Worsening annual inflation rates and total inflation hurt the consumer’s disposable income. This creates winners and losers in the restaurant and consumer discretionary markets. People will more likely avoid poorly run restaurants while cutting down on alcohol consumption.
Cracker Barrel (CBRL) risks re-testing its $33.86 low. The firm posted a 3.0% Y/Y drop in revenue, to $868.01 million. It expects to open two new Cracker Barrel stores while closing 14 Maple Street units.
The company needs to re-evaluate its current CEO. Board introspection will lead to the realization that its restaurant experience worsened. Food quality declined, too, resulting in weak traffic trends.
In the alcohol market, beware of Constellation Brands (STZ). Shares closed at a new 52-week low. The stock fell almost daily throughout September. On September 2, it lowered its outlook for fiscal 2026. CEO Bill Newlands said at the time that “We continue to navigate a challenging macroeconomic environment that has dampened consumer demand and led to more volatile consumer purchasing behavior since our first quarter of fiscal 2026.”
Americans are drinking less alcohol. This would hurt Anheuser-Busch (BUD) and Molson Coors (TAP) as well.
In August, Berkshire Hathaway disclosed that it added to its STZ stock position. Anyone who followed this buy would have lost money. Regrettably, famous branding power from Corona, Robert Mondavi Winery, and Modelo may not offset negative demand trends.
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