Valentine’s Day is upon us and provides a bellwether for the food industry over the mid-term.
Across America, we’re deciding whether or not to take someone out for a fancy dinner that costs a pretty penny, or to stay home and open a bottle of champagne, or maybe bring chocolates to someone special. The flower industry also has its fingers crossed that the growing costs and challenges of delivery services and the rise of “porch pirates” won’t result in too many refunds or lost customers. It’s going to be a coin toss whether it’s the best or worst of times for companies like 1-800-FLOWERS (FLWS) that built their entire business on the dependability of both global supply chains and last mile delivery.
As we look back on the past two Valentine’s Days (and the COVID-induced uncertainty of a Valentine’s Day kiss while wearing a mask), the challenge of home delivery seems to remain. But restaurants are a leading indicator of balance returning to the labor market. Most restaurants are now close to fully staffed with entry level workers again seeking jobs and more hours.
What hasn’t shown up in the very impressive job creation and unemployment numbers is the loss of experience and skill in the restaurant industry both among servers and in the kitchen. And the change in experience — smaller menus and shorter dining times — will play into the decision about an extravagant dinner out or something else like opening a bottle at home.
From where we sit at Changing Tastes, tracking consumer eating habits and restaurant traffic, we see Valentine’s Day being a mixed bag for restaurants and a boost for a few Nasdaq-listed companies. Overall, we think restaurant traffic will stay very healthy in the midst of what is going to be a record year for Americans spending on eating out.
But on February 14, going out to dinner may look like smaller checks at nicer restaurants, including cocktails (which don’t take as much skill) and small and shared plates, which have become more prominent on menus and that can often be plated in advance so as not to tax kitchen staff.
While traditional “event” dining options like Ruth’s Hospitality Group (RUTH), which operates Ruth’s Chris steakhouse, may see check size lag diner traffic, other restaurant companies are likely to find themselves busier serving lovers than before COVID. The One Hospitality Group (STKS), which operates Kona Grill and a host of other upscale casual restaurants, may be one of the beneficiaries as their focus on beverages and smaller plates may appeal to those looking for a dependably fun and fancy spot rather than an extravagant night out.
The choice to stay at home may mean spending just a little bit more on chocolates to be enjoyed together, rather than just a box to hand over before going out. Rocky Mountain Chocolate Factory (RMCF) may see traffic bump up next week, although the headwinds they face along with declining shopper visits in American malls may be too stiff a wind to overcome with just one special day. John B. Sanfilippo & Son, Inc. (JBSS) also may be surprised by the restocking orders from grocery stores the week after Valentine’s Day as upscale chocolate snacks like their Squirrel Brand fill up bowls for those staying in for a movie and maybe a bottle of wine, while Mondelez (MDLZ) is already preparing with its long experience of making people smile with the gift of Cadbury chocolate, one of their iconic premium luxury brands. You can be sure they’re gearing up for an Easter spike soon to follow as well.
The corker — or uncorker — is about what bottle to open. While cocktails may win a bigger share of those choosing to celebrate by eating out, champagne still pairs best with flowers and chocolates. And by that, we see the market tilting a little bit towards other sparkling wines. (Champagne is a term that can only be used for sparkling wines made using traditional methods in the champagne region of France).
We think Spanish Cavas and Italian Proseccos will be ordered a bit more in restaurants where they show up at lower price point and also make a great mixer for cocktails. At home, California sparkling wines will be a great choice now that the dollar starts to weaken against the Euro. One of the better ways to play the shift towards domestic wines is The Duckhorn Portfolio (NAPA), which has rolled up many of California’s better, affordable and accessible Napa-centric wineries. Their Decoy label just released a rose sparkling wine that may show up on my Valentine’s Day table along with a more conventional white sparkler from their Migration label.
All in all, we see a great Valentine’s Day ahead for lovers and also lovers of playing the market for food. The moves may be subtle, but when love is the headline, there are a few companies that stand to benefit.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Arlin Wasserman
Arlin Wasserman is the founder and managing director of Changing Tastes. Over the past two decades, he has helped identify and catalyze some of the most significant shifts in the way business and consumers think about food.
Read Arlin's Bio