What happened
Shares of Chili's parent Brinker International (EAT +1.70%) were moving higher after its CEO reassured investors in an interview with Yahoo! Finance, and as restaurant stocks moved higher on favorable economic data and hopes for a second stimulus bill.
The stock closed the session up 12.7%.
Image source: Brinker.
So what
CEO Wyman Roberts told Yahoo! that his company could manage its way through the crisis and that its performance so far had been solid, considering the challenges it faces. Brinker has so far opened about 900 of its 1,600 restaurants globally, and said earlier this month that 82% of dining rooms in the U.S. had reopened.
Roberts said: "We're happy with the performance of the business. We feel good about our value propositions and the things that we've been leveraging going into the pandemic." As of the week ended June 3, the company said sales at Chili's with dining rooms open were down 11%, showing the company had recouped most of its sales as the trend has gradually improved since the depths of the crisis.
Separately, restaurant stocks gained broadly as investors reacted to positive economic data, showing housing sales were recovering and manufacturing levels improving. Investors also brushed off concerns about surging coronavirus cases across much of the country and instead focused on the possibility of a second stimulus check being sent out after President Trump said he supported the move. Such a payment would surely be a boon to the restaurant industry.
Now what
Brinker stock is still down about 36% from pre-crisis levels, so it has room to run if investors buy into the recovery. Gains are likely to accelerate if the government passes a second stimulus, but investors should keep their eyes on new COVID-19 case counts, especially in Texas, where Brinker is based, as an extended surge could cool off restaurant sales.
