What happened

Shares of casual-dining stocks including Bloomin' Brands (NASDAQ:BLMN)Brinker International (NYSE:EAT), Dine Brands Global (NYSE:DIN), and Texas Roadhouse (NASDAQ:TXRH) are moving higher today after Pfizer (NYSE:PFE) and BionTech (NASDAQ:BNTX) announced that phase 3 trials for their COVID-19 vaccine showed it was effective in more than 90% of participants.

Casual-dining chains have been among the biggest losers during the pandemic as restrictions have been imposed on indoor dining across much of the country and many Americans have been reluctant to visit restaurants for safety reasons.

As of 11:20 a.m. EST, Bloomin' Brands, the parent of Outback Steakhouse, was up 18%; Chili's parent Brinker had gained 11.2%; Dine Brands, which owns Applebee's and IHOP, had tacked on 17.3%; and steakhouse chain Texas Roadhouse was up 13.2%. At the same time, the S&P 500 had jumped 2.9% and the Russell 2000, which is made up of small-cap stocks like some of the names above, had risen 5.5%, showing investors expect beaten-down smaller companies to be the biggest beneficiaries of the vaccine news.

A group of young people sitting around a restaurant table eating pizza.

Image source: Getty Images.

So what

This morning, Pfizer and BionTech announced the first round of interim results from their phase 3 study, saying that the vaccine candidate was found to be more than 90% effective in preventing COVID-19 in participants that have not previously had the SARS-CoV-2 virus. The trial was performed on more than 43,000 participants.

That news set off a seismic shift in the stock market, with stay-at-home stocks mostly plunging, while stocks that have been hit hard by the coronavirus crisis surged because it signals a foreseeable end to the pandemic, though the vaccine won't be fully distributed for several more months.

There was no company-specific news out on any of these four businesses, but since they're all dependent on dine-in customers, they stand to be big winners when a vaccine becomes available. Though these chains have adapted their business models during the crisis by focusing on takeout and delivery, their performance has still suffered.

Bloomin' Brands reported a 12.8% decline in U.S. comparable sales in the third quarter, which led to a 20.3% drop in revenue to $771.3 million. On the bottom line, it posted a loss of $0.20 per share, compared to a profit of $0.11 per share in the third quarter a year ago. The Outback parent was cash flow positive, and it continues to see strong sales in its off-premise business.

At the end of October, Dine Brands said that 97% of its locations had reopened. Same-store sales at Applebee's fell 13.3% in the third quarter, but were essentially flat at the end of the month and into the beginning weeks of the fourth quarter, while IHOP's comparable sales tumbled 30.2%. Revenue declined 19% to $176.6 million, and its franchise model helped it deliver a per-share profit of $0.60, though that was down from $1.36 a year ago.

Like its peers, Brinker saw similar trends in its fiscal first quarter, its most recent reporting period. Companywide comparable sales dipped 10.9%, but revenue was down just 5.8% to $740.1 million, helped by its acquisition of 116 franchised restaurants a year ago. On the bottom line, earnings per share fell from $0.41 to $0.28. For the current quarter, Brinker said comparable sales "are expected to be in the negative mid-single digit range," indicating it's recovered nearly all of its lost sales.

Texas Roadhouse has been one of the best-performing casual-dining chains during the crisis, and said in its Q3 earnings report that revenue declined just 3% in the most recent quarter. Comparable sales were down only 6.3% for the period, and they recovered to nearly flat in September. In fact, comparable sales were up slightly in October. Meanwhile, earnings per share for Q3 was down 20% to $0.42, showing only modest profit headwinds.

Now what

Though you might think these stocks have moved in tandem during the pandemic, that isn't true. As the chart below shows, Brinker and Texas Roadhouse are actually up year to date, while Dine Brands and Bloomin' Brands have lagged.

BLMN Chart

BLMN data by YCharts.

Texas Roadhouse's strong performance reflects the company's status as a premium brand, which has performed better than its peers during the coronavirus crisis as the recently positive comparable-sales growth shows. Brinker, meanwhile, has also outperformed its peers during the pandemic.

The gains from those two companies this year may be a reminder that the recovery ceiling is lower for these stocks than you might expect, but they should continue to benefit from positive vaccine news given investors are anticipating a wave of pent-up demand for discretionary categories like restaurants.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.