Limited Services Restaurants Trending In The Right Direction

In a new report, analysts at Morgan Stanley provided the latest numbers from their U.S. Limited Services Restaurant Tracker, which indicates that limited restaurants recorded a strong month of April on the heels of a relatively weak March. Morgan Stanley’s restaurant tracker is intended to provide traders with an early read on the health of the limited services restaurant space, including names such as Restaurant Brands International Inc QSR, The Wendy’s Co WED, Sonic Corp SONC and Dunkin’ Brands Group Inc DNKN.

The numbers
Morgan Stanley’s data suggests 3.0 percent same store sales (SSS) growth among limited services restaurants in April after only 2.1 percent SSS growth in March. According to analysts, there is room for continued growth in the space, as improving confidence and rising liquidity have created a favorable environment for many companies.

McDonalds showing signs of life?
One restaurant that has been lagging the overall industry in recent months has been McDonald’S Corp MCD. According to Morgan Stanley’s new data, McDonald’s SSS growth for the month of April was about -2.0 percent. While negative grow is never a good thing for a company, the -2.0 percent number is slightly better than consensus estimates of -2.2 percent growth, and it is a marked improvement over March’s -3.9 percent SSS growth.

Trending in the right direction
Despite weakness from McDonald’s, the overall U.S. Limited Services Restaurant Tracker indicates that SSS numbers in the space have been trending upward for about a year now, following nearly two years of steady declines.

In recent months, SSS growth numbers hit their highest levels since late 2012.