NEW YORK ( TheStreet) -- A handful of recent earnings misses in the restaurant sector have some wondering whether the great run for that sector is indeed on its last legs.
Restaurants typically are top performers after a recession, but they defied logic following the financial crisis by performing well during the recession, too.
As much as consumers have suffered, eating outside the home seems to have been one of the last items cut from the budget. Now we are seeing some high-profile restaurant names missing their numbers, and it raises the question of whether a slowdown is in the works.
Still, I'm not ready to declare the restaurant sector dead. True, I am concerned about commodity costs and the apparent slowdown in the economy following what was a tepid "recovery." I want to see results from some other names that aren't as high profile as McDonald's or Chipotle. I want to hear from Cracker Barrel (CBRL), which plans to report earnings Nov. 16. I want to hear from "forgotten" brands such as Denny's (DENN - Get Report), which has made a fairly significant recovery in recent years and plans to report Oct. 30. I want to hear from Wendy's (WEN) (reporting Nov. 8), a name that has been very disappointing, and one that I finally gave up on. Finally, looming in the background is the "fiscal cliff." If the current tax rates are not extended, I also wonder how the higher-yielding restaurant names will be affected, due to the impending increase in the tax on dividends. McDonald's currently yields 3.5%, Darden (DRI) yields 3.7%, and Cracker Barrel yields 3.1%. Several others are in the 2%-plus range. MCD Dividend Yield data by YCharts
At the time of publication, Heller was long DENN. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage. Follow @JonMHellerCFA