Why Panera Bread, Texas Roadhouse, and BJ's Restaurants All Fell More Than 10% in September

By Joe TenebrusoFood and BeverageFool.com

Image source: Getty images.

Continue Reading Below

What happened

Shares ofPanera Bread (NASDAQ: PNRA), Texas Roadhouse (NASDAQ: TXRH), and BJ's Restaurants (NASDAQ: BJRI) declined 10.3%, 11.8%, and 10.5%, respectively, last month, according to data provided byS&P Global Market Intelligence. An industry-wide slowdown is weighing on these stocks, as well as concerns that more difficulty could lie ahead for the restaurant industry as a whole.

So what

More From Fool.com

Restaurant traffic was flat in both the first and second quarters of 2016, according to The NPD Group.

"Contributing to the stalled visit growth are consumers' uncertainties about current and future economic conditions," says Bonnie Riggs, NPD Group's restaurant industry analyst. "These uncertainties have put a damper on overall consumer spending. Compounding the situation for the restaurant industry is the decline in food at home inflation while at the same time restaurant operators have been increasing menu prices."

Restaurant chains are in a difficult position, as rising labor costs are forcing them to choose between raising prices -- and sacrificing sales -- or holding prices steady, and crimping profit margins.

This comes at a time when analysts are growing concerned that industry same-store sales growth could stall and even decline in the coming quarters, with the strong growth in previous periods likely to make it difficult to show improvement.

Now what

While these trends are somewhat worrisome, they are not specific to Panera Bread, Texas Roadhouse, or BJ's Restaurants, which have all tended to outperform their industry benchmarks over the long-term. And in times when industry-wide concerns drag down the stocks of proven market leaders, profit opportunities often arise for long-term minded investors.

We may be nearing such a situation, as this recent downturn has driven down valuations for this group significantly. As such, Foolish investors may wish to consider using this sell-off as an opportunity to pick up some shares of their favorite restaurant stocks.

A secret billion-dollar stock opportunity The world's biggest tech company forgot to show you something, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here.

Joe Tenebruso has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Panera Bread and Texas Roadhouse. The Motley Fool recommends BJ's Restaurants. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.