As restaurants gradually reopen for dining service, the three largest restaurant suppliers Sysco (SYY), US Foods Holding (USFD), and Performance Food Group (PFGC) stand to benefit.
The stocks have been slammed by the collapse in restaurant sales, which fell to 36-year lows in April, when adjusted for inflation, Barron’s explained.
The food distributors should rise as states allow restaurants to reopen dining rooms, and the economy gradually recovers, the financial publication explained. Even if many local restaurants never reopen, distributors could become more profitable by servicing fewer locations, gaining efficiency, and lifting operating margins, Barron’s explained.
“It’s still early, but we’re encouraged by the trends we’re seeing,” Dirk Locascio, chief financial officer of US Foods, tells Barron’s. Sales volume is gradually recovering, he says, and spending by restaurants has improved weekly for the past month, signs that the market has stabilized and is slowly reviving.
© 2021 Newsmax Finance. All rights reserved.