Dear Mr. Berko: Brinker International has increased its earnings and dividends every year since 2011 and expects to do even better in 2018, but the stock price went down in 2017, from $55 to $32. How can that be when sales and earnings continue to increase very nicely? Brinker recently raised its dividend to $1.52 and yields 4 percent. I’d like to buy 600 shares, but I can’t figure out why the stock is down. Brinker seems to be very undervalued, and I can’t see any reason not to buy it. But Wall Street analysts are not recommending Brinker. What am I missing here?
— G.L., Destin, Fla.
Dear G.L.: You’re missing a lot. Did you know that officers and directors, including the president and CEO, began unloading the stock in 2016 in the low-$50 range? You must look under the table if you want to know why.
Restaurants are everywhere — on nearly every street corner, highway, byway, avenue, boulevard and thoroughfare — and so much food goes to waste. About 40 percent of the food in the United States goes uneaten. It’s tossed out or left to rot. Americans are squandering about $165 billion a year tossing fruits, vegetables, fish, grain products and milk in the garbage. Restaurants’ diners leave about 19 percent of their food untouched, and portion sizes, which have ballooned in the past dozen years, are the main culprit. Imagine all that fertilizer, energy, water, land and labor gone to waste.
At the end of 2016, there were 287,351 chain restaurants and 323,456 independents, which have a combined 14.7 million employees (11.6 percent of the U.S. workforce) producing revenues of $799 billion. And 2016 was the worst restaurant year since the Great Depression, according to QSR magazine. Walk-in traffic has been falling for five years, and lunch traffic is in a veritable recession. Considering the expanding numbers of new eateries — such as Shake Shack, Potbelly, PDQ, Zaxby’s, Yum China, Smashburger, BurgerFi, Umami Burger, Five Guys, Papa Murphy’s and numerous others competing fiercely for your dollars — it’s little wonder that restaurant unit sales are down. New restaurants are opening every day, faster than you can say “chicken wings and Key lime pie.”
