, down from a 4.5% gain in October and a 3.7% rise in Q3, Baird reported.
Baird surveyed restaurants with $15B or above in annualized sales.
On a combined three-year basis, same-store sales growth was +16.5-17.0%, more than October +14.5-15.0% and Q3 +14.8% largely due to improvement for the fast-casual segment.
Looking at one-year comparable sales, fast-casual was +11%, quick-service was +2-2.5% and casual dining was -3%.
The survey results for the first two weeks of December were softer than November, given the three-year comparison, Baird said.
"We still see risk that the demand backdrop for restaurants could become more challenging in 2023 than in 2022, given the unfavorable trends we are seeing in some of the variables that have correlated well to restaurant demand historically (including key housing indicators) as well as the potential for tighter monetary policy to begin to lead to worsening employment conditions," Baird analyst David E. Tarantino wrote. "Given these risks, we have a relatively higher degree of confidence in our 2023 estimates for limited-service chains (particularly those that operate with highly franchised models) than we do for the more discretionary sub-segments of the industry (e.g., casual dining, coffee)."
Stocks to watch: BJ's Restaurants (BJRI); Dutch Bros (BROS); The Cheesecake Factory (CAKE); Chuy's (CHUY); Chipotle Mexican Grill (CMG); Domino's Pizza (DPZ); Darden Restaurants (DRI); Jack in the Box (JACK); El Pollo Loco (LOCO); McDonald's (MCD); Portillo's (PTLO); Restaurant Brands International (QSR); Starbucks (SBUX); Shake Shack (SHAK); Texas RoadHouse (TXRH); Wingstop (WING); Yum! Brands (YUM)